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 | Relying on deadwood: States depend on public sector in mining Our Correspondent Even after 17 years of economic reforms, policy-making suffers from a peculiar paralysis, affecting the most critical areas. Mining is one such area. The Government cleared the new National Mineral Policy on March 14 this year. The new policy had an ambitious aim—to attract foreign direct investment (FDI) to the tune of $250 million annually in mining in the next five years. One would have expected the mineral-rich states to be jubilant at the prospect of attracting huge investments. For instance, the South Korean major, Posco, is already in the process of starting its $12-billion plant in Orissa—which, by the way, is the single biggest FDI in India. Major business houses such as the Tatas and the ArcelorMittal Group have also committed themselves to investing billions of dollars in mining projects. Further, many of the mineral-rich states such as Orissa, Jharkhand, and Chhattisgarh are also among laggards in terms of development; and widespread poverty helps the spread of Maoism in these states. Development of mining in these states would bring in prosperity. So, a new policy, which aims to augment private sector participation in mining, should have been welcomed by the states. But, alas, that was not to be! According to a news report, "Mineral-rich states such as Chhattisgarh, Orissa and Karnataka have jeopardised the prospects of the United Progressive Alliance's ambitious plan to put in a place a New Mineral Policy." The states are against the new policy because they feel that it "usurped their rights to limit mineral-rich areas for public sector units and making priority allocation of mines through a seamless transfer of mineral licence. They have bluntly told the Centre that the policy intrudes into their rights over the minerals produced in their respective territorial domain. And, they have now demanded setting up of a joint task force including representatives from the states." A more ridiculous resistance could not be conceived. For public sector enterprises (PSEs) are not very prominent on the investment radar. It is not difficult to find the cause. Let us begin with state PSEs. According to the data on the website of the Department of Disinvestment, in March 2001, out of a total of 831 state PSEs, 387 were loss-making entities and 185 were all but dead. The accumulated losses amounted to Rs 23,352 crore. The condition of Central PSEs is just a shade better. As the Disinvestment Department website says, "The return on investments in PSEs, at least for the last two decades, has been quite poor, and the PSEs have not been able to generate resources for development." The states are only fooling themselves if they believe that the liability called the public sector can redeem mining. Posted on : 10/10/2008 Mail this article to your friend |