Statement of Lok Raj Sangathan, Jan 9, 2015

In the recent winter session of Parliament, the Lok Sabha passed the Coal Mines (Special Provisions) Bill, 2014. The opposition parties demanded the Bill be referred to a standing committee. However, it was passed by voice vote. The Bill has to be opposed since it serves only the interests of the large monopolies and violates the principle that people are the ultimate owners of natural resources and that it is the duty of the government to regulate their use in the interests of the people.

The changes proposed in the Bill are removal of the end-user requirement for coal mining and allowing the central and state governments to form joint ventures with private enterprises and get the coal blocks allotted. In effect, this Bill seeks not only to auction coal mines, but also to amend the Coal Mines (Nationalisation) (CMN) Amendment Act, 1976, and the Mines and Minerals (Development and Regulation) (MMDR) Act, 1957, without a debate in Parliament.

Earlier this year, in September, the Supreme Court had declared that the allotment of coal blocks between 1993 and 2010 was illegal. This forced the government to bring in an Ordinance in October. The Bill replaces the Ordinance and seeks to allow commercial mining in the country, apart from re-allocating the 72 cancelled operational coal mines for end-usage to the power, steel and cement sectors by February next year.

Enabling provisions for commercial mining are being added in the CMN Act and the MMDR Act. Section 3A is being inserted in the CMN Act to enable joint ventures to be formed by the central and state governments and their companies with any company for mining operations in India “in any form, either for own consumption, sale or any other purpose”, in accordance with the licence granted by the state government.

All companies can bid for the 132 mines under schedule-I, which are yet to be explored. Bidding for mines in the second and third categories (mines already producing and about to begin production, respectively) will be open to companies engaged in specified end-uses of the power, cement and steel sectors.

As far back as 1949, when Jawaharlal Nehru introduced the debate on Article 24 of the draft Constitution in the Constituent Assembly, several members argued that large mines and mining concessions should be taken over without compensation. The argument they gave was that gifts of nature such as mines and forests belong to the people. Since they have been alienated from the people by a foreign rule, there was no harm in the state taking over such monopoly mines and mining concessions without compensation, all the more so if they have been operated for a certain number of years and the owners have earned many times more than the capital invested.

This argument was not accepted by a majority in the Constituent Assembly. Nehru himself cautioned the members against nationalisation and rejected expropriation of essential industries without compensation. The new Constitution that came into being did not have any provisions for the nationalisation of natural resources. Till the early seventies, slaughter mining, violation of mine safety laws, reluctance to mechanise, and relentless profiteering were rampant in the coal mining sector. Popular outcry and severe shortage of coal forced the government to nationalize coal mining in the early seventies, during the regime of Indira Gandhi. Large privately owned iron and steel and cement monopolies welcomed this move since they would now be assured of an adequate and timely supply of coal at low cost.

Coal mining was nationalised in 1973, through the enactment of the Coal Mines (Nationalisation) Act, 1973. The 1973 Act was amended in 1976 terminating all the mining leases on coal held by the private lessees but allowing captive mining by private companies engaged in the production of iron and steel and sub-leasing to private parties of isolated small pockets not amenable to economic development and not requiring rail transport.

By 1993, nationalisation had served its purpose. The large industrial houses engaged in iron and steel, cement and power sectors were no longer happy with the erratic coal supplies from the nationalised coal mines. They wanted to set up captive mines over which they would have full control. Some business houses had grown so big that they had the wherewithal to set up captive coal plants for their energy needs and also saw in coal mining a new arena for making super profits in India and on the world scale. Responding to this demand, the Narasimha Rao government amended the coalmining Act to allow captive coal mining in the private sector for certain industries.

Thus, progressively, various governments took steps to privatise coal mines. This led to a massive scam in coal mines allocation. According to the CAG report on the Coalgate scam, during the contentious allocation process adopted between 2004 and 2009, about 44 billion metric tons of coal reserves was allocated to public and private firms as compared to the entire global production of 7.8 billion tons annually! India produces 585 million tons annually. This gives a picture of the enormity of the fraud, expressed mildly by the CAG as “lack of transparency” and “failing to arrive at the optimal price”. Under this allocation procedure, firms with captive mines were allocated vast amounts of coal reserves, adding up to many years of supply, for a nominal fee.

The experience of our people all these years shows that the coalmining sector cannot be left in the hands of the private sector. The mining and usage of coal has to be determined by the needs of entire society.

The entire process of first promulgating an Ordinance on privatization of coal mining and then passing the Coal Mines (Special Provisions) Bill, 2014 has revealed that the executive, legislature and judiciary work hand in glove in the interests of the big monopolies, with the executive calling the final shot. While the Supreme Court declared the allocation of coal mining licenses by the UPA government as illegal, it did not contest the Ordinance which the BJP-led NDA government passed in order to pave the way for e-auctioning of coal mines. The ruling establishment took advantage of the Supreme Court ruling to amend the coal mining legislation and push through privatization in the sector. The current Bill was passed by the Lok Sabha by voice vote without a serious debate on such an important issue affecting the livelihoods of millions of people. The Bill was passed under the cover of other diversionary debates in Parliament. Coal mining unions were not even consulted in formulating this Bill.

The way coal mines, an asset belonging to the people of India, are being privatized without any consultation or debate shows that people are extremely marginalized in the current political process. There are no constitutional mechanisms or provisions to enable the people to propose legislation in their own interests or be involved in amendment of existing legislation. The existing Constitution does not protect the right of people to mines, minerals and natural resources.

All this points to the fact that new mechanisms have to be created to ensure that the goal of the economy should be to satisfy the needs of the vast majority of the people and not to satisfy the greed of a handful of monopoly houses. This requires that people are empowered and a new political process is created.

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