Whose Development Is It, Anyway?

Senior Maoist leader Kobad Ghandy, presently under arrest inside Tihar jail, writes about how mining giants are making obscene amounts of money at the cost of the poor.

Our defeat was always implicit in the victory of others; our wealth has always generated our poverty by nourishing the prosperity of others—the empires and their native overseers. In the colonial and neo-colonial alchemy, gold changes into scrap metal and food into poison.

— Eduardo Galeano in Open Veins of Latin America

It is ironic — the richer the land the poorer its people: Eduardo Galeano, in his above mentioned book said: “The Indians (local inhabitants) have suffered, and continue to suffer, the curse of their own wealth; that is the drama of all Latin America”.

In India too, the richest states of Jharkhand, Orissa and Chhattisgarh are amongst the poorest in the country. Of course, unlike two centuries back in Latin America they no longer exterminate the local population. They induce slow death through starvation, disease and lack of livelihood. Development for some has always been at the cost of ‘development’ for the many.

Tantalum, a necessary ingredient of computers, cell phones, ipods, and so on, is to a large extent, extracted cheaply from Congo which has one-fifth of the world’s deposits. But to extract that (together with gold and tin) MNCs have tied up with warring warlords which has taken a toll of 5.4 million lives since April 2007. Killings continue at the rate of 45,000 per month and Congo has become the world capital of rape, torture and mutilation.

Yes, computers are huge development, but for the people of Congo what does it all mean? Can the super profits of the mining companies and computer manufacturers be slightly reducd so that the people of Congo share in the wealth creation?

In India, too, the concept of development seems to be different for different people. For Ficci, the representative of big business interests, it is one thing and for the Supreme Court of India another.

Ficci, in a report released on 9 November 2009, said: “Just when India needs to ramp up its industrial machine to lock in growth and just when foreign companies are joining the party, the Naxalites are clashing with the mining and steel companies, essential for India’s long term success”. 

The Supreme Court of India in a judgement dated 20 July 2010: “Why is the State’s perception and vision of development at such great odds with the people it purports to develop? And why are their rights so dispensable? Why do India’s GDP and Human Development Index present such vastly different pictures? With the GDP of $1.16 trillion (of 2008) the Indian economy is the twelfth largest and it is the second fastest growing economy in the world. But according to the Human Development Report 2009, the HDI for India is 0.612 which puts it at 134th place among 182 countries”. 

And when we see the Bellary Reddys’ scam who are said to be earning through iron ore mining over Rs 15 crore per day (mostly illegal), the mining scams of Orissa (about Rs 3 lakh crore), the Madhu Koda scam (the Chief Minister earned about Rs 4,000 crore through mining contracts in just two years), one begins to really wonder whose ‘development’ all this mining really entails!!

And yet again, one wonders how much the country gains when we read (Indian Express, July 13) that 30 million tonnes of iron ore has been exported illegally. With royalty ranging from Rs 4 to Rs 27 per tonne of iron ore, the income to the state governments is a pittance. While the mine owners make anything from Rs 4,000 to Rs 6,500 per tonne in profits for every tonne of iron ore, the government gets a mere Rs 27 for best quality ore. Here again, is it the development of our country or that of the mine owner?

Besides with iron ore exports (legal) having increased six-fold in just eight years from Rs 358 crore in 2000-01 to Rs 21,725 crore in 2008-09, does the iron go to build our country or others?

Such are the disturbing questions which face us when we think of the development paradigm related to the mining projects of our country.

Let alone ‘development’, we find massive ecological destruction due to these mining projects. An estimated 164,000 hectares of forest land have been diverted for mining in India. The speed of forest destruction is increasing apace. During 1998-2005, 216 mining projects were granted forest clearance annually as against 19 per year in the 1980-97 period. Just iron ore mining used up 77 million tonnes of water in 2005-06—enough fort the annual daily needs of 3 million people. In addition mining of major minerals generated 1.84 billion tonnes of waste in 2005-06—most of which is not properly disposed.

In human terms too the number of those employed in mining is in fact coming down though production is going up. The formal mining sector employs just 5.6 lakh people. Between 1991 and 2004 the number of people employed in mining came down by 30 percent but the value of mineral production went up several times.

Such then is the devastation that accompanies mining in India. With royalties consciously set low, together with massive illegal mining what nation/region building is at all possible? The following examples indicate precisely this reality at the ground level.

Recently in July 2010, the Karnataka assembly had been in a state of paralysis over the issue but as is the norm there is now silence. Estimates suggest that Bellary is one of the poorest districts of Karnataka which has 1 billion tonnes of iron ore reserves, 60 percent of which are high quality fines. 

