The government appears to be moving towards finalising legislation to ensure that those displaced by mining projects get 26 per cent of the profit accruing from them.
This is in response to the growing realisation, after the rise of militancy in central India, that those dispossessed by such projects, mainly forest-dwelling tribals and cultivators, need to be made a part of the development process as winners, not losers.
The intention is sound but the device chosen is not. Government cannot pre-empt revenues like this and hurt mining interests. There are other ways in which government can raise revenues rather than eat into profits, and that too in perpetuity.
After all, there is also the issue of inter-generational equity involved here. Industry associations have opposed the idea on the ground that this may make such projects unviable.
While that was seen as largely the stance of the private sector, the opposition to the idea has now been strengthened by public sector giant Steel Authority of India Limited (SAIL) joining the naysayers.
The SAIL chief's contention is that currently mines are owned by the company which handles the entire steel-making process; creating a separate entity for mining will be problematic.
It is also worth noting that a share of the profits may not be good for the displaced in the long run as there can be periods of losses (mineral prices can crash during a serious economic slowdown) and imaginative accounting can turn black into shades of red even in good times.
The best way to proceed in this matter is not to lose sight of the fundamentals. If tribals and cultivators, deprived of their traditional means of livelihood by development, should benefit and not suffer from it, then how best to go about the task?
Paying the entire compensation as a lump sum is not a good idea. Those not used to seeing big money can blow it up, aided and abetted by sharks. The cardinal aim must be for the displaced to acquire new skills and new means of livelihood with the help of the capital available as compensation.
Hence, the Haryana model of splitting up the compensation into a lump sum component and an annuity that runs for 30 years is gaining acceptance. But the question of training and help to start new ventures remains, as also the need to recreate displaced communities and preserve at least some parts of their tradition.
Tata Steel, the other integrated steel maker which says it has always shared its prosperity with neighbouring communities, has made some suggestions. Make the social cost of resettlement a part of operational costs, not profits, during the life of the mine.
It can be levied in the manner of mining royalty. It also focuses on the utilisation of the levy. This should be done in consultation with the community, possibly through a trust or local development body in which the community, government and the corporate house in question participate.
In reality, money is only a part of what it needs to help people learn new means of livelihood and sustain and rejuvenate their communities after the disorientation of shifting.
Knowledgeable public-spirited individuals have to help, hence the notion of a trust.
