IASbhai Daily Editorial Hunt | 19th Jan
“I don’t regret the things I’ve done, I regret the things I didn’t do when I had the chance.” – Unknown
EDITORIAL HUNT #321 :“National Mineral Policy Analysis | UPSC”
National Mineral Policy Analysis | UPSC
Rahul Basu is the Research Director at the Goa Foundation and a member of ‘The Future We Need’, a global movement to make intergenerational equity foundational for civilisation beginning with minerals
Mining in India equals selling the family gold
Treating mineral sale proceeds as revenue or income hides the real transaction — the sale of inherited wealth
SYLLABUS COVERED: GS 3 : Mining
Mining in India has not been a profitable gig since independence . Discuss -(GS 3)
- Intergenerational equity
- How it is sustainable?
- Losses, Errors in accounting
- Way Forward
- SUSTAINABLE ECONOMIES : The principle that the economy must be “sustainable” — we cannot compromise the ability of future generations to meet their needs — is beyond question.
- EQUITY AMONG GENERATIONS : The principle of Intergenerational Equity would make it imperative for us to ensure future generations inherit at least as much as we did.
- ADDICTED TO SELL : To consume what we have inherited without a thought for generations to come will leave the whole world poorer; like an addict selling the family gold.
HOW IT IS UNSUSTAINABLE
- NATIONAL MINERAL POLICY : India’s National Mineral Policy 2019 states: “natural resources, including minerals, are a shared inheritance where the state is the trustee on behalf of the people to ensure that future generations receive the benefit of inheritance.”
- EXTRACTION TURNS INHERITANCE : The extraction of oil, gas and minerals is effectively the sale of this inheritance, with royalties and other proceeds being the consideration paid in exchange for the mineral wealth extracted.
- DEFINITION : Unfortunately, State everywhere treats the mineral sale proceeds as revenue or income, a crucial error which hides the real transaction — a sale of inherited wealth.
- ILLEGAL MINING : This results in the States selling minerals at prices significantly lower than what they are worth, driven by lobbying, political donations and corruption.
- HIDDEN TAX : Any loss is effectively a hidden per-head tax which makes a few extractors and their cronies super rich. Inequality grows sharply.
LOSSES, ERROR IN ACCOUNTING
- LOSSES IN MINING WORLDWIDE : There is growing empirical evidence of large losses in mining from around the world.
- SUSTAINABLE MINING : International Monetary Fund indicates that many governments of resource-rich nations, including the United Kingdom and Norway, face declining public sector net worth, i.e., their governments are becoming poorer.
- LOSS IN MINERAL VALUE : Losses in mineral value drive many of the other problems with mining.
- EXTRACTION TECHNIQUE : Naturally the extractors are keen to extract as quickly as possible and move on.Trees, tigers and tribals are labelled as anti-development or anti-national.
HOW TO MANAGE IT
- CONSERVATION : Since minerals are a shared inheritance held in trust for the people and future generations, our foremost duty is to maintain the value of our children’s inheritance by avoiding theft, loss, waste or consumption.
- MINERAL HEALTH : Leaving the minerals undisturbed fulfils our duty.Therefore, if we extract and sell our mineral wealth, the explicit objective must be to achieve zero loss in value; the state as trustee must capture the full economic rent.
- EXAMPLE FROM NORWAY : Like Norway, the entire mineral sale proceeds must be saved in a Future Generations Fund.
- PASSIVE INVESTMENT : The Future Generations Fund could be passively invested through the National Pension Scheme framework.
- EQUAL SHARING : The real income of a fund of this nature may be distributed only as a citizens’ dividend, equally to all as owners. Future generations would benefit from the dividend in their turn.
ON FAIR MINING
- LONG TERM DOMESTIC CAPITAL : Lower inequality leads to higher economic performance, and as budgets no longer have easy mining money, public investment, and tax administration will become more effective and efficient.
- PROMOTING CONSTITUTIONALISM : These principles of fair mining are fully constitutional, promoting justice, liberty, equality, and fraternity.
- REDUCING CRONY CAPITALISM : The reduction in losses would limit corruption, crony capitalism and growing inequality.They fulfil our duties to our future generations.
Let us be the generation that changes the course of history for the better, not the one that consumed the planet.