Friday, 8 July 2011

New mining bill

Just a quick though on the new mining bill, the draft of which has been put up yesterday. The crux of the bill: 26% of net Profit of all miners to be shared amongst locals. All core non-mining related companies involved should disburse 100% of royalty paid to the locals.

I find this quite ridiculous. If the govt were really interested in ensuring that people get their just desserts, so to speak, they should probably look for some kind of affirmative action (read: preference given to tribal people working in the mines in some capacity) as opposed to a 26% tax on miners.

a. How does anyone ensure that this 26% goes to the right people. [Just for Coal India, last year PAT was ~4000 cr. 26% translates to 1000 odd crores. Non-miners like SAIL and NMDC in this field paid a royalty of 4000 cr last yr to the govt... which would mean 4000 crores to the "locals"]
b. Is there a good way of finding who the locals are and they get their due? Is there going to be an audit to ensure the process and the trials and tribulations involved are transparent?
c. Time and again, we see that the best way to involve and grow society and make it grow at a decent rate is to educate it and give it ample job opportunities. How will a yearly money transfer change things and the status quo? Why are the other options not being brought to the table?
d. If the current PM who understand economic incentives doesnt get it, who ever will?

The way it looks, its a generous way of ensuring that wealth can be transferred from one place to another in ingenious ways without accountability. Kudos to the guys behind this idea.