House panel favours profit-sharing model proposed in mining Bill

Our Bureau New Delhi | Updated on May 27, 2013 Published on May 27, 2013

Reforms in mining, which included sharing profits with the local people, as proposed in the Mines and Minerals (Development and Regulation) Bill, 2011, had come under a lot of criticism from the industry.

However, a Parliamentary Standing Committee headed by Kalyan Banerjee has recommended that the profit-sharing provision, which is seen as important for inclusive development, be retained.

But, the committee has suggested a change in the way it would apply to coal mines. It has recommended that miners should be required to pay a certain percentage of royalty instead of 26 per cent of profit, as proposed in the Bill. The funds will be given to the District Mineral Foundation (DMF).

It has also recommended that miners of major minerals, such as iron ore, limestone and others, would have to pay an amount equal to royalty, while miners of minor minerals will have to shell out a certain percentage of royalty.

The percentage to be paid will be decided by State Governments in consultation with the National Mineral Regulatory Authority.

According to industry chambers, the mining industry is already heavily taxed, and the requirement to share profits with locals will hit the industry hard, make it uncompetitive and discourage investments.

However, a study conducted by the Centre for Science and Environment (CSE) has argued that sharing profits with the local communities (at 26 per cent) of profits does not significantly hurt the companies’ profitability.

The committee also suggested that representation of the local community in the DMF council be increased.

“The committee’s recommendation is a welcome step,” said Chandra Bhushan, Deputy Director-General, CSE.

However, the committee hasn’t elaborated on how the funds collected will be used for local welfare.

Published on May 27, 2013
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