A decade has passed the mining of iron ore, a major backbone of the Goan economy since its liberation in 1961, has yet to start. Why? Because it was banned by the Supreme Court in 2012. Why was it banned? Was it because Goa Foundation, an NGO led by Dr Claude Alvares, went to the Supreme Court? Or because the Supreme Court confirmed through the investigation conducted by Justice Shah Commission that Goa was blatantly involved in Illegal Mining? Who was the culprit? Goa Foundation or the Government of Goa led by its corrupt politicians in collusion with the mining leaseholders?
When the growth of the Goan economy came to a grinding halt in 2012 with a ban on mining, everybody, including the trade unionists, made Dr Claude Alvares of the Goa Foundation, the Villian. As though he had passed the judgement and he is the Chief Justice of India. We did not even bother to think that the court has found his allegations valid, verified by a Commission headed by a retired Judge and the blatant ‘theft’ of our own mineral wealth was confirmed by the highest judicial body of this country.
What is the ultimate outcome of the whole legal exercise, today?
The Portuguese had handed out 791 concessions – called Titres de Concessao – from 1929 onwards to various persons and companies, with each concession ranging from 20 to 100 hectares. They called themselves ‘mine owners’. When Goa became part of independent India, these mines were brought under the central mines act, from October 1963. Its basic principle is that all the natural resources underground belong to the State and not any private person.
But the so-called ‘mine owners’ challenged it, claiming that the concessions were granted to them ‘in perpetuity’, which means for endless time, by the Portuguese. They won the first battle in the Goan court, but lost the war in the Supreme Court, in 1981.
Subsequently, in 1987, the Government of India abolished the mining concessions and brought them under the MMDR Act. They were converted into ‘deemed leases’ for 20 years, which were to end in 2007. But the government renewed the leases while the China boom shot up iron ore prices from US$ 15 to US$ 180. The ore export zoomed up from 12 million tonnes to 54 million tonnes by 2012.
THE DAYLIGHT ROBBERY
Justice Shah Commission and then the Central Empowered Committee, both set up by the Supreme Court, established two hard facts:
The operation of iron ore mining from 2007 to 2012 by the deemed leaseholders was blatantly illegal since the leases expired in 2007.
When total iron ore exports during these five years were actually around 1950 million tonnes, production was shown only at 1554 million tonnes. It meant that around 396 million tonnes were exported illegally, without even paying taxes.
The Justice Shah Commission, as we all know, marked the losses at Rs 35,000 Crore. They continued mining without being the leaseholders from 2007 onwards, mined outside the lease areas, and exported ore by evading taxes. This daylight robbery was committed during the Congress regime. Later on, during the BJP regime in 2014, once again 88 ‘active’ leases were renewed, which were again struck down by the Supreme Court. According to Dr Alvares, Goa once again lost Rs 3300 crore due to this.
END OF THE LEASE ERA
But finally, the Supreme Court order prevailed, the lease era was over, and the apex court ordered in 2020 that all leases should be taken over and auctioned as blocks. Since then, now the mines belong to the People of Goa and not the ‘mine owners’ any more. Like how government-owned cashew plantations or ‘Manos’ (sluice gates) for fish are auctioned, the mines are now being auctioned for a limited period of 50 years.
IRON ORE RESERVES OF GOA
COST @US 100/TONNE
RS 3 LAKH CRORE
MT: Million Tonnes (Figures rounded up)
Source: Indian Bureau of Mines
Out of the 25 mining blocks, only six have been auctioned till date in the first phase. More are in pipeline. The procedure would go on till all the blocks are auctioned. But even if all the blocks are auctioned, not more than total 20 million tonnes can be extracted every year together, from all the blocks. That’s the cap the Supreme Court has imposed to arrest boundless mining. We need to preserve it also for our future generations. That’s the spirit of the new mining policy.
Dr Claude Alvares and his colleague Rahul Basu, have recently published a book: “The Supreme Court and Intergenerational Equity: The Goa Mining Case”. The 300 and odd pages of the book tell us the whole history of Goa’s mining and the court battles, including the judgements etc. It also tells us how iron ore reserves need to be looked at as inter-generational equity. At the function held to release the book, both of them made two separate presentations. They were simply the real eye-openers. (Both are available on Prime TV YouTube channels).
FIVE PER CENT V/S NINETY-FIVE PER CENT
Dr Alvares, at this function, provided the audience with a break-up of the first four blocks auctioned, as follows:
MINERAL SALE PROCEEDS OF FOUR MINING BLOCKS
(Value in Rs Crore)
Value of Ore
Estimated Mineral Sale Proceeds to Govt of Goa
Will this table open our eyes, at least now? What does it tell us? Forget the 15% royalty or the 10% of the amount kept in reserve as the Goa Iron Ore Permanent Fund (GIOPF) for our future generations as per the new mining policy, the Goa government would get 75% of the amount from the sale of the iron ore. This will come directly to the government treasury. All these years, under the pretext of the leaseholders being the ‘mine owners’, this whole amount was going to them. We were getting only five per cent, in the form of royalty, some amount in the form of different taxes and the charity like schools, hospitals etc built by the ‘mine owners’ (No doubt that has been their valuable contribution to Goa’s economy and social upliftment even when there existed no concept of Corporate Social Responsibility – the CSR).
