By Mayabhushan Nagvenkar
Panaji: Symbolically, the deep hole which the rupee finds itself in, might well be a cavernous, mining crater. Those who speak for the mining industry and pro-mining political class certainly seem to think so.
The rebound of the rupee, they say, is linked to revival of the many hundred hollowed mining craters pockmarking the country that were abandoned after a string of mining bans. The bans had been imposed by the Supreme Court after instances of rampant illegal mining and destruction of environment in Goa, Karnataka, Orissa among other states came to light. The ban was lifted partially in Karnataka some months back.
Over the last few weeks, as the dollar swelled bicep and the rupee shrunk and cringed around the nether regions of Rs 60 to the dollar, a cohesive effort anchored by the mining industry and a cross-section of the political class appears to be gaining in momentum.
The short-term objective: to leverage pressure as well as political and social momentum to grab the attention of the top court.
The long-term game: to sell the premise that mining exports which earn India crucial foreign exchange have to be resumed to trigger the revival of the rupee vis a vis the dollar. And for that to happen, mining has to begin at the earliest.
The aggressive advocacy domino set in motion is relatively easy to understand if one takes Goa as a case in point. The last three weeks have seen political and social activity hinged on manufacturing a groundswell demanding resumption of mining in Goa. Chief Minister Manohar Parrikar virtually set the ball rolling after he, at a public rally organized by the Goa Mining People’s Front (GMPF) last week, squarely blamed the Supreme Court for the rupee crisis.
“The Supreme Court is to be blamed for the rupee crisis. The rupee has plunged because of the suspension of mining activity in India,” the chief minister said. The “absolute bans” on mining, Parrikar further said, were “destroying India”. Before becoming chief minister in 2002, the Indian Institute of Technology (IIT) alumnus was spearheading a seven-year campaign against rampant illegal mining in the state. None of that was mentioned at the public meeting.
At the public meeting, the BJP’s technocrat chief minister shared dais with state Congress President Subhash Shirodkar and former Congress chief minister Pratapsingh Rane, both accused in varying degrees in Goa’s Rs 35,000-crore illegal mining scam.
And the All India Trade Union Congress (AITUC) general secretary Christopher Fonseca rubbed shoulders with mining magnates, both demanding resumption of mining in Goa. Around the same time in New Delhi, Union Finance Minister P Chidambram spoke in a similar vein.
“We have to find a way to export iron ore. We need to restart iron ore mining,” he said.
So how crucial is mining to the economy and rationalizing of India’s EXIM graph? According to the Union Mines ministry statistics, India’s total iron exports fell a hefty 68.27 percent to 16.3 million tonnes in April 12-January 13 from 51.5 tonnes during the corresponding period in the year before.
This loss alone is valued at $ 10 billion in iron exports alone in the last fiscal. And that shortfall, industry insiders claim, is ominous for the economy, which is facing a foreign exchange crunch.
In 2011-12, export of ore from Goa alone contributed Rs 16,500 crore in foreign exchange revenues. According to Reserve Bank of India (RBI) data, the country's FOREX reserves have dipped by $ 1.08 billion to $ 227.7 billion for the third week of August. India’s import cover now stretches to seven months.
And since Goa accounts for nearly half of the iron ore exported from the country, the apex court ban which came into force in October last year, says the Goa Mineral Ore Exporters Association (GMOEA), is breaking the back of the industry which contributes to 25 percent of the state’s Gross Domestic Product (GDP).
“A large population of Goa depends on mining. The main industry itself is closed. Incomes have depleted and people struggling. Lifestyles have changed. Spending has largely come down. Machineries have been left idle and are rotting,” a spokesperson for the GMOEA told Firstpost.
The effects of the Goa ban, the association claims, will also be felt on the national economic canvas as easily.
“Goa exports around 50 percent of the total exports from India and earns foreign exchange which is the need of an hour of Indian economy. In fact, one of the causes of the present current account deficit is due to ban of export from Goa as well as other states like Karnataka, which has caused an adverse balance of payment for India. Further due to the export ban, India has to import iron ore for local steel industry, which aggravated the present economic scenario. It has also impacted Goan economy,” the spokesperson said.
Carmen Miranda, who has managed to take Goa’s campaign against illegal and rampant mining global by speaking about the ravages caused by mining at international forums in Europe, however, claimed that “trying to save the rupee by destroying Goa will be irreversible as far as Goa’s future is concerned”.
“It is a dangerous decision to re-open mines in a knee-jerk reaction to the state of the economy,” says the former director of Panos Asia, who shuttles between UK and Goa.
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Updated Date: Sep 05, 2013 15:58:40 IST