January 18, 2014
The Shah Commission report on iron ore mining has the potential to
cripple the steel sector, with the impact more devastating than the
ban on mining in Karnataka and Goa. The report has indicted both the
central and state government for systematic illegal mining worth
thousands of crores in Odisha.
MB Shah Commission has said that Rs 60,000 crore should be recovered
from miners for conducting illegal mining in the area [Read here].
Naturally, the miners have trashed the report [Read here] saying that
government has received royalties and taxes over the years and it is
improper to go back on contracts as old as 1994.
But, even the miners in Karnataka and Goa were paying a miniscule
royalty to the government and selling ore at a huge profit. And where
is the logic in not looking at records from 1994 onwards. These
companies had started production without having the required
clearances, in other words, they started selling iron ore which was
not rightfully theirs. Over the years they have digested the profits
which has been ploughed back in their business to help them grow to
the current size.
A scam hit UPA government has been sitting on the report for the last
six months [Read here] and was scared to table the report or even
finalise an action take report (ATR). Thankfully, there is a law that
says that the government is obliged to table the report along with a
memorandum of action taken in the parliament within six months.
According to the Lokayukta, loss to the exchequer in Karnataka was Rs
16,085 cr. Shah panel on the other hand pegs recovery to nearly four
times in Odisha as compared to Karnataka. Yet there is no sound bytes
in Odisha, with few so-called-experts even considering it as a scam.
Perhaps because ‘big and clean corporates’ are involved or the
government is now politically immune to scams.
However, the fact remains that if the recommendations of Shah
Commission is implemented, the sector will be facing tough times
ahead. The commission has recommended a cap on iron ore production,
review of environmental clearances to Tata Steel, SAIL and JSPL.
According to Deutsche Bank’s analysts Abhay Laijawala and Anuj Singla,
Odisha contributes 45-50 per cent of India’s iron ore production and
any disruption in supply could potentially lead to plant shutdowns in
the domestic steel industry or heavy reliance on iron ore imports.
This seems to have spooked the govt. Mines ministry has opposed a cap
on iron ore production while the environment ministry has disregarded
the recommendation to cancel licences of firms encroaching forestland.
Envisaging such hindrances, the government at the centre has gone a
step further by refusing the Shah Commission to finish its work in
Jharkhand and Chhattisgarh. Clearly the media is wrong in blaming the
government for not having corporate India friendly policies
Read mor ehere —