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India's mining sector is at a virtual standstill, with applications for mining and prospecting leases piling up with States.
A staggering 50,000 applications for reconnaissance permits, prospecting licences and mining leases are currently pending with the States, according to data compiled by the Mines Ministry.
“The mining sector is in total uncertainty and there is a negative growth. The industry is in total disarray,” said Mr R. K.Sharma, Secretary General, Federation of Indian Mineral Industries (FIMI), the apex body of miners.
Quarterly reports
The number of delayed and pending applications is based on the quarterly reports submitted by the States to the Centre. It also includes the pending applications for renewals of mining leases and licence execution cases.
Procedural delays, coupled with hold-ups in clearances and change in policy decisions, are attributed for this piling up , though the States have turned cautious in the aftermath of crackdown on illegal mining.
The pendency is very high in mineral-rich States such as Chhattisgarh, Jharkhand, Karnataka, Madhya Pradesh and Tamil Nadu. Moreover, the States have been slow in submitting the quarterly status of pending concession applications. “States are not interested in the growth of the mineral sector. There is a delay in processing applications across the country,” Mr Sharma added.
Centre's permission
Though States are the owners, they need the concurrence of the Centre for grant of concessions for some 11 minerals including iron ore, bauxite, gold, silver and copper. The mining sector's contribution to the country's Gross Domestic Product has been stagnant at around 1.2 per cent for last several years.
On Wednesday, the Prime Minister's Economic Advisory Council said that the mining and quarrying sector is likely to report a negative growth for 2011-12, the first time in three decades. The Advanced Estimates have projected mining growth at -2.2 per cent for the year. This negative growth is on account of weak coal output, restrictions imposed on annual production, declining natural gas production and negative growth in crude oil output. The mining sector, which saw a peak growth of 7.5 per cent in 2006-07, is projected to see rebound in 2012-13 with an estimated growth of 6 per cent, according to the PMEAC.
With a moratorium on new mining leases imposed by the Supreme Court after it set up the Central Empowered Committee last year to probe illegal mining in the State, Karnataka tops the list with the maximum number of pending applications. The Empowered Committee recently submitted its report to the Supreme Court and the matter may be heard by the Forest Bench on Friday.
A strategy paper by the Mines Ministry highlights the need to address the permit delays by reducing the permit timelines for mining leases from 5-8 years to below two years. Such a move would help attract investments into the sector. Further, it is important to reduce uncertainty in time and outcomes while awarding the permits for mining, the paper says.
The new Mines and Minerals (Regulation and Development) Bill, currently before Parliament, when enacted into a law is expected to put in place structural mechanism for reducing the permit delays.
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