___________

This is interesting. Naveen Patnaik has a strong election winning record in Odisha and based on the current ZP and Panchayat elections, it seems he will also win big in the next elections in Odisha. He is suave, gentle, has a good natinoal image, not prone to histironics (like Mamata Banerjee), not an ayaaram-gayaram (i.e., does not change alliances often like AIADMK and hence reliable), speaks good English, and Odisha being a smaller state other state leaders will not think he is too powerful. So he may be an acceptable PM candidate for a third front consisting mainly of various regional parties. He is right about the problems with the two national alliances in India. The big problem with UPA is its multiple power centers, especially with the all power no responsibility position of the Yuvraj. He and his cronies have single handedly stopped major development in Odisha; especially the Vedanta University. The other problem with national parties is that their leadership in Delhi control the states where they rule. As a result, while those states do get some extra benefits, they are manipulated by the center to agree to their wishes, even if it may be detrimental to the state’s interest. In the context of Odisha a UPA govt in Delhi can push a Congress govt. in Odisha to give mining leases to companies of its choice.

At present the Odisha government is able to defy them to some extent. Even in case of coal blocks where the center unilaterally allocates the blocks, the state is able to put its terms, sometimes vocally, as the companies need the help of the state in getting the land and various clearances. That is the reason MCL and NTPC have agreed to establish medical colleges in Odisha. If there was a Congress government they would not be as vocal and may have just signed on the dotted lines as dictated by the central leadership. Of course one has to also think of the country as a whole. But in the past what has happened is that in the name of "national interest" Odisha has suffered greatly, some of it partly overcome by the non-Congress leadership in Odisha.

Examples of this are:

• The freight equalization policy that harmed the industrialization of Odisha.
• The low royalty rates of minerals.
• Lack of port development. (There is folklore about how Biju Patnaik unilaterally went ahead to establish Paradeep port)
  • Also related is the disregard of the military about accommodating port development near their sites.
• The opposition of Rahul Gandhi and his cohorts to industrial development in Kalahandi and Vedanta University.
• Lack of development of Railways in Odisha.

Some of the above were overcome when there was a third front type government at the center. The ECOR zone was one of them. Since the ECOR zone was established things have looked up in the Railways sector in Odisha, but there is lot more to be done.

In the mining and metal based industry sector, since the BJD government in Odisha has become very discriminative in giving leases and installed the value added policy there has been a beeline of investment (some of it yet to come to fruition). The government has seen through the past games of Tatas and now have forced them establish a plant in Odisha (hence their upcoming Kalinganagar plant) and yet have not given them any new leases. SAIL and NALCO are not having an easier time either. 

So the point is that in our current set up where leadership in Delhi (true for both UPA and NDA) often dictates the state leaders of the same party to do what it wants, the state may lose out in the name of national interest. On the other hand *honest* regional parties can guard the state’s interests as has happened in Odisha. More and more states are going that way.

However, its not clear what kind of central government a coalition of regional parties will be able to form and how well will that work at the national level.

More ramblings later. … (See http://www.orissalinks.com/orissagrowth/archives/5458 for related thoughts.)

Following is from the article at http://www.cseindia.org/content/cse-releases-its-report-profit-sharing-mining. This is for wider dissemination of the article. The highlights are done by us.

Bhubaneswar, June 24, 2011: Mining companies and industry in general have been opposing the government’s recent proposal to set aside 26 per cent of their net profits, to be shared with local communities. Their contention is that this provision, if passed by Parliament, would drastically dent their profitability. A recent analysis by New Delhi-based research and advocacy body, Centre for Science and Environment (CSE), proves them wrong.

The Central government has come out with a draft Mines and Minerals (Development and Regulation) bill, 2010 (MMDR bill) to replace the 1957 Act. The draft bill which has been vetted by a GoM, includes this provision of sharing benefits. The CSE analysis comes out in strong support of this proposal, and clearly establishes how timely and necessary this provision is.

The CSE analysis was released here today in a Public Meeting chaired by Santha Sheela Nair, former secretary, Union ministry of mines. The meeting was attended by Manoj Ahuja, Secretary (Mines), Odisha government, BL Bagra, Chairman and Managing Director (NALCO) and Yashbant Narayan Singh Laguri, Member of Parliament (Keonjhar).

