NEW DELHI: Keen to stay clear of the minefield of scandals and lawsuits, the Union mines ministry has asked the attorney general (AG) whether mining lease applications can be disposed of under the first-come-first-served (FCFS) policy, until upcoming legislation makes auction mandatory.
The ministry’s concern is that granting mineral concessions through FCFS policy might attract strictures from the Supreme Court and run afoul of the Comptroller and Auditor General ofIndia’s stated position on the matter. Over 400 pending mining lease/licence execution cases are waiting for the ministry’s no-objection certificate, before states can process the lease.
The number of applications pending at different stages of mineral concession in 14 states was over 42,500 by the middle of April.
Absent any provision of auctioning mineral resources in the extant Mines and Minerals (Development and Regulation) Act, 1957, the ministry can’t decide whether to implement the concessions under the FCFS route. Using the policy, it fears, could draw adverse remarks from the courts and the CAG.
At the same time, the ministry can’t put the mining sector on hold either, as it would take a while before the Parliament clears the MMDR Bill, which will kick off auctions.
“The Supreme Court’s February 2 judgment cancelling 122 telecom licences issued by A Raja and seeking auctions to determine spectrum awards in future has direct relevance to the way mineral concessions are issued under MMDR Act, 1957. We have sought AG’s advice on the issue so that our actions are not considered bad in law and we could move ahead and meet the needs of the industry,” said a mines ministry official asking not to be named.The precautions will also help insulate the ministry from potential adverse comments by the CAG. The national auditor has been critical over the non-transparent way in which natural resources were allocated, causing huge financial loss to the exchequer. A recent leaked CAG draft report on coal put losses to exchequer to the tune of Rs 10.7 lakh crore for not auctioning captive coal blocks.The mines ministry is in a bind because since the adoption of new mineral policy in 2008, the MMDR Bill took more than three years to reach the Parliament. Even after the Bill was introduced in December, it is stuck with the Standing Committee tackling wide differences between ministries over some provisions. “We cannot wait endlessly for the new legislation and shut all our work,” said another ministry official. The queue needs to be eased before the auction process sets in, he added.The ministry has justified its intent to continue with FCFS, saying even in this mechanism, the market value of the mineral is captured in the royalties paid by the concessionnaire to the state government. “The delay in operationalising the MMDR Bill, increased cases of illegal mining and pendency of applications with state governments would not help the cause of growth in the mining and minerals industry in the country,” said a mining industry expert.India’s mining sector witnessed a negative growth of 2.96% in January 2012 as against the corresponding month last year. Booming illegal mining has led to overexploitation, forcing the central empowered committee of the apex court to recommend a ban on mining in three districts of Karnataka. In terms of pendency of applications, Karnataka tops the list with over 19,300 applications for concessions, followed byGujarat(4,900), Madhaya Pradesh (close to 4,600), Orissa (3,600) and Chhattisgarh (2,700). According to a report finalised by the mines ministry, unlocking the potential of the mining sector inIndiacould add up to $210-$250 billion to the GDP. Moreover, it could create 13-15 million jobs by 2025. It could also contribute $ 55 billion to $ 70 billion of revenue to the central and state governments through corporate taxes, royalty and export duty collections by 2025.