Jeemol Unni, Institute of Rural Management Anand

While India has enacted progressive laws to protect the environment and indigenous tribal communities, the mining industry and financial capital are able to evade them with huge costs to the environment and tribal communities.

Financial capital and the metal exchange systems in UK and USA combine to take away cultivable lands of the tribal communities in India for mining company profit.

In a recent book, my colleagues and I expose a “crisis of concealment” in the extractive industries.

The resource curse

For mining companies, the starting point for value creation is getting hold of cheap ore. India has this in abundance.

India has deposits of bauxite, used to make aluminium, in the mountains in some of its poorest states: Odisha, Jharkhand and Chhattisgarh. They are also significant tribal areas of the country. This creates conflict between mining companies, financial firms and the government on one side, and tribal communities on the other.

These conflicts provide fuel to the ongoing armed fight in these regions between the government and the naxalites as this Maoist-inspired movement capitalises on tribal resentment to attack industrial projects.

It is a classic case of the resource curse: where capital-intensive mining companies with few local linkages direct export earnings to service foreign capital investment, rather than the local community.

In our book, we wrote that for aluminium, steel and coal projects, the methods for assessing conflicts of interest need serious refining. At the moment, local communities are often left out of the process.

Competing legislation

There is systematic failure of the state to enforce the property rights of the poor. India has some of the world’s best legislation for protecting the environment and the people’s basic rights. But implementation is far from satisfactory, and so the poor continue to lose out.

The Companies Act, which facilitates the interests of joint stock private and financial companies, and the recent Mines and Mineral (Development and Regulation) Bill seem to override more progressive laws. These include the Provisions of the Panchayats (Extension to the Scheduled Areas), known as PESA, and the Forest Rights Act.

PESA attempts to bring together two different worlds – the informal system of governance of tribal communities and the formal system governed by law – under one single framework. It recognises that tribal communities depend on village commons to survive, and ownership of this commons is collective and regulated by customary law. The act transfers power and control over resources, land, water, minor forest produce and minerals to the people.

But state governments are reluctant to enact the law, and draft rules that enable gram sabha, or village committees, control over resources. Without that local control, the operation of the act becomes null and void.

The Forest Rights Act, intended to protect tribal access to forests, has also been undermined by allowing infrastructure projects to proceed without obtaining forest clearance from communities or by forging gram sabha consent resolutions.

According to the act, gram sabhas provide the only officially recognised space for local people to be involved in decision making about what happens on their land.

In this spirit, a 2013 Supreme Court order allowed 12 gram sabhas to articulate ecological, spiritual and food security reasons for not mining the hills of Niyamgiri for bauxite.

But two years on, the local Odisha government asked the court to annul the gram sabha resolutions. Now, attempts to mine bauxite in the region have been renewed.

Counting the real cost of mining

A holistic approach to mining requires a cost benefit analysis that puts the environmental and social costs to local communities – including issues of people being displaced from their homes, as well as poor labour conditions – alongside profit margins for mining companies.

A conventional cost benefit analysis would focus purely on economic costs, fixing a financial value and “net present value” of assets. But a holistic approach exposes the crisis of concealment, wherein extractive industry profits only through government subsidies on electricity and water and by excluding the real environmental cost of any damage they may do.

That cost can be great for local people. Bauxite mining strips the local landscape of vegetation, pollutes local water sources and destroys the habitats of species.

The impacts of India’s resource curse could be lessened if governments approached existing laws as a means to achieve a just, democratic and ecologically informed conversation. The government must admit that the knowledge base of local communities regarding forests is of value in making decisions about the future, and that decisions in their favour must be upheld. The participation of gram sabhas is vital to work out the full cost of a resource project.

The 73rd amendment to the Indian Constitution was intended to increase participatory decision making for ordinary people, with regard to livelihoods and resources. Government-supported foreign direct investment in mining is making a mockery of these progressive laws, which are meant to protect the rights of poor citizens.

This is the second in of a series of articles in partnership with UNU-WIDER and EconFilms on responding to crises worldwide.

Jeemol Unni, Professor of Economics, Institute of Rural Management Anand

This article was originally published on The Conversation. Read the original article.