It is also a good sign of gesture that the same leaseholders, who were yesterday’s ‘mine owners’, have accepted this new concept in principle and have bid for the auctions. They will now hopefully partner with the government to develop Goa socio-economically in tune with the new mining policy.
But this is not the complete picture. The amount shown in the above table will increase multifold once 20 more blocks are auctioned. But this whole amount will not come to the treasury as soon as mining activity starts. There is a cap for not extracting iron ore of more than 20 million tonnes annually.
OVER 6000 CRORE PER YEAR?
Based on the first four blocks being auctioned, Rahul Bose presented a rough picture of how rich the public treasury would be every year, once mining starts.
ANNUAL REVENUE GENERATION
@20 MT OF ORE EXTRACTION
Mineral Sale Proceeds
Rs 6304 Cr
Rs 4734 Cr
Rs 937 Cr
Rs 624 Cr
According to the authors of the book, if they are not wrong, during the entire period of eight years from 2004 to 2012, the state received only five per cent (5%) of the legal sale of ore. The major component of it was royalty. Minerals worth Rs 51,655 crore were exported and the public treasury received only Rs 2387 crore in the form of royalty. This means, on average, less than Rs 300 crore per year. Now, the amount of royalty would increase three-fold, nearly Rs 1000 crore. And in addition, the premia over the sale of ore is five times more than what we will get as the royalty. Nearly Rs 5000 crore. The total revenue would be over Rs 6000 crore!!!
Chief Minister Dr Pramod Sawant recently presented the annual budget in the Goa Assembly last month. These are some of the major highlights, in terms of revenue generation.
ESTIMATED TAX & NON-TAX REVENUE INCLUDING MAJOR ESSENTIALS (2022-23)
State Tax Revenue
Rs 6341 Cr
State Non-Tax Revenue
Rs 3226 Cr
Rs 9467 Cr
VAT on Petrol-Diesel
Rs 1686 Cr
Rs 578 Cr
Rs 172 Cr
Rs 437 Cr
Health (Patient fees & charges)
Rs 8 Cr
Rs 2881 Cr
Theoretically, if we look at these figures, we will realise that taxes imposed by the state government could be totally wiped out and Goa can be made a ‘tax-free state’, if we utilise the annual returns we will get from mining in a calculative manner. The state tax revenue is a little over Rs 6000 crore while Goa will annually earn around Rs 6000 crore from the auction premia and royalty from mining. But this need not be practically viable when Goa annually gets over one crore tourists and part of these taxes are also recovered from them, compared to hardly 15 lakhs of the population of Goa.
Soon after the presentation of the budget, within a week, the Goa government announced a second hike in power tariff – this time 5.19% – across the board, made applicable to the domestic consumers as well as the commercial establishments. Do we really require to squeeze Goans with such a hike, that too when there is more power consumption in the summer season?
A few years ago, then chief minister Manohar Parrikar, one of the best financial managers Goa has experienced, had literally scrapped the VAT on petrol and diesel. In this year’s budget, the major component of tax returns coming from ‘major essentials’ shown in the above table is coming from the VAT on petrol and diesel – Rs 1686 crore. In addition, revenue generation through power and water tariff, fees and charges collected from patients at GMC hospital and other health centres as well as different types of taxes and fees imposed by the transport department on vehicles add to Rs 2881 crore. Can’t the Goa government provide total relief to Goans by writing off taxes and fees on such essentials as water, power, health etc? Of course, the excess and wasteful misuse could be controlled by imposing a cap on the usage of water and power.
The biggest challenge the whole world is facing today is the future of Special Children when they grow up. Can’t Goa build state-of-the-art facilities for these children to make them self-reliant and make all necessary lifetime provisions for them?
INTER-GENERATIONAL PERMANENT FUND
In addition, Goa becomes the first state in India, where we will create a Permanent Fund for the future generations. For this, as per the Supreme Court guidelines, Goa Iron Ore Permanent Fund (GIOPF) has been created. As per the provision, 10 per cent of the sale proceeds must be deposited in GIOPF and should be utilised for future generations. Around Rs 500 crore has already been accumulated so far through e-auction of the ore etc. Around Rs 624 crore would be added to it every year.
Goa Foundation has floated the idea of transferring 100 per cent of sale proceeds to the GIOPF. It would, according to Dr Alvares and Mr Basu, would create a huge amount of reserves for the generations to come. If implemented, for a population of around 15 lakhs, each Goan could get a monthly dividend of around Rs 9000.
However, this concept was also opposed by some panellists at the book release function while they proposed various alternatives. Some panellists vehemently opposed freebies and proposed to utilise the reserves for productive usage.
Goa is perhaps the only state in the country which prepares a Regional Plan every 10 years. Along similar lines, Goa also needs to think about implementing this unique concept of intergenerational equity by creating such a Permanent Fund. How it should be utilised for future generations requires a DEEP THOUGHT, like how experts came together to chalk out a vision document, called RPG21, after the most disastrous RPG11 was scrapped.
In a similar manner, after banning mining for over 10 years now, Goa needs to chalk out a similar Vision Document for the utilisation of the GIOPF, for the next 50 years. It needs to chalk out the responsibilities of the ore extractors, the government and towards the people whose land is destroyed to extract this mineral wealth. Not by keeping in mind the Development Index (of constructions, constructions and constructions….) but the concept of the Happiness Index! To make Goa a real Happy State!!!
(This article previously appeared in the annual magazine of Prime TV, on the occasion of its anniversary on 21 April 2023)