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COVID-19, 'Atmanirbhar Bharat' and a Glimmer of Hope for the Indian Mining Industry

Updated: Jun 30, 2020

Authors: Ishan Khare and Gaurav Deep Agarwal


Introduction

On 25th March 2020, India became one of the first democracies in the world to opt for a nationwide lockdown in light of COVID-19, and it now is on the brink of another crisis, i.e. an economic recession due to a global economic meltdown. Having already allotted a tenth of the GDP for economic resurrection, a pertinent question that continuously pinches the Government looms at large again- What about the wages of the laborers? And more importantly, what about the depressed Indian industry?

According to the 2011 census data, India has around 450 million workers in the unorganized sector.[1] Two million among them are homeless, while nearly 37% of people live in single-room households.[2] As per a survey done by the Centre for Development Studies, around 73% of the migrant workers do not have any savings, and only 3% manage to save more than Rs. 10000 in a month.[3] The mining sector alone employs somewhere between 50 million to 60 million such workers.[4]

The Government’s Intervention

In an attempt to alleviate this plight of the workers, the Ministry of Home Affairs (‘MHA’) issued an order on the 29th April 2020, under which an employer was bound by the law to pay wages to its ‘workers’ failure of which would attract penal provisions.[5] While the order did provide some much-awaited relief for the distressed, the penal components of the order were a source of major controversy.[6] This controversy ultimately culminated in a series of court cases against the order, which ended with a stay order by the Supreme Court [7]. Later, in light of these events, the MHA redirected its order providing for relaxations of the guidelines.[8] The Sorry State of Indian Mining Companies While such orders were directed after taking into account the perils faced by the workers during the lockdown, they can have potentially catastrophic consequences for the mining industry, which already finds itself in an extremely precarious position.[9] Now, a worker engaged in the labour-intensive mining sector after the central Government’s recent economic aid package is likely to earn a minimum of Rs. 202 per day.[10] A minimum of Rs. 202 for a day’s work is an extremely meager amount. But this sum has to be looked at with the larger economic crisis at hand. The mining sector in India has lately been in a sorry state. The gross value added by this sector has already fallen from 2.9% in financial year-2018 to a modest 2% in financial year-2019.[11] This poor performance was, in part, accredited to the various cases filed in the Supreme Court, advocating for the closure of prominent mines due to environmental hazards.[12] According to the Federation of Indian Minerals Industries (FIMI), “the cumulative effect of these penalties and restrictions can threaten the employment of almost 2.3 million people, and losses of billions of dollars in Forex”.[13] The mining sector, and the coal industry in particular, has been hit hard due to years of low demand for coal and the global economic slowdown. Coal India Ltd., the largest coal company in India, has recorded a meager 1.6% growth in financial year ending 2019.[14] In the financial year ending 2020, with the possibility of recession either on a national scale or on a global scale, itching towards a dark and gloomy reality, the MHA guidelines can have a catastrophic effect on the entire mining sector. [15] For starters, the protection to the laborers has worn off with the end of the lockdown, and it would be natural for the companies to cut corners to keep the corporation afloat. This may translate to layoffs of an unprecedented scale. The importance of this issue cannot be emphasized enough as both the employer and the employee are at the losing end.[16] Light at the End of the Tunnel? Even during these testing times, we can say that all is not lost. The central Government, with its 2 Million Crore Rupee ‘Atmanirbhar Bharat Package’ has strived to ensure that all the sectors, including mining, can get back on track. The fourth part of this package delves into the various provisions through which the Government envisages the resurrection and recovery of this sector.[17] At the heart of it are some needed and long-awaited reforms, including a higher degree of privatization, especially in the coal mining sector. The privatization in the mining industries adds to the industry’s capacity as it is believed that the private sector comes with superior technology, additional capital, and efficient management, as the same can be witnessed in other areas where privatization has already been allowed[18]. It will, therefore, lead to additional production of coal and also reduce the dependence on imported coal. The privatization would act as a means to control certain hindrances that are otherwise known to plague the efficiency of a government organization, or public sector entity, like a rigid bureaucracy, issues with the trade union, etc.[19] These hindrances are not prevalent in the private sector, and principles like equal pay for equal work acts as an incentive for workers to put in their best efforts and the relaxation of labor laws recently is a positive step in this direction.[20] The use of superior technology cannot be undermined as it helps in the extraction of minerals efficiently and in larger quantities with lesser input costs adding to the productivity in the long run. Furthermore, the Government also plans to implement an ‘exploration-cum-mining’ process that will cater to the needs of the various private entities engaged in exploration by providing them better revenue streams, than those present in the existing models. The process involves the auctioning of the composite license that is needed for the exploration of an area and mining if the mineral is discovered and the highest bidder gets the composite license and opening of over 500 aluminum and bauxite blocks for auction, in the initial phase itself.[21] This process is beneficial as it gives solitary rights to the highest bidder for exploration and mining. The exploration-cum mining provides many benefits, including a reduction in the expenditures for setting up the machinery for exploration and extraction as it can be done at one go without bearing the cost for setting up of a mechanism for exploration and then replacing the same with extraction machinery. It also removes the scope of illegal activities like grabbing of mines after exploration and before extraction, which often happens if one party carries out the exploration and another party carry out the extraction. This, combined with the rationalization of stamp duties under the package, will reduce under-collection or over-collection of the stamp duty, which goes into the state treasury.[22] On analysis of the above-mentioned measures, it is clear that though the mining sector had many problems and also had issues of inefficiency, the schemes under Atmanirbhar package are critical for the continued employment of the workers and the good-health of the companies involved in the mining sector. If the schemes are implemented properly, then the result would be great for the industry, the people at large and the national economy as well.


