In ordering that lease-holders should pay compensation to the extent of 100% of the price of the quantum of minerals they had illegally extracted, the Supreme Court has gone beyond a mere affirmation of the ‘polluter pays’ principle.
It has also set a significant benchmark for stringent action against those who indulge in mining without environmental or forest clearance. Even the Central Empowered Committee had recommended compensation to the extent of 30% of the value of the iron ore and manganese ore illegally mined in Odisha, but the court has been firm about not compromising on the quantum of compensation.
It is impossible to dispute the court’s reasoning that the defaulter or violator should bear the consequences of the illegality, and therefore cannot be allowed the benefit of “pocketing 70% of the illegally mined ore”.
The mining companies tried every possible means of avoiding the tag that they had illegally mined iron or manganese ore. Some of them argued that they did not require environmental clearance as they had started operations prior to 1994, when the Environmental Impact Assessment Notification was first issued, and that unless there was an expansion, they did not require environmental clearance.
Some said “illegal mining” was limited to mining activity outside the leased area, but the court has firmly ruled that any excess extraction within the leased area would also amount to unlawful mining. It has clarified that every renewal of a mining lease would require such clearance, even if there is no expansion, modernisation or increase in the pollution load.
The apex court has been passing a series of orders on illegal mining activity, notably in Goa and Karnataka. It has often voiced concern over the extent to which mining laws are being flouted and how illegal mining is depleting the country’s natural resources. In this verdict as well, the court identified rapacious mining in Odisha as a cause for great concern.
There appears to be no effective policy or effective check on mining operations, it has noted. In strong words, it has asked the Centre to revisit its National Mineral Policy, 2008, which “seems to be only on paper and is not being enforced, perhaps due to the involvement of very powerful vested interests or a failure of nerve.”
It is clear that the country is already paying a heavy price for its failure to regulate mining operations in an effective manner in several parts of the country. It has become a source for corruption, excessive exploitation of natural resources and a scourge in the lives of forest dwellers and tribals.
The petitioners before the court had stressed on the principles of inter-generational equity, the responsibility of every generation to conserve resources with subsequent generations in mind while exploiting nature. The court, understandably, has not set a limit for mining activities, but it has certainly flagged some issues for those in power to bear in mind.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.