Sending a clear message that it means business when it comes to economic reforms, the Modi Government on Friday passed two crucial legislations, Mines and Minerals (Development and Regulation) Bill and Coal Mines (Special Provision) Bill, related to the coal and mining sectors. The legislations will help the Government unleash the potential of these valuable natural resources and augment growth in cement, steel and power sectors. The overall impact of these measures will also be felt on the GDP, that will be pushed up and employment-generation will also get a boost.
These Bills replaced Ordinances that were promulgated to allow mining and coal block auctions. The Bills cleared the Rajya Sabha hurdle with thumping majority, with only the Congress and the left parties opposing them. Together with the insurance sector reform Bill that was passed recently, the Government has been able to carry out most of the promised reforms during the first half of the Budget Session.
Expressing happiness over passage of three key economic legislations in Parliament in the first leg of the Budget Session, Finance Minister Arun Jaitley said that the insurance sector is expected to get a lot of foreign investment. “Three major pieces of legislations, the insurance law, mining, coal allocation Bill, have all been approved by Parliament. Therefore, now there will be a lot of investment that we (will) get in the insurance sector,” Jaitley said outside Parliament.
The two important legislations will help in revival of power, cement, steel and metal sectors besides boosting employment generation, but first, it will pave the way for auction of hundreds of mines containing minerals like iron ore, bauxite, etc, in the first phase. In all, 199 mines have been identified so far for auctioning.
Following the legislation, States are likely to launch the auction process in June for allocation of mines, having iron ore and other minerals. Mines Minister Narendra Singh Tomar said these mines will be auctioned for the first time under simplified and transparent rules to attract investment in the sector and will bring “revolutionary change”.
He added it would also help in bringing out the untapped potential of the sector with two per cent of the royalty fixed to be used on exploration activities. “Exploration (of minerals) will get a boost. The process will be simplified and investment will come in,” Tomar said. Industry bodies like CII, FICCI and Assocham said the new law will help bring transparency in auctioning of mines, boost investor sentiment and kick-start industrial growth.
The coal mine Bill and the Government’s thrust to revive this comatose sector comes in the backdrop of the fact that India has to meet a major part of its coal requirement through import despite being blessed with the world’s fifth-largest coal reserves. The country is also among the first three coal producing and consuming nations. But the sector has been left to the mercy of Government interference and the coal mafia. The Coal Mines (Special Provisions) Bill, 2015 provides legal framework for auction of coal blocks. The Government has already auctioned 33 blocks garnering a revenue to the tune of over Rs 2.13 lakh crore, surpassing the former CAG Vinod Rai’s estimates of a Rs 1.86 lakh crore-loss.
Delay in awarding coal blocks to highest/lowest bidders is causing uncertainty in the industry and grave concern for investors. One of the objectives of the Bill is to provide for allocation of coal mines and vesting of the right, title and interest in and over the land and mine infrastructure to successful bidders and allottees with a view to ensure continuity in coal mining operations and production of coal.
The objectives also included taking immediate action to auction or allot coal mines to minimise impact on core sectors such as steel, cement and power besides amending the Coal Mines (Nationalisation) Act, 1973 and the Mines and Minerals (Development and Regulation) Act, 1957 thereby removing the restriction of end use from the eligibility to undertake coal mining except in the case of certain specified coal blocks.
The Bill defines 204 blocks, cancelled by the Supreme Court in September as ‘Schedule-I coal mines’. Of the Schedule I mines, 42 producing and ready-to-produce coal mines are defined as ‘Schedule-II coal mines’. Other 32 substantially developed coal mines are defined as ‘Schedule-III coal mines’ meant for specified end-use (more mines can be added to Schedule-III).
The Government managed to scale the Opposition wall In Rajya Sabha as BSP, SP, TMC, NCP, BJD, AIADMK, DMK and JMM came along with it in support even though left parties and Congress tried to derail the Bill saying it encroached rights of States and was ultra-vires of the Constitution. An elated Finance Minister later said “politics of obstructionism led by Congress lost today.”
The JD(U) staged a walked out to register protest against the Bill before voting on CPI(M)’s P Rajeev’s Motion to refer the mining Bill to the same Select Committee for re-examination. The motion did not get through. While most of the members favouring the Bill stressed on the proper compensation aspect, Congress and left raised issues of technicality that the Select Committee did not follow proper process of consulting all stakeholders, including State Governments.
While opposing the legislation, Congress member Mani Shankar Aiyar, who was part of the Select Committee on Mines and Minerals Bill argued that though the Select Committee had limitation of time there was no limitation on consultations to be made. He claimed that despite the Secretaries of the States being present in New Delhi during that time, the Select Committee did not call them and argued the Bill is likely to be declared ultra-vires. Yet, after a day of heavy drama, the Mines and Minerals Bill was passed by Rajya Sabha and later approved by the lok Sabha within 20 minutes.
later in the day, the Coal Mines (Special Provisions) Bill, 2015 was approved by Rajya Sabha after several amendments moved by the Congress and left were defeated. Once again, the JD(U) walked out opposing the Bill. Coal Minister Piyush Goyal, replying to a short debate on the Bill, allayed apprehensions raised by many members that the legislation will infringe upon the rights of States. “let me assure you, rights of States will not be taken away. The Centre is in constant touch with State Governments. We are keeping the interest of both coal bearing States and consuming States,” he said. The Minister also made it clear that “foreign companies will not be allowed. Only Indian companies will be there.”
The Government was on tenterhooks till the Rajya Sabha cleared it on the last day of the first leg of the Budget Session and the Ordinance was set to expire on April five. Amendments were moved by Congress members Digvijay Singh and P Bhattacharya, the CPI(M)’s P Rajeev, KN Balagopal, TN Seema and Tapan Kumar Sen and CPI’s D Raja but all of them were defeated. Some members, including DMK’s Tiruchi Siva, withdrew their amendments.