[The authors are students enrolled in the five-year B.A. LL.B program at National University of Juridical Sciences, Kolkata.]

Notes and References

[1] Census Of India Website: ‘Office Of The Registrar General & Census Commissioner, India’ (Censusindia.gov.in, 2020) <https://censusindia.gov.in/2011-Common/CensusData2011.html> accessed 14 May 2020. [2]Id. [3] The Wire. 2020. Lockdown Hit Migrant Workers' Savings, Forced Many To Take Loans: Gurugram Survey. [online] Available at: <https://thewire.in/rights/lockdown-migrant-workers-savings-loans-gurugram-survey> accessed 18 June 2020. [4] Press India, 'Govt To Place Legislation To Safeguard Unorganised Workers In Parliament' (Business-standard.com, 2020) <https://www.business-standard.com/article/economy-policy/govt-to-place-legislation-to-safeguard-unorganised-workers-in-parliament-118011000925_1.html> accessed 15 May 2020. [5] Investindia.gov.in. 2020. Order By MHA To Support Labour Workers During Covid-19 Lockdown. [online] Available at: <https://www.investindia.gov.in/team-india-blogs/order-mha-support-labour-workers-during-covid-19-lockdown> [Accessed 20 May 2020]. [6] Samanwaya Rautray, 'SC Says No Action For Now Against Employers Who Don't Pay Full Wages During Lockdown' (The Economic Times, 2020) <https://economictimes.indiatimes.com/news/politics-and-nation/sc-stays-mha-order-on-paying-full-wages-during-lockdown/articleshow/75754751.cms> accessed 15 May 2020. [7] The Financial Express. 2020. Coronavirus: Supreme Court Stays MHA Order, Employers Won’T Be Prosecuted For Non-Payment Of Wages. [online] Available at: <https://www.financialexpress.com/india-news/lockdown-news-supreme-court-wages-full-payment-workers-employers-prosecution-coronavirus-update/1959905/> accessed 18 May 2020]. [8] 'MHA Withdraws Order Requiring Compulsory Payment Of Wages | ILN Today' (ILN Today, 2020) <https://www.ilntoday.com/2020/05/mha-withdraws-order-requiring-compulsory-payment-of-wages/> accessed 19 May 2020. [9] Bhavya Dilipkumar, 'Indian Metals And Mining Sector To Be Hit If Lockdown Persists: KPMG Findings' (The Economic Times, 2020) <https://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/indian-metals-and-mining-sector-to-be-hit-if-lockdown-persists-kpmg-findings/articleshow/75016211.cms?from=mdr> accessed 15 May 2020. [10] 'Minimum Wage For Workers Hiked From Rs 182 To Rs 202 Per Day: FM Sitharaman' (https://www.oneindia.com, 2020) <https://www.oneindia.com/india/minimum-wage-for-workers-hiked-from-rs-182-to-rs-202-per-day-fm-sitharaman-3088496.html> accessed 15 May 2020. [11]Jayajit Dash, 'Mining Sector GVA To Slow Down To 2% In FY19 From 2.9% In FY18: Icra' (Business-standard.com, 2020) <https://www.business-standard.com/article/economy-policy/mining-sector-gva-in-fy19-to-slow-down-to-2-down-90-basis-points-icra-118123100949_1.html> accessed 15 May 2020. [12] India Today. 