New life to the mining sector
Building a post-Covid world required grit, perseverance and a vision; precisely everything that makes up Prime Minister Modi. The world was taken aback by a global pandemic and was struggling to deal with it when our Prime Minister announced the grand vision of a self-reliant India, Atma Nirbhar Bharat. As a Union Minister of Mines and Coal, I often reflect upon my Ministry’s contribution to this grand initiative. We were collecting daily reports down to each district and having detailed deliberations with none other than the Prime Minister himself. Therefore, when during the launch of an auction for commercial mining of coal, on the 18th of June 2020, PM Modi talked about ending decades of lockdown in coal, the sector was only too ready to don the new avatar. In the ensuing months, the government galvanized its machinery to remodel the mineral mining sector.
The mining sector is next only to agriculture in terms of generating employment. The sector, directly and indirectly, employs about 1.1 crore people and sustains the livelihood of about 5.5 crore people in the country. 1 direct job in the sector creates 10 indirect jobs. Similarly, 1% growth in mining results in 1.5% growth in industrial production. Its importance grows manifolds when we consider other allied sectors which depend upon it for their survival and existence. Sectors like steel, aluminium, commercial vehicles, rail transportation, ports, shipping, power generation, etc. are closely linked to the mining sector. Therefore, a boost to the mining sector will boost these sectors as well which together will brighten the economic horizon of the nation. With a sector having such far-reaching significance in the generation of employment opportunities, the Modi Government envisions increasing its contribution from 1.75% of GDP currently to 2.5% of GDP,with an aim to increase the mineral production output by 200% in the next 7 years.
The country’s mineral mining sector has remained choked for several decades under previous regimes. Despite the huge mineral potential, India had so far been under-explored with mining being carried out only on 0.25% of the land whereas over 17% of the national land has mineral reserves. The sector had also underperformed in attracting investments. While mineral production stands at Rs 1.25 lakh crores annually, its import is a whopping Rs 2.5 lakh crores.
Unless one is an ostrich with their head buried in the sand, it does not take much to gauge the herculean task the country has achieved in the last 10 months to give a new direction to economic growth. Mineral mining is one such sector that has witnessed an array of reforms, with the Mines and Minerals (Development and Regulation) Amendment Act, 2021 being the latest addition to the fore. These reforms will give new “LIFE” to the mining sector- ‘L’ stands for Long term impact, ‘I’ for Immediate boost to mineral production, ‘F’ for Focus on public welfare and ‘E’ for Ease of Doing Business.
We have seen how a large number of mining blocks with very high quality resources were not brought into production for many years, resulting in sub-optimal utilisation of valuable national mineral resources. Most of them have been blocked in legacy cases. Legacy issues pertaining to mining have become an impediment as such cases can neither be granted lease because the time period to grant them is already over, nor can they be brought to auction because of legal impasse. We have amended the existing provision for the reallocation of such mineral blocks through a transparent auction mechanism. Similarly, auctioned mines not made operational within 3 years will be returned to the concerned States for re-allocation through auction and greenfield mines allocated to PSUs that are not brought into production are also proposed to be reviewed and given back to State Governments for auction. Bringing unused mineral blocks into production will generate enormous employment opportunities and bring growth to such mining areas.
One of the key reforms is transferring all valid rights, approvals, clearances, licenses to the new lessee, valid until the mineral reserves last. This would facilitate lessees transfer mine to another entity, thus bringing fresh investment and entrepreneurship to operate the mine.
Since 2015, geological reports for 143 mineral blocks have been handed over to various States. These blocks are auction-ready, but so far only 7 blocks could be auctioned by States. To ensure that national reserves are put to best use for the development of the nation, provision has been made wherein the Central Government can conduct auctions in consultation where State Governments face challenges or fail to conduct auctions.
Removing the distinction between captive and non-captive mines was long-coming. We knew it was akin to participating in a race with one leg tied down. With no such distinction now, there will be level playing for mineral block auctions. Moreover, existing captive mines have also been allowed to sell minerals over and above their requirements. 50% rebate in the revenue share, for the quantity of mineral produced and dispatched earlier than the scheduled date of production, has also been provided.
To be contd