Why the coalgate debate is dangerously incomplete

The apex court’s insistence on auctioning rare and valuable natural resources in the 2G case and the government’s resistance to what it views as intrusion in policy matters have inspired much hair-splitting. A lot of steam has been generated by the debate on the financial loss in the coal scam and the resultant washout of Parliament’s monsoon session. The more informed have highlighted how the government went back on accepting the recommendations of its own committee headed by Ashok Chawla on transparent harnessing of natural resources.

In all, the focus has been on avoiding corruption in exploitation of natural assets such as spectrum, coal and minerals. Much like wind, spectrum is a natural resource which, though finite, can be reused. But the rest – water, land, minerals or biodiversity – either deplete irreversibly in quantity and quality or do not get replenished in the human timescale. Busy debating how much money these resources should fetch (or should have fetched) the public exchequer, we are sidestepping the more important question: just how much of (and at what rate) should these invaluable, finite assets be tapped into at all?

 Why the coalgate debate is dangerously incomplete

What is the real price of mining? Firstpost

As the union finance minister, Manmohan Singh initiated the process of liberalising the mining sector, eventually allowing 100 percent FDI, to boost GDP growth. Many activists compare this to distress selling of family gold to tide over penury. While desperate situations may justify desperate measures – as India had to literally pledge gold with the IMF – there is no economic prudence in riding on wanton exploitation of minerals for two decades to post an unrealistic growth rate our politicians randomly set as the benchmark for the success of their fiscal policy.

Even cricketers know better than to push for a, say, 7-run-plus average in every limited overs game they play. Factoring in ground realities – the pitch, outfield and weather – they set modest totals that often turn out to be winning ones. But when they try to post unreasonably high scores batting first under tough conditions, most often they do not even last the full 50 overs. There is much wisdom, and certainly no shame, in being pragmatic.

But is there anything realistic about the way our governments exploit India’s natural resources to chase growth? Water, the most crucial of them all, is doled out virtually free. Whatever little tax is levied goes uncollected. Take Orissa, for example, where the government was ready to let Posco draw 10 million gallons daily from the Mahanadi’s Jobra barrage and later the Hansua River. Here, 16 large industries together owe the state Rs 1,422.04 crore in water cess and have moved the high court with two dozen litigations.

The per capita availability of water in India is 1,600 cubic metres which is considered a “water stressed” condition (anything below 1,700 cubic metres). Half of the country’s river basins face “water scarcity” (availability of less than 1,000 cubic metres). Across the country, water bodies and wetlands are either being developed or being used as garbage dumps for future “reclamation”. There is virtually no cap on groundwater extraction for flood-agriculture and factories. Rivers, of course, are being dammed like never before to meet the energy requirement for 9 percent growth.

Yet, the national water policy unveiled this year seeks to offer incentives (tax relief and tariff restructuring) to hitherto-reckless industries for reducing water wastage. There is nothing concrete on effluent and sewage treatment or a legal framework to ensure optimal use of water. But an unspecified recovery plan through public-private partnership (read privatisation and corporatisation) has been proposed which in all likelihood will involve huge loans from the World Bank.

Land, possibly the second-most scarce resource in an overcrowded country, is also up for grabs. Forests, wetlands, flood plains, coastal strips and throbbing ecosystems disparagingly branded as wastelands are rapidly making room for growth. While promoting Gujarat as a top tourism destination, Narendra Modi is fast destroying the unique landscape of the Rann of Kutch by allowing power plants, cement factories and windmills because there is “little tree cover”. In land-starved Delhi, the Sheila Dikshit government built expansive housing and transport infrastructure on the Yamuna flood plain in the name of the Commonwealth Games.

A laundry list of such mindless misuse of natural resources will run too long. But mining stands out on this shocking list because it is twice as damaging. The government’s policy of allowing private (often foreign) players to mine the precious stock and sell (export) it without value addition not only cheats the public exchequer but also endangers the country’s resource security in the long run. Take iron ore, for example. India is the world’s largest iron ore exporter after Australia and Brazil. But in terms of per capita reserves, India has only 21 tonnes against Brazil’s 333 tonnes and Australia’s 2,000 tonnes. Various studies have estimated that business-as-usual will exhaust India’s iron ore reserves anytime between 2025 and 2040.

At the same time, the mineral map of India overlaps with the country’s forest map. To perpetrate this loot of ores and coal, thousands of hectares of pristine forests with its biodiversity are ripped apart. To maximise profit, few (if any) miners fully exploit the local stock or restore the mine before moving on to the next site. And yet the coal ministry was livid when the environment ministry proposed to safeguard a few stretches of India’s best forests as no-go zones for mining. Exactly a year back, then finance minister Pranab Mukherjee scrapped the green embargo.

Apart from certain captive blocks necessary for other industries, coal is in demand for power generation and accounts for 70% of India’s electricity. The 11th Five-Year Plan projected a target of 50,000 MW of additional thermal power capacity while the 12th Plan aims at another 1,00,000 MW. During 2007-11, the green ministry has granted environmental clearance to 2,10,000 MW of power, which is 60,000 MW in excess of the combined target of 1,50,000 MW by 2017. Coal India is apparently struggling to meet the demand for coal to operationalize these plants.

But it is common knowledge that India loses up to 40 percent of power in transmission. While investing heavily in new power projects, the government or the private sector refuses to plug the holes in the transmission and distribution segment which, says a report, is facing an investment shortfall of Rs 3.68 lakh crore.

Instead, our governments want to mine the last forest and hand out cheap deals, apparently in desperation to meet growth targets. And let’s not even get into the spectrum of illegal mining; or the displacement and destitution of communities; or the scary dimensions of inequity (the poverty map of India also overlaps with those of minerals and forests).

Of course, this is corruption; but not merely in the financial sense. It takes a baffling degree of moral turpitude to justify this brazen assault on the country’s future as a matter of government policy. In this, there is little difference between the Congress or the BJP or even the Left. That is why they continue to clamour over the best possible price, and not this sell-out.

Updated Date: Sep 09, 2012 09:33:14 IST