2020. The Goa Mining Debate: How And Why Mining Has Come To A Standstill In Goa. [online] Available at: <https://www.indiatoday.in/impact-feature/story/the-goa-mining-debate-how-and-why-mining-has-come-to-a-standstill-in-goa-1575216-2019-07-30#:~:text=Mining%20has%20been%20stalled%20in,tonnes%20of%20iron%20ore%20exports.> accessed 20 May 2020]. [13] 'Supreme Court Ban On Mines Resulted In 2.3 Million Job Losses — Laments Industry Body' (Business Insider, 2020) <https://www.businessinsider.in/supreme-court-ban-on-mines-resulted-in-2-3-million-job-losses-laments-industry-body/articleshow/71270105.cms> accessed 16 May 2020. [14] Roychowdhury, I., 2020. Coal India’S Flat Q1 Growth Puts Stiffer Tagets Of Management A Far Cry From Reality. [online] The Financial Express. Available at: <https://www.financialexpress.com/industry/coal-indias-flat-q1-growth-puts-stiffer-tagets-of-management-a-far-cry-from-reality/1629330/> [Accessed 30 May 2020]. [15] Supra note 7. [16] Samanwaya Rautray, 'SC Says No Action For Now Against Employers Who Don't Pay Full Wages During Lockdown' (The Economic Times, 2020) <https://economictimes.indiatimes.com/news/politics-and-nation/sc-stays-mha-order-on-paying-full-wages-during-lockdown/articleshow/75754751.cms?from=mdr> accessed 1 June 2020. [17] TheHinduBusinessline. 2020. Atmanirbhar Package: Mining Industry Welcomes Reforms Announced Under Fourth Tranche. [online] Available at: <https://www.thehindubusinessline.com/economy/atmanirbhar-package-mining-industry-welcomes-reforms-announced-under-fourth-tranche/article31601932.ece> [Accessed 30 May 2020]. [18] Amarendra Das ‘Performance of Public and Private Mining Firms in India: In Productivity, Environmental and Social Dimensions’ (Cambridge Scholars Publishing). <https://www.cambridgescholars.com/download/sample/59930> accessed 20th May 2020. [19] Public And Private Sector Efficiency (2020) <https://www.epsu.org/sites/default/files/article/files/Public%20and%20Private%20Sector%20efficiency%20EN%20fin.pdf> accessed 10 June 2020. [20] The Express, 'Ease Labour Laws Now: UP Gets It Right, But Relaxation Must Become Permanent' (The Financial Express, 2020) <https://www.financialexpress.com/opinion/ease-labour-laws-now-up-gets-it-right-but-relaxation-must-become-permanent/1953057/> accessed 10 June 2020. [21] Outlookindia.com. 2020. Govt Announces Big Reforms In Mining Sector; To Auction 500 Blocks. [online] Available at: <https://www.outlookindia.com/newsscroll/govt-announces-big-reforms-in-mining-sector-to-auction-500-blocks/1836874> accessed 20 May 2020. [22] 'Stamp Duty And Amendments To The Indian Stamp Act, 1899 - Corporate/Commercial Law - India' (Mondaq.com, 2020) <https://www.mondaq.com/india/corporatecommercial-law/889646/stamp-duty-and-amendments-to-the-indian-stamp-act-1899> accessed 9 June 2020.

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