ForumIAS announcing GS Foundation Program for UPSC CSE 2025-26 from 19 April. Click Here for more information.
ForumIAS Answer Writing Focus Group (AWFG) for Mains 2024 commencing from 24th June 2024. The Entrance Test for the program will be held on 28th April 2024 at 9 AM. To know more about the program visit: https://forumias.com/blog/awfg2024
Synopsis: For ensuring Intergenerational Equity, it is important to ensure availability of resources for future generation. For this, sustainable mining should be ensured.
Introduction
But Present trend of mining as much as possible, is not according to the role of trustee acquired by the government in its policy. The extraction of oil, gas and minerals is effectively the sale of this inheritance.
What are the issues in mining trends at present?
- First, governments without their role of trustee in mind, end up with a mineral price that is considerably lesser than what they are worth.
- For example, it is projected from the yearly reports of Vedanta that from 2004 to 2012, Goa lost more than 95% of the value of its minerals. They sold mineral wealth worth 100 rupees for 5 rupees.
- Second, extractors try to extract as much as possible and move on quickly to reduce their cost and maximize their profits from an area.
- Third, the government also allows the hasty extraction, as it perceives more mining equals more government revenue.
What are the steps to be taken?
The Government Accounting Standards Advisory Board needs to correct this error in the standards for public sector accounting and reporting for mineral wealth.
- There should be legal safeguards against unregulated mining and minerals should be considered as a shared inheritance.
- The state as trustee of mineral wealth must collect the full economic rent i.e., sale price minus the cost of extraction and cost including profit for the extractor. The full value of the extracted minerals should be received by the state, according to India’s national mineral policy 2019.
- India can also maintain the entire mineral sale profits in a Future Generations Fund like Norway did. This Fund could be submissively financed through the National Pension Scheme framework.
- The Supreme Court gave a judgement in Goa Foundation vs UOI & Ors and ordered the creation of a Goa Iron Ore Permanent Fund in 2014, which already has an amount of ₹500 crores.
- This may be distributed as a citizens’ dividend, equally to all the owners and future generations would benefit from the dividend in their turn.
Way forward
- The principle of fair mining in return of its real value is fully constitutional, promoting justice, liberty, equality, and fraternity. The reduction in losses would also limit corruption, crony capitalism and growing inequality.
