The Mining Billl: A First Step towards Fighting Corruption?

One of the most prominent anti-corruption scandals that rocked India this year was in the mining sector, as iron-ore mining in Bellary was frozen due to grossly environmentally destructive and corrupt practices. However, mining in India has long been riddled with corruption. As many as 82,000 illegal mining cases have been reported in the last year alone. In order to combat these practices, a much-needed piece of mining legislation has been introduced in the Indian parliament that has the potential to be a game-changer.

The Mines and Minerals (Development and Regulation) Bill, 2011 provides for mining companies to share their profits and royalty with those affected by their activities, by paying higher compensation to people displaced by mining activities. This bill has been drafted to replace 54 year old legislation and ensure the granting of leases in a more transparent manner.  It also helps to stop illegal and irregular mining by empowering state governments to constitute special courts to provide speedy trials for these offences.

The MMDR bill is strongly needed, as inadequate policies have allowed illegal mining operations to flourish, without strong and independent regulation. There has been rampant exploitation of forest land in India by iron-ore miners. India’s swelling Naxalite movement is testimony to this; the ‘red corridor’ that makes up the notorious movement includes some of India’s most mineral-rich and poor areas. The tribals that have resorted to violence against the Indian state are that segment of the Indian population that do not have adequate access to healthcare, education or even roads.

This piece of sustainable mining legislation was designed to boost the production of mineral resources by allowing a better legislative environment for investment and to allow for more transparency and quicker approvals in the system. And yet, mining stocks fell sharply when the bill was introduced in Parliament, as markets witnessed a strong sell-off. Additionally, most major mining companies have spoken out in protest of the bill.

This is unsurprising, as the well established ‘mining mafia’ in India is blocking this bill. Its members range from small local operators to powerful politicians as well as state owned companies such as the National Minerals Development Corporation (NMDC), and international mining companies. Their power is so endemic, that in August, an activist was killed for turning her attention to mining conglomerate Rio Tinto’s processes for extracting diamond-bearing ore from teak forests in the country.

Thus, despite its many key provisions, it hardly seems likely that this much delayed bill will be passed in Parliament. The government has already faltered, and shown its self to be indecisive, by shelving plans to allow foreign direct investment (FDI) in the retail sector in the country in the face of strong opposition.

And yet, in the midst of a country racked by anti-corruption protests, the Congress needs to make a bold move. The Indian government cannot continue to shy away from controversy. Either there will be unrest and civil violence in the country as people cotton on to just how unfair a deal they’re getting or businesses will suffer due to corruption and bureaucracy, dragging markets and politicians down with them. This is as much about politics as it is about policy; the current government must appease the increasingly angry public if it hopes to keep power. The MMDR Bill is a step in the right direction.