The mining of manganese and iron ore, mostly in the last 12 years in the reserved forests of the neighbouring districts of Bellary (Karnataka) and Anantapur (Andhra Pradesh) have played havoc with the region. Environmental organisations claim that about 120 hillocks, 500,000 lakh trees, 2,000 hectares of forests, 10,000 acres of agricultural land, four streams, 17 lakes and 28 ponds have been destroyed. Farm lands surrounding the 4500 hectares of mines have been declared drought-prone and red dust from mining has drastically reduced agricultural produce.

The Reddy’s entered the scene late—around 2005 after involving in the by-election of Sushma Swaraj who was pitted against Sonia Gandhi in Bellary. Till then the Reddy brothers were running a chit-fund company which spread throughout Karnataka with 46 branches. This closed down in 2005 with reports of charges of cheating. Though the mere sons of a head constable of Bellary, it is after this election that the Reddys witnessed a meteoric rise.

With Bellary mines already leased out to 65 mine owners the Reddys entered the field from neighbouring Anantapur, with the assistance of the erstwhile Chief Minister YS Rajasekhara Reddy. But with the quality of ore being poor in Andhra they had their eyes on Bellary. Using a combination of muscle power and political clout, they took 48 of the 56 mines on ‘contract’. Though they mined in Bellary they showed the ore came from AP while transporting it to Karnataka ports for export.

The boom in iron ore demand since 2005-06, fuelled by huge demands from China, resulted in gigantic profits with prices soaring to Rs 7,000 per tonne. Transporting 10,000 truckloads a day, the Reddy would make over Rs 20 crore per day when prices peaked. Even on lean days they would make Rs 12 crore. That means they were making a cool Rs 5,000 crore per year.

Added to this with the two brothers now as cabinet ministers, and one as Bellary city MLA, and close confidant Sriramulu as state health minister it was not surprising that the Reddys could make even the chief minister bend to their dictates. Today they run Bellary as their personal fiefdom and have built an empire that would make big-time dons look small fry. Janardhan Reddy is building a virtual palace in Bellary. The 500 metre approach road is monitored by CCTV round the clock. One part of the house is shaped like a cottage. The newer part has 60 rooms spread out over an acre. He has over 20 armed guards guarding the place round the clock. There are rows of SUVs waiting. A helipad is being built for his two helicopters. There are bomb-proof shelters. Next door is an equally magnificent palace of Sriramulu—both being connected by an underground passage.

The present commotion in the assembly was over the disappearance of 500,000 tonnes (worth Rs 260 crores) seized at a port as being termed illegal by the High Court. But this was just the tip of the iron ore iceberg scandal. The Deputy Conservator of Forests’ application to the High Court revealed that between November 2009 and February 2010 a total quantity of 57 lakh tonne was exported from Karnataka ports; but the total amount of transport permits issued was for just 22 lakh tonne. That is, a huge 35 lakh tonne was transported (and exported) illegally.

In May 2010, 5 lakh tonne was seized. But on June 10, it was discovered even this had been exported. Sometime later, the Deputy Conservator of Forests was transferred.

Orissa has 33 percent of the country’s iron ore and 50 per cent of its bauxite; yet it is one of the poorest states with 60 per cent living in abject poverty.

Broadly, there are two methods of plunder. Firstly, there is the mining mafia without any license. Second, mining is allowed to take place well beyond the licenced limits. Some of the largest mining companies are involved in these rackets.

To take the first category: over 60 per cent of Orissa’s mines do not have clearance. The Supreme Court appointed CEC (Central Empowerment Committee) has found that 215 out of 341 working mines in Orissa are operating without statutory central government clearances. Even more shocking is the fact that some mines have been in business for years without even submitting a statutory mining plan—37 have been in operation for 15 years.

Now let us turn to examples of the second category:

According to a report of the Indian Bureau of Mines, between 2001-02 and 2005-06 Essel Mining dug out 20.6 million tonnes of iron ore in excess of its permitted limit of just under 2.6 million tonnes. The value of the excess ore exceeds Rs 4,000 crore. Another mine, operated by SR Rungta Ltd, one of the largest ore exporters in the country, was discovered (in 2007) to have extracted 20 million tonnes of ore illegally over ten years from 22.6 hectares deep within the forests. The enquiry revealed that Rungta had manipulated the production and dispatch of iron ore to the tune of 10 million tonnes in 2007-08 alone.

Even given the low royalty rates the state exchequer has lost some Rs 14,000 crore through such frauds. Most of the illegal mining is in the Maoist districts of Keonjhar and Sundergarh.