Speaking on the occasion, Chandra Bhushan, deputy director general of CSE said: "It is now well recognised across the world – including in India — that wealth generated by the mining sector comes at a substantial development cost, along with environmental damages and economic exclusion of the marginalised. In fact, the major mining districts of India are among its poorest and most polluted."

He added: "The government’s proposal to share the benefits of mining with local people is an important step ahead in building an inclusive growth model. It is also in line with the best practices being followed in the world. The principles are not new and many mineral-rich countries have been following it for years without impacting the genuine profitability of mining companies."

Profit sharing a global practice
To break this resource curse, a number of countries across the globe have incorporated the provision of benefit sharing in their mining legislations to enable local communities to benefit from mining activities in their region.

South Africa’s Mineral and Petroleum Resources Development Act, 2002 gives communities the opportunity to obtain a ‘preferential right’ to prospect or mine a mineral on land registered under the name of the community.

In Canada, special mining regulations are in place to recognise the rights of the aboriginals. There are some treaties called land claim agreements (LCA) which establish defined area of land for aboriginals and cover issues of mineral rights. These agreements also give specific rights to aboriginals. For example, the Nunavut LCA grants Inuits the title to about 3.5 million ha of land and mineral rights to approximately 0.35 million ha. It also gives rights to Inuits in controlling how mining will proceed on lands owned by them. Usually in such circumstances, mineral leases are given to third party to develop those resources in exchange of signing an Impact Benefit Agreement (IBA). Even if both surface and subsurface right belongs to the government then also some rights like consultation are provided to aboriginals.

Papua New Guinea, for instance, has incorporated provisions under which the mine lease holder is to provide compensation to the landholders on whose land mining is to take place, under its Mining Act 1992. The compensation is dependent on the negotiating skills of the community/landholders. For instance, the Ok Tedi copper mines have a special institutional structure to manage and implement the 52 per cent dividends received from the mine operations. This is a legally binding obligation that the company must follow as per the legislation passed in November 2001.

In Australia, the aboriginals have been given special rights in case mining happens on their land. These rights are to be realised by mining agreements. Different parts of Australia, has varying laws regarding aboriginals and mining. For example, the Aboriginal Land Rights Northern Territory Act, 1976 establishes a financial regime whereby affected aboriginal people receive a share of the mining royalties earned from activity on aboriginal land. Australian government guarantee all mining royalty for aboriginal interests except 30 per cent which is reserved for the owners of the affected area.
 
Companies will lose profits? Hogwash
The CSE analysis clearly shows that the Indian mining sector enjoys huge profits. An analysis of the annual reports of three major non-coal mining companies (Manganese Ores India Ltd, Sesa Goa and National Mineral Development Corporation or NMDC) indicates that in 2009-10, their average profit after tax (PAT) was about 50 per cent of their turnovers. In the case of Coal India Limited, this was about 18 per cent.

Assuming the draft MMDR Act, 2010 becomes a law, the CSE analysis of companies shows that it will not make any material difference to the profitability of the company. After sharing 26 per cent of the net profit with the affected community, the PAT of National Mineral Development Corporation – for instance — will still be 41 per cent of its turnover (from 55 per cent). In the case of Coal India Limited, PAT will become 14 per cent of its turnover from 18 percent.

Rich lands, poor people
Almost all the country’s minerals are located in regions that also hold most of its forests, rivers and tribal populations. Mining and quarrying has destroyed large tracts of forest land in these areas, affecting the ecosystem and the livelihoods of the already impoverished tribals.

The top 50 mining districts of India, that account for more than 85 per cent of the value of minerals produced in the country (Rs. 85,00 crore), have close to 50 per cent of the total mine lease area in the country. These districts also have, on average more poverty, more forest cover and larger tribal population than rest of the country. According to CSE analysis, at least 2.5 million people are directly affected by mining in these districts which include those who have lost their land and livelihoods.

If the MMDR provision would have been implemented in the current year (2010-11), then the affected population of these districts could have got more than Rs 9,000 crore as share of profit from mining companies. The per capita figure for these districts could have been Rs. 38,000 in 2010-11 as share of profit from mining companies. 
 
