Tribals as partners in development

A bill proposes 26 percent shareholding for tribals in companies getting mining leases in their area


Prasanna Mohanty | June 22, 2010

While the anti-Maoist security drive is  making big news, a development initiative is underway quietly, without much public debate and away from the media glare--an initiative that may go a long way in addressing the development concerns of the tribals and help in weaning them away from the ultras. This comes in the form of a legislative move which seeks to actually make them stakeholders in the mining activities – a major source of unrest in the tribal heartland of the country. A draft Mines and Minerals (Development and Regulation) Bill 2010 which is meant to replace the existing law of 1957 has been put in the public domain to invite comments.


Will their smile endure? A Kutia Kondh family in Orissa's Kalahandi district that lives under the shadow of Vedanta's mining plans on the Niyamgiri hills

There are five key elements in this draft bill. The most significant among them is to provide a 26 percent partnership in the company to people living in an area over which a mining lease is granted. The second element is to give the local inhabitants  a say before a prospecting licence or a mining lease is granted and before their land is acquired for the purpose. The third makes room for setting up a tribal cooperative for the purpose of granting  such leases and giving preference to it for granting mining concessions.

The fourth element relates to the setting up of a National Mining Tribunal to adjudicate disputes arising out of any mining lease and related activities and the fifth one puts restrictions on the companies getting the lease to sub-lease it further to trigger a chain reaction at the end of which the company that actually finances, controls and excavates the mines is a complete outsider to the process of granting the lease.

While the fourth and the fifth elements are important for the role they would play in the whole scheme of things, it is the first three which will, if the bill becomes a law, mark a paradigm shift in the way mining operations are carried out. It also address some of the concerns that have caused distress, displacement and exploitation of the tribals – pushing them to seek shelter in the Maoist rebels.

As far as providing stake-holding goes, clause 43(2) of the draft says that the holder of a mining lease “shall in respect of a person or persons holding occupation or usufruct or traditional rights of the surface of the land over which the lease has been granted be liable to allot free shares equal to 26 percent in the company through the promoter’s quota in case the holder of the lease is a company, or, an annuity equal to 26 percent of the profit after tax in case of lease is a person, on account of annual compensation.”

This is a kind of move for which there has been a consistent demand from civil society groups which have argued that the tribals never benefit from the development activities in their areas and due to which they are dispossessed of their land and livelihood and that they either get little or too little compensation. These voices had entered the realm of policy-making way back in 1995 when the Dilip Singh Bhuria committee recommended such a measure and the National Commission for the Scheduled Tribes endorsed it saying that in all industrial enterprises set up in the Scheduled Areas (other than small ventures) the community should be deemed to be the owner with 50 percent shares in its favour by virtue of its allowing the industry to use local resources and get established. But nobody paid any attention to the proposal and it never figured in any legislation.

Even the Supreme Court had advocated a direct and regular share of the benefit for the project affected people in the Samatha vs State of Andhra Pradesh case of 1997. A three-member bench had said that “at least 20 percent of the net profits should be set apart as a permanent fund as a part of industrial/business activity for establishment and maintenance of water resources, schools, hospitals, sanitation and transport facilities by laying roads etc.”

As far as the next element, that is, providing an active role to the tribals living in the Fifth Schedule (tribal-dominated areas declared as “Scheduled Areas” by the states) and the Sixth Schedule (tribal land of the Northeast) in deciding mining activities is concerned, it is a direct take-off from the Panchayats (Extension to the Scheduled Areas) Act of 1996 (PESA). Clause 13 (5) of the draft bill says before a prospecting licence is granted, the state, among other things, “shall obtain all necessary permissions from the owners of the land and those having occupation rights.” Clause 13 (11) adds that “notwithstanding anything contained in this section, notification of an area for inviting applications in respect of public lands in areas covered by Fifth and Sixth Schedule shall be issued after consultation with the gram sabha or district councils as the case may be…” (a gram sabha is the basic unit in the Fifth Schedule areas and so is a district council in the Sixth Schedule areas.)

While clause 13(5) is self-explanatory, the key phrase in clause 13(11) is “after consultation”, which civil society groups would like to be replaced by “after consent” of the gram sabhas so that the people living in a proposed mining area play a crucial role in the decision-making process. The PESA already provides overriding powers to the gram sabhas in the Scheduled Areas to decide everything linked to them and their environment – which includes deciding what development activities can take place in their areas and whether any land can be acquired or a mining lease can be given.


