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Deregulation minefield

LAST THURSDAY'S DECISION on coal mining shows the Union Cabinet's intent to complete the process of deregulation of the sector, which has been carried out in fits and starts in the reforms era. Given the failure of the scheme for development of captive c oal mines by the private sector for power, steel and cement projects, the proposal to bring forward a Bill in Parliament soon to amend the Coal Mines Nationalisation Act of the early 1970s may once again prove to be only an academic exercise, unless New Delhi does its homework properly. Which in this case will mean getting political parties and trade unions, for whom coal sector deregulation is a very sensitive issue, to see the rationale behind the move. Equally important is to take the State governmen ts into confidence.

The Union Mines and Minerals Ministry will be well advised to initiate the legislative process only after it has managed consensus on the ticklish issue. The Centre should not lose sight of the fact that in the wake of the embarrassment that the then gov ernment faced in the Lok Sabha in 1997 second half on the Insurance Regulatory Authority Bill, the latter had to backtrack on the intended legislative steps of the kind now proposed. Given the limited majority of the NDA, led by the BJP, and the disconte nt of the Sangh Parivar outfits over New Delhi's eagerness for second generation reforms, evolving a consensus assumes greater importance; the earlier passage of the Insurance Regulatory Bill notwithstanding. The strong opposition of the political partie s and the trade unions can be traced to the poor track record of the private sector in coal management, which had forced the Centre to nationalise the industry between late 1971 and early 1973. The need for consultations with the State governments stems from the fact that the onus is on them to keep the records of land rights updated, resolve disputes over compensation for land/employment for land losers as also provide land for compensatory afforestation where forest land is involved.

There are indications that the proposed Bill will have a provision on the location and size of new coal mines to be promoted by the private sector. Therefore, prior dialogue with the Railways too may be desirable; for there may be large stretches in the coal-bearing areas where rail facilities may have to be augmented or even created. Finally, and no less important, is the question of funding private sector coal mines. Therefore, the Centre must talk it out with the FIs and banks. May be, this will foll ow the passage of the Bill. Similarly, after the Bill is passed, New Delhi should discuss the matter with the apex industry bodies, such as the CII, Ficci and Assocham, whose members can be counted among prospective investors, whether by themselves or in tie-up with foreign firms which are already allowed to invest. Logical conclusion of the process of the coal sector deregulation is, no doubt, right in economic principles, like all others _ in respect of banks, power, telecom and oil. But, in India, im plementation is often more difficult than decision-making.

The recent exhortation by the Prime Minister, Mr. Atal Bihari Vajpayee, to the NDA partners to support the hard economic decisions of the Centre sounds alright. But a coalition Government of so many parties has many limitations. If the Centre succeeds in removing the apprehensions of political parties and trade unions, it will have simultaneously ensured safe passage of the Bill in Parliament. And, finally, it will be for the private sector to see that the new mines set new standards in efficiency, adhe rence to safety and conservation norms, and HRD. On all these counts, there were charges galore against them before the Central intervention.