The mining affected people in Odisha would have got about Rs 1,750 crore as share of profit from mining companies. This could have been used to reduce hunger, provide better health and education infrastructure and to ultimately bring people out of poverty. 

CSE examines a few cases in the state: Keonjhar currently produces more than one-fifth of India’s iron ore and contributes more than Rs 7,000 crore to value of minerals produced in the country. Worse, mining has done nothing for Keonjhar’s economic well being. Over 50 per cent of the district’s population is below poverty line (BPL). If the draft MMDR provisions would have been implemented for the present year, the affected people of the district would have money to the tune of Rs 750 crore as profit share (2010-11 figures). Every BPL household in Keonjhar would have got at least Rs 40,000 annually.   

Similarly, Sundargarh with Scheduled Tribes (ST) as about half its population, produces minerals worth Rs 2700 crore. The affected people of the district could get Rs 285 crore as share of profit from the mining companies. Every directly affected person from mining in Sundargarh could get Rs 45,000 annually. 

Says Chandra Bhushan: “This money should be used not only to reduce present impoverishment but also for future well being of the communities like investment in health and education. There is huge opposition to this bill and it may get axed. It is very important for the communities that this bill goes through.”

• For more information on this, please contact Sugandh Juneja of CSE at sugandh@cseindia.org or call her on 9953805227

• For additional information on CSE’s work in this area and subject,

Following is from Samaja.

Following is an excerpt from a report in Telegraph.

… According to the draft bill, a mining company has to “allot free shares equal to twenty six per cent in the company… in case the holder of the lease (the land being taken over) is a company”. If the holder of the lease is a person, “an annuity equal to 26% of the profit after tax” has to be given as “annual compensation”.

The draft Mines and Minerals (Development & Regulation) Act, 2010, also proposes that the mining company has to provide employment and/or other assistance in accordance with the rehabilitation and resettlement policy of the state government concerned.

Government sources said they hoped the draft bill would address these issues through the “partnership” plan. “Their (tribals’) home is being taken away so how will they feel. The point is being driven home,” said an official with the mines ministry.

… The sources said the bill could come up before the cabinet for clearance in a few weeks.

The bill envisages the involvement of gram sabhas or district councils or panchayats — as the case may be — who would identify the families to be affected by mining projects, directly or indirectly, before the commencement of operations to “ensure appropriate benefits”.

“A mining welfare fund will be set up, funds from which will be only for tribal land,” sources in the government said. The plan is to create “model villages”, added an official.

The bill also proposes a mandatory Corporate Social Responsibility document to be attached to the mining plan. The document envisages a scheme for annual expenditure by the mining company on socio-economic activities in and around the mine area to facilitate self-employment opportunities.

P. Chidambaram’s home ministry, too, has come up with a plan to assuage tribal sentiments. It has proposed free power for villages within a certain radius of power plants. “People should not feel that the power generated from their land is benefiting only the rich in cities,” said a home ministry official.

…  Home ministry officials said the focus was now on “micro-management” to understand the problems of tribals. On April 30, MPs from 34 districts most affected by Maoist violence will be briefed by home ministry officials. “We can put things right in the bureaucracy, but it is the duty of MPs to go and talk to affected people,” said a source.

On policing, the ministry wants to deploy police personnel “sympathetic” to tribals.  …

Following is an excerpt from a report in Pioneer.

the BJD has decided to bring four resolutions against the Centre. “We will move resolution against the Centre for neglecting the cause of Odisha in the field of railway, for not increasing mine royalty in a regular manner and not giving its due share to the State, Centre’s negligence in providing help to the State to face the Maoist menace and Government’s failure to provide flood assistance to the State,” Mohanty added.

I agree with the above.

From Samaja:

From Dharitri:

The following is from http://rc.orissa.gov.in/index3.asp?linkid=30&sublinkid=272.

ORISSA’S 11^th Five Year PLAN SIZE FIXED AT RS.32,225 CRORE

 AIMS AT 9% GROWTH

Addressing the 54^th meeting of the National Development Council (NDC) at Delhi, Chief Minister of Orissa Naveen Patnaik announced that the 11^th five year plan for Orissa has an outlay of Rs.32,225 crore and targeted 9% growth for the plan period. This was set against the achievement of 7.26% growth during the first four years vis-à-vis the target of 6.2% of the 10^th five year plan.