Present tense: Donagria Kondhs of the Niyamgiri hills at a weekly 'haat' of Muniguda in Rayagada district of Orissa

In fact, B D Sharma, former SC/ST commissioner who has been working for the welfare of tribals for close to four decades, has consistently pleaded for honouring the constitutional obligations towards the tribal communities and providing them a complete autonomy in deciding what development they want for themselves, instead of imposing it from outside. The intent of the Fifth Schedule and the purpose of the PESA are precisely this but neither the centre nor the state governments is implementing them for the obvious reasons.

Land alienation by way of awarding mining leases in the tribal area has exercised the Supreme Court too. In the Samatha case, for example, the apex court dealt with it in a great detail and observed: “The object of Fifth and Sixth Schedules to the constitution, as seen earlier, is not only to prevent acquisition, holding or disposal of the land in Scheduled Areas by the non-tribals from the tribals or alienation of such land among non-tribals inter se but also to ensure that the tribals remain in possession and enjoyment of the lands in Scheduled Ares for their economic empowerment, social status and dignity of their person.”

But there is no escaping the mining, and the consequent displacement of the tribals, because of the windfall profit that it brings. Karnataka Lokayukta and former Supreme Court judge Santosh Hegde provided a glimpse of it in his report on the mining scene in the state in 2008. He pointed out that while the cost of production of iron ore came to a mere Rs 150 a tonne, it fetched a whopping export price of Rs 6,000 to Rs 7,000 to the mining companies between 2004 and 2006! But the government did not benefit from it. In fact, the Karnataka government earned a paltry sum of Rs 16 to Rs 27 a tonne (depending on quality of ore) by way of royalty. It was the allegation of complicity of government officials and large-scale illegal mining that prompted the state in the first place to ask Hegde to inquire into the matter. Post-inquiry, the state raised the royalty to a maximum of Rs 200 a tonne.

Now, how can the natural resources found in the tribal areas be utilised for the common good? With a two-to-one majority, the Supreme Court had ruled in the Samatha case that only the “government instrumentalities” and the tribal cooperatives be given the mining lease. (As far as mining minor minerals go, PESA makes the gram sabha’s “recommendation” mandatory.) The present draft bill makes talks about the latter, the tribal cooperatives, by providing that in the Fifth and Sixth Schedule Areas “the state government may allocate such mines to local Scheduled Tribes as a cooperative through framing of regulations” and “give preference to local cooperative for the grant of concession” (Clause 6(6)).

At a two-day brainstorming session on the draft bill in New Delhi in May, civil society activists were reasonably happy with its framework. Ritwick Dutta, a prominent environment lawyer, commented: “On the face of it, a bulk of the bill is positive. There are some areas of concerns though, like the provision for awarding a maximum of 100 square km of lease for both the major and minor minerals. No single lease should be so large because it will completely take away the rights (of people living in the area) and the forest areas. A very negative step. The maximum area should not exceed 20 square km. The other area of concern is waving off “mining plan” for the minor minerals. If the maximum mining area that can be allowed in this case is also 100 square km, why not make mining plan mandatory?”

What bothers the civil society activists like Dutta most, however, is if the mighty mining lobby will allow the bill to be passed unchanged, particularly the provision about the stake-holding.

As far as rest of the draft bill goes,  there are provisions for setting up a National Mining Tribunal and certain safeguards to prevent what is known as “raising contract”–-transferring the lease to somebody else.

Dealing with the issue of the transfer of lease, clause 18 says, among other things, that the lease holder “shall not, without the previous approval in writing of the state government…enter into or make any arrangement, contract or understanding whereby the lessee will or may be directly or indirectly financed to a substantial extent by, or under which the lessee’s operations or undertakings will or may be substantially controlled by, any person or body of persons other than the lessee”.

It may restrict “raising contract” only to the extent of prior approval, but this may be considered reasonable for now.

Should the bill get enacted, it would be the UPA’s second big move after the Forest Rights Act, which provides for tribals’ right over forest, to address the tribals’ concerns.

This first appeared in the June 1-15 issue of the Governance Now magazine (Vol.01, Issue 09).



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