And now, into this scenario, enters the notorious Vedanta, mining bauxite. Surprisingly this company has been allowed to mine in the face of intense opposition both in India and abroad.

In 2004, the Supreme Court’s CEC deputed a fact finding team. In its report submitted to the Court in 2005, the CEC recommended closure of the project citing grave environmental and human rights concerns. It also stated “the displacement was opposed vehemently by the villagers despite being offered large cash compensation. In the face of resistance, the District Collector and company officials collaborated to coerce and threaten them. An atmosphere of fear was created through the hired goons, the police and the administration. Many tribals were badly beaten up by the police and goons”.

Yet what is astounding is that the Supreme Court, in a 2008 judgement ignored the findings of its own committee and allowed construction (albeit under the banner of Sterilite Industries India Ltd, a subsidiary of Vedanta).

In addition a report of a 3 member team of the Union Environment and Forest Ministry said that Vedanta failed to follow the Forest Rights Act. It added, ‘The Niyamgiri forest has been proposed as a wild life sanctuary …removal of bauxite will impact ground water levels and consequently the quality of forest lands.’

Acting on the basis of these reports other foreign investors withdrew their money from Vedanta. The Edinburgh based investment management company Martin Currie sold its stake of £2.3 million (Rs 20 crore) in Vedanta in August 2008 on ethical grounds. The Church Of England following advice of its Ethical Investment Advisory Group disinvested its holding in Vedanta of £810,750 (Rs 6.5 crore).

But in India Vedanta continued its activities creating environmental devastation in the Niyamgiri hills, particularly, three villages on the foothills face devastation. Rengopalli village is enveloped in smoke with the refinery just 500 metres away. It is also close to the Red Mud Pond, built for the refinery’s alkaline waste disposal—containing iron oxide, silicon and titanium (radioactive). Villagers complain of cattle dying and trees not bearing fruit due to contamination of the ground water. The Pond also pollutes the Vamsudha river—the main source of water. The amount of waste dumped is huge as for every tonne of aluminium produced one tonne of toxic waste is dumped.

Chattrapur village also faces similar problems from the ash pond located just outside the village.

Meanwhile, Vedanta, at its Annual General Meeting reported a quantum leap in its profits. Yet, Orissa and its 7 million adivasis continue to live in the quagmire. For the shareholders of Vedanta and its owner the mining project signifies development, but for the residents of these areas it means despoliation.

The three tribal dominated states of Orissa, Chhattisgarh and Jharkhand are the most productive mineral bearing states of the country. They account for 70 percent of India’s coal reserves, 80 percent of its high grade iron ore, 60 percent of its bauxite and almost 100 percent of its chromite reserves. Of the top 50 mineral producing districts in the country, almost half are tribal and are among the 150 most backward districts of India. But ‘development’ there has been as mineral production has been rising exponentially from Rs. 25000 crores in 1993 to Rs. 84000 crores in 2005-06—and this is only the ore mined legally. While tribals who are just 8 percent of the population comprise 40 percent of the 6 crore displaced people in the country.

In spite of the devastation mining projects have been planned on a scale unseen in the past. According to estimates of the Centre for Science and Environment the land required for mining in the next 20 years is equivalent to the land leased out for mining in the last 60 years.

So the Chhattisgarh government, since 2006, has signed 102 MoUs with industrial houses for production of steel, iron, power, cement, aluminium and even for gold and diamonds. Some of the MoUs are with foreign giants like De Beers, BHP Billiton, Rio Tinto and Arcelor Mittal. All agreements were signed on the basis of private negotiations without any fare competition. 

In Jharkhand, if all the 104 MoUs the state government has signed with 66 companies resulting in mining licenses materialise, 1.33 lakh acres of land would have to be evacuated and around 20 lakh families displaced. Already, Jharkhand tribals have witnessed the maximum devastation. According to the Annual Report of the Union Ministry of Rural Development, Jharkhand tops the list of Adivasis who are land alienated in India with 86,291 cases involving a whopping 1,048,930 acres. Of these, only 20 percent have been officially rehabilitated. So, more of the same devastation is in store.

In Andhra Pradesh huge deposits of bauxite in the Arku valley (in Vizag) have virtually been gifted away by the state government to the Anrak and Jindal groups. As per the agreement, assuming 7.5 million tonnes mined per year, the state government would get a royalty of just Rs 64.5 crore per year. On the other hand Anrak will make a profit of Rs 2,350 crore per year and Jindal Rs 1,260 crore. While one lakh, mainly tribal people, will be rendered homeless in the Arku valley alone; barely 400 tribals will get job.

