While corporations and the country’s economy are profiting from mining, what are the communities living in the mining areas gaining?

In leading mining states such as Chhattisgarh, Odisha, Jharkhand, 40% of the population lives below poverty line, much more than the national average of 21.9%. The Modi government acknowledges that mining has exacted a steep cost on tribal land and communities, but doesn’t believe in making miners pay sufficient compensation for it.

In his Independence Day speech, Prime Minister Narendra Modi had conceded that the gains from mining have bypassed local communities. Calling this an “issue of grave concern”, the prime minister set the stage for the creation of a new welfare scheme for mining areas.

That programme, called the Pradhan Mantri Khanij Kshetra Kalyan Yojna, was unveiled on September 16. And the following day, on September 17, the Union Ministry of Mines released the Rules on Mines and Minerals (Contribution to DMF) to fund the scheme.

As per these rules, an additional levy will be imposed on the royalty paid by mine leaseholders to fund a District Mineral Foundation in every district affected by mining. (Royalty is a tax levied on miners in lieu of transfer of the ownership rights of mines.) Those who got mine leases after January 12 will contribute 10% of the royalty to the foundation, while older leaseholders will pay 30% of their royalty. The government hopes that the levy will help it generate Rs 6,000 crore for the benefit of mining area communities.

While the scheme is surely a first, it’s still far from ideal. In fact, the miners’ contribution is much lower than what the National Democratic Alliance government’s own amendments to the Mines and Minerals (Development and Regulation) Act, 1957, this March had allowed for.

Undermining possibilities

On January 12, the National Democratic Alliance government had amended the Mines and Minerals (Development & Regulation) Act, 1957, increasing lease periods and limits on the maximum area of a mine. The amendment had allowed states to grant prospecting and mining leases through electronic auctions, with the aim of attracting “private investment and modern technology in mining”. The amendment became a law in March.

Significantly, it provided that other than royalty, the leaseholder will pay an additional amount into a District Mineral Foundation, a fund to be used “for the benefit of people and areas affected by mining activities”. For mines leased before the commencement of the law on January 12, it prescribed a contribution up to 100% of the royalty. And for mines leased after that date, the stipulated contribution was to be up to a third of the royalty. The law specified the upper limit for contributions, though it remained silent on the minimum limit.

In the new rules notified last week, those ceilings have changed. The rules fix 30% of royalty as contribution for existing leases, and 10% for new leases – a third of what they can be. By doing this, activists say, the government has diluted the law’s provisions.

“The government has decided to weigh in on the side of the mining companies,” said Ashok Shrimali, an activist with the Setu Centre for Social Knowledge and Action in Gujarat. “Since January, mining companies have argued that they already pay royalty to government, why should they be made to pay any additional funds. The new rules show the companies have lobbied successfully and managed to keep the norms of contributions lower than what the law prescribes.”

The new limits are also lower than what the United Progressive Alliance government had proposed in 2011. Back then, the Congress-led government had prepared a draft Bill that recommended that the miners’ contribution be equivalent to 26% of profits in the case of coal, and same as the royalty in case of major minerals such as iron ore.

“The original provision in January was to move towards social action, the final decision that came out last week is more towards miners,” said Anwarul Hoda, a former member of the Planning Commission who headed a panel in 2006 to suggest changes in the mining policy that preceded the UPA's proposal.

Gaps in new welfare scheme

The welfare scheme Pradhan Mantri Khanij Kshetra Kalyan Yojna gives guidelines for how the funds may be best used to ensure the benefits of mining go to local communities. It says that 60% of the funds should be spent on drinking water supply, health care, education, and the rest 40% on building roads, bridges, irrigation infrastructure.

Ashok Shrimali, the activist with the Setu Centre for Social Knowledge and Action, said the scheme shares goals with the existing Vanbandhu Kalyan Yojana, which prescribes building infrastructure in tribal areas but has achieved little improvement for tribal communities.

The guidelines note that “activities meant to be taken up under the ‘polluters pays principle’ should not be taken up under the PMKKKY”, and yet they advise use of funds for effluent treatment plants, pollution prevention technologies under the 40% ratio of physical infrastructure funds.

Environment activists say this can lead to companies passing off the costs of setting up effluent treatment plants to be the community’s responsibility rather than their own. “This is objectionable and shows that the scheme contradicts itself,” pointed out Sreshtha Bannerjee, a researcher at the Centre for Science and Environment in New Delhi.

The NDA government’s welfare scheme, for the first time, sets norms for identifying people and areas adversely affected by mining:
* Directly affected areas – where direct mining-related operations such as excavation, mining, blasting, beneficiation and waste disposal (overburdened dumps, tailing ponds, transport corridors etc.), etc. are located.

* Indirectly affected areas –Those areas where local population is adversely affected on account of economic, social and environmental consequences due to mining-related operations.”

It says that “affected family” and “displaced family” are defined under Section 3(c) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. It adds that families “affected by mining should include people who have legal and occupational rights over the land being mined, and also those with usufruct and traditional rights”.

Bannerjee says there are positive features in the scheme, such as its definitions of affected areas and persons, and the requirement for taking gram sabha approval for scheme plans in constitutionally protected Scheduled Areas. But since these are guidelines, she adds, “a lot will now depend on how states interpret these and form their rules”. Among the mining states, so far only Odisha and Rajasthan have issued rules for District Mineral Foundations.