Four decades after nationalisation, 3.36 lakh workers in state-owned Coal India Ltd (CIL) and Singareni Collieries Company Ltd (SCCL) are a happy lot. At CIL, which contributes 90 per cent of commercial coal production in the country, workers earn ₹30,000 to ₹1 lakh a month, excluding bonus, medical and statutory benefits, depending on skill levels.

Not only are the workers benfitting, coal companies, which were once sick, are now making hefty profits. Production has increased by nearly 220 million tonnes in the last 10 years. The government, on its part, is minting money through taxes and dividend. Coal is the single largest revenue churner for the railways. And, consumers benefit from the supply of low-priced coal for domestic use.

These gains are, however, being made at the expense of one segment — the 39,000 contract workers who account for around 11 per cent of the combined workforce of CIL and SCCL. They contributed to two-thirds (398 million tonnes) of the commercial coal production (629 mt) in 2017-18, but are paid a measly ₹15,000-20,000 per month.

An exploited lot

Employed by contractors, who are basically goons backed by local politicians, the workers are paid a fraction of what their counterparts in CIL get. They live in tin-roofed dormitories in most unhealthy conditions and suffer from a disproportionately high rate of injuries and fatalities in mine accidents.

According to the preliminary findings of an ongoing study — parts of which were discussed at a mine safety conference recently — by the Directorate General of Mine Safety (DGMS), the rate of accidents in the case of the contractor worker was 2.7 times more than the regular worker during 2010-16. The trend is likely to worsen as mining firms are seeing outsourcing as a more productive option than depending on their lethargic workforce, whose productivity is one of the lowest in the world.

In 2005, the country’s coal sector, including Tamil Nadu-based Neyveli Lignite (NLC), had only 15,000 contract workers. In 2017, the number moved up to 58,000. All mines put together, the number of contract workers is a sizeable 1.08 lakh as against 4.55 lakh regular workers.

From a commercial perspective, the emphasis on contractual mining is paying off.

In 2010-11, CIL produced 431 mt of fuel. Roughly 50 per cent of the production, or 215 mt, was outsourced. In 2017-18, 345 mt, or 61 per cent of the 567 mt produced, was outsourced. It means much of the 136 mt growth in production during the last seven years came from contract labour.

Also, 74 per cent of the 1,172 cubic metre overburden (spoil or waste) removal in 2017-18 was outsourced. Now, one begins to wonder what CIL’s mammoth workforce is doing.

Moreover, with the cost of extraction being one-third of CIL’s, contractors are generating huge savings for the company.

These are distributed in the form of 20-25 per cent wage increases for regular workers every five years and dividend to shareholders. The best part is, all this is happening without much increase in fuel price. Naturally, the government is pushing for the contract mining or MDO (mine developer and operator) model.

MDO is not wrong

Theoretically, there is nothing wrong in contract mining. It is evident that private miners are way more productive (in tonne per man basis) than CIL’s own workers.

The country could have benefited if contract workers had more handle to the production.

What’s wrong is, contractual workers are being exploited in the process. The government has so far only notified the minimum salaries of contract workers and that coal companies pay such salaries through direct bank transfer, and nothing more.

The reason behind this policy inaction is purely political. Labour and transport contracts for any project across the country are considered the preserve of the local population . In coal mines, it has taken the shape of a nexus.

With 95 per cent of CIL’s production coming from opencast mines, land is in constant demand. On an average, the company needs 2,000-3,000 hectares of land every year to keep the electricity flowing through the wires. And, a 2013 legislation made such acquisitions awfully difficult.

This hurdle though, has been overcome by a known formula: Allow the project affected to grab contracts. Which means, even if CIL appoints the world’s finest miner as MDO, it has to sublet contracts to the locals. This is also the reason why reputed global miners keep away from CIL tenders for contract mining. And, when voters agree can politics be far behind? At coalfields, politicians are a part of this nexus. Most of the dump trucks seen plying in mining areas are owned by ‘ netas ’, cutting across party lines.

The practice, which was initiated soon after nationalisation, has gained momentum as coal production is being fast-tracked.

Disastrous consequences

The outcome is disastrous, to say the least. Modern-day mining became safer with the introduction of high-capacity machines and vehicles that reduce congestion on mine roads as also the chance of accidents.

CIL, which operates some of the world’s largest opencast mines, is a glaring exception to this rule. As village contractors cannot afford costly machines, each worth a few hundred crores of rupees, they settle for cheaper low-tonne equipment making safety a casualty.

A DGMS study points out that the use of low-capacity equipment by contractors, whose lack of technical knowledge mainly due to poor or no training, as a prime reason for the high rate of fatalities among contract workers. Since these workers are mostly outsiders and small in number, such accidents do not carry any political significance locally.

And, as long as votes are intact and production doesn’t stop, who cares for a few thousand contract workers spread across eight or nine large States?

Yes, the coal companies are stigmatised. But, should a CIL or SCCL come forward and announce at least equal pay to both contract and regular workers? Will the government allow them to hike coal prices to cover up the additional outgo, spare them for the drop in profits and share price and, demand less dividend?