In his address, the Chief Minister, Orissa stated that tackling the challenging task of reduction of regional, social and gender disparities and achieving faster, broad-based and inclusive growth needed a three-pronged strategy that included:

(i)               Increasing flow of untied Central assistance to less developed states,

(ii)            Providing greater fiscal space to the states for mobilizing higher resources, and

(iii)          Helping states to reduce their debt burden by swapping high cost debt, including Small Savings debt, with low cost loans.

He impressed that a growth strategy that promotes employment has been rightly given prominence in the 11^th Plan.  Orissa has already put employment generation on a mission mode for achieving convergence of resources and activities under different programmes to generate more employment opportunities for unemployed people.  Development of small scale industries in clusters and ancillarization are also going to be given more attention during the 11^th Plan.

He also stressed that increasing irrigation potential and drought proofing were critical pre-requisites to enhance agricultural productivity.  With a view to increasing assured irrigation in Orissa, he urged Government of India to substantiality increase Accelerated Irrigation Benefit Programme (AIBP) funding for Orissa and to expand the scope of AIBP to include Lift Irrigation projects.  He further requested Government of India to significantly enhance allocations under Jawaharlal Nehru National Urban Revival Mission (JNNURM) and Urban Infrastructure Development Schemes for Small and Medium Towns (UIDSSMT) for providing basic infrastructure facilities in urban and semi-urban areas in Orissa.

The Chief Minister, Orissa further outlined several interventions that were urgently needed for expeditious and inclusive growth of backward states like Orissa.  Some such interventions included:

(i)               higher Central Assistance for infrastructure development in the areas of roads, ports and railways in Orissa and other backward states,

(ii)            enhancement of funding for the World Bank sponsored Orissa State Road Project from US $ 250 million to US $ 360 million and increased Central support for the proposed Ranchi-Vijayawada Highway,

(iii)          establishment of prestigious Central institutions like IIT, IIM and IIIT in Orissa to meet growing needs of skilled manpower for upcoming industries,

(iv)          exemption from income tax and central excise for 10 years for the KBK region on the lines of Special Category States in order to promote industrialization,

(v)             timely revision of royalty on coal and other minerals, on  ad valorem basis and  equitable share of export duty levied by Government of India on major minerals to the mineral rich states,

(vi)          just and adequate compensation for power producing states which bear the brunt of pollution and displacement, and

(vii)        expeditious coverage of all 30 districts under RGGVY and release of funds for the same.

The Chief Minister, Orissa also stressed that the mineral rich states needed to benefit from their natural endowment in a fair and efficient manner and that these states needed to be consulted in assigning mineral concessions.  He stated that value addition within the mineral bearing states needs to be given emphasis and hoped that Government of India shall fully address the concern of the mineral bearing states while finalizing the proposed mineral policy.  He further urged the Central Government to declare Orissa as a Special Category State.

Following is an excerpt from New Indian Express on this.

… Chief Minister Naveen Patnaik has demanded that the royalty be fixed on ad valorem basis.

In a letter to Prime Minister Manmohan Singh, the Chief Minister said that the manner in which the Centre is going to revise the royalty, the State will be a loser. The State has already sustained a huge loss because of two-year delay in the revision.

He urged the Prime Minister to compensate the revenue loss of the State and delete the provision of adjusting the cess collected by the State during payment of royalty. As per the Supreme Court ruling, the collection of cess by the State for the development of the people in the mining areas is justified, he argued.

Under the new ‘hybrid formula,’ the State will get Rs 10 more per tonne of coal which is nothing given the delay in the revision of royalty, he said.

As per the Mines and Mineral (Development and Regulation) Act, 1957, the Centre is bound to revise royalty on coal and other minerals every three years. The Act provides that the State should be compensated accordingly for the delay in revision of royalty.

The latest revision was made on August 1 after five years, the Chief Minister reminded and urged the Prime Minister to compensate the State for the last two years.

I wonder if Naveen is referring to the supreme court judgment regarding Vedanta where the supreme court asks Vedanta to give 5% of its profits for spending towards tribal development and environmental safe guards.