New mining rules to create national and state funds

Sharing of 26 per cent of annual profits by mining companies with tribals is not the only legislative measure proposed in the Bill being finalised by the 10-member Group of Ministers (GoM) after discussions spanning six months. A final meeting of the GoM is likely soon to approve the draft.

The Mines and Minerals (Development and Regulation) Bill, 2010, the text of which has now been finalised by the GoM, headed by Finance Minister Pranab Mukherjee, has provision also for creation of funds, at both national and state level, to check illegal mining and ensure investment in local development for areas affected by mining operations.

For creation of a National Mineral Fund (NMF), the government will levy a cess on major minerals. “The central government shall establish a fund to be called the National Mineral Fund. The proceeds of the cess levied shall first be credited to the Consolidated Fund of India, and the central government may, if Parliament by appropriation made by law in this behalf so provides, credit such proceeds to the National Mineral Fund from time to time,” states Section 50 of the draft.

The cess to be credited to the fund will be levied as excise duty where the ore is sold to an end-user and as customs duty where the ore is exported, at a rate which will not be increased more than once in five years.

There are provisions in the revised draft for creation of a similar fund in each state. The proceeds from the NMF will be utilised for various purposes including prevention of illegal mining through commissioning of surveys, making grants for the National Mining Regulatory Authority and National Mining Tribunal Fund, and local area development, among others.

CAG INVOLVEMENT
The NMF will be under the administrative and managerial control of the central government, which will prepare an annual statement of accounts for this fund in consultation with the Comptroller and Auditor General of India.

On similar lines, the state governments will create State Mineral Funds in every district where mining leases have been granted. The amount credited to the state level fund will be channelised for, among other things, rewarding whistle-blowers on illegal mining, Section 53 of the draft Bill states. “A whistle-blower is a person who provides credible information of illegal mining.”

The state-level fund will also be channelised for financial assistance to the District Mineral Foundation. Which, in turn, will make payments of monetary benefits on a monthly or quarterly basis to all members of families affected by mining operations.

After its introduction in the winter session of the Parliament, the Bill is likely to go to a standing committee of both Houses for further deliberation. Private sector mining companies are already opposing the 26 per cent profit sharing provision. The Tatas, for instance, which run the private sector giant, Tata Steel, had recently said the government should not charge the profit shared as separate tax, as social obligation forms a part of the operating cost of the company.

The new mining legislation also has provision for setting up a central regulator for the mining sector to check the rampant illegal mining practices in India.