It seems a pattern whereby state exchequer gets next to nothing—either through illegal mining or ‘legal’ mining with agreements like the AP-type. So we find that even in the North East massive illegal coal mining activities are taking place in Meghalaya, Nagaland and Arunachal Pradesh by small producers at the behest of big players.

Unfortunately it is the Maoist problem which is inducing a re-think of the government regarding the mining policy, tribal welfare and environment protection. The problem needs to be seen in its own light, regarding the future and development of our country, and not merely as a knee jerk reaction to a Maoist problem. No matter even if a reaction, it will be positive if the fruits of development really begin to reach the people.

As yet, most of this re-thinking is at the consideration, statement or ‘reports’ level, and yet have to be converted into policy.

The first is the finalisation of the proposed Mines and Minerals (Development and Regulation) Act which is considering giving tribals 26 percent equity in the ownership of the these mines or an equivalent in revenue. It is also being debated whether this should go to the individual tribal or to the community. But of course it adds that it is the state government who will identify the affected people…of course through the gram sabha or district council or panchayat. But it is the state governments that have been primarily responsible for the massive mining loot, sharing in the spoils.

We have seen above the state governments and local politicians are deeply intertwined with the mining interests—legal and illegal. The less the royalty they take, there is no doubt the more they take personally—eg. the Madhu Koda affair. But this is not mere speculation, it is concretely mentioned in a government’s own report of the Union Rural Development Ministry.

The report entitled “State Agrarian  Relations and Unfinished Land Reforms” was comprised of a 15 member high profile committee headed by the then minister CP Joshi himself. It was set up in January 2008 and the watered down version of the original report was presented in March 2009. Yet, it presents a scathing indictment of the government policy.

The report says the present policy “is the biggest grab of tribal land since Columbus”. The report is devastatingly frank about collusion between government and big business, even accusing the latter for funding and fuelling the Salwa Judum in Chhattisgarh. It suggests radical changes in land management, stressing that the cycle of growing landlessness, poverty and violence is a natural outcome of the governments’ neo-liberal economic agenda. It also warns that if immediate steps are not taken, it is bound to result in a downward spiral.

In fact the Prime Minister himself has gone on record as saying (Hindustan Times Nov. 14, 09) that “there has been a systematic failure in giving tribals a stake in the modern economic system…the alienation built over decades is taking a dangerous toll…The systemic exploitation of our tribal communities…can no longer be tolerated”.

Also very recently the Attorney General has allowed the Environment Ministry to, if necessary, take action against the Vedanta project in Orissa, notwithstanding the Supreme Court Judgement.

All these reports and statements reflect at best god intentions, but where is the action? For intention to turn into policies the politicians will have to take on the Reddys, the Khodas, the Vedantas and the big business houses (India and foreign) and make them toe the law and interests of the people and country. The nexus between politicians and big business will have to be broken. Immediately, after the 26 percent equity suggestion came, the powerful mining lobby headed by Rungta vehemently opposed it.

The question here is to turn intentions into implementable actions. For this, to begin with, all MoUs should be made public and not allowed to be signed in secrecy. Then, the first step would be to implement a total ban on the export of iron ore as suggested by the Union Minister (ToI, June 5 2010) and also the Karnataka Chief Minister.

The second step would be to implement a strict ban on all illegal mining and increase the royalty to a minimum of 10 percent. This has also been suggested by the government.

The third step must be that the benefits of mining projects go to the people of the area. This cannot be restricted to 26 percent equity with the beneficiaries being decided upon by the state government. Besides this, it has to entail a detailed holistic approach where the stakeholders are the direct beneficiaries—with no go-betweens. All know that most funds meant for the poor are generally swallowed up by the numerous intermediaries. The gram sabhas and their committees must be the direct stakeholders. The holistic approach should entail employment, education, health, cultural and other facilities.

Fifth, srict environmental controls should be established and under no conditions should the land, water, air trees, etc. be destroyed. This too must be overseen by the people and their committee. Massive afforestation programmes should be undertaken to make up for the loss of foliage. Environmental standards must at least be equivalent to those adopted in the West.

These are just some minimum steps to be taken if mining projects are to be linked to the development of the country and its people. The essence must centre around the livelihood of the dwellers of the region and preservation and development of the life and culture of the traditional inhabitants. This alone would mean development of the region as part of development of the country. Till today what is entailed is mere development of the mining houses and those who gain from the spoils of collaboration. One hopes that the spirit of the latest Supreme Court decision is taken up in government policy.

Meanwhile RTI activist Amit Jethwar was killed in broad day light in Ahmedabad as he was seeking to expose the illegal mining taking place in the Gir forests.

About The Author

Kobad Ghandy