Covid package for mining industry great beginning, but needs detailing

coal mine india
Putting unused captive mines on auction is a welcome move, but there are several mines that could not be operational due to delays in clearances.

The Union government has accepted several long-standing demands of the mining industry while announcing the fourth tranche of the Rs 20 lakh crore stimulus package to revive the economy reeling under the impact of the Covid-19 pandemic. The revival package for metals and minerals is a long-term plan and deserves detailed attention. The government will have to act consistently and credibly to achieve goals through quick inter-ministerial decision making.

The package brings to the fore the policy framework on commercial coal mining evolved since August 2019. One has to wait for details, but the mention of revenue sharing model has to be carefully examined so as to prevent confusion. Adjusted gross revenue must be clearly defined for coal and bauxite so that the segments do not end up in a mess like telecom.

READ: Kickstarting economy without burdening government finances

The auction route will have to be examined as the previous attempts did not attract domestic or foreign players. In fact, a number of foreign investors exited the coal mining sector. Putting unused captive mines on auction is a welcome move, but there are several mines that could not be put into operation due to delays in getting clearances. Thus, there cannot be a sweeping policy. Old commitments of mines valid till 2030 need to be honored after examining if they are unused due to delay of clearances.

The auction policy should be clear for those cases where there is only one bid. The officials refuse to take a decision in such cases due to fear of inquiries and harassment. There is a need to bring in clarity in such cases if the objective of the policy is import substitution.

Coal gasification plans did not take off due to cancellation of licences by the court. Thus, the role of judiciary also needs to be defined. A joint committee of the ministries of environment, mines and steel should resolve issues emerging if any. The loss to the exchequer due to the sweeping judgments by the courts can be avoided this way.

READ: India’s storied middle class may be sliding into poverty

The issues faced by Kudremukh mines and Goa also need resolution under the package. Aggressive bidding will result in cornering of mines by a few end-users, which will lead to extraction limited to their requirement. This has happened in the case of iron ore.

Combining Bauxite and Coal is welcome if there is a plan for more Aluminum plants in private sector. There is no mention of other minerals like copper and gold or that of minor minerals such as sand that generate local employment. Thus, the package needs to be examined before finalising the details. This is a good beginning, but needs a lot of detailing.

(Dr Aruna Sharma is a Delhi-based development economist and a former civil servant. She retired as secretary, ministry of steel, government of India in 2018.) 

+ posts

Dr Aruna Sharma is a New Delhi-based development economist. She is a 1982-batch Indian Administrative Service officer. She retired as steel secretary in 2018.