Modi Govt to Reduce Penalty for Late Payment of Coal Royalties, Forest Diversion Rules Diluted

New Delhi: Even as big corporate entities have queued up to acquire mining rights over coal blocks from which they can sell the extracted minerals at the highest prices, the Modi government has proposed to halve the penalty rate that is binding upon leaseholders for failing to pay their royalties in time. The existing rate of 24% interest against delay in payments of royalties or rents to the Central government against minerals extracted from coal mines will be reduced to 12%.

The aforementioned proposed amendment comes close on the heels of a set of new rules issued by the Bharatiya Janata Party-led Central government to facilitate the exploration and mining of minerals in forests without necessarily obtaining the prior consent of local communities dwelling for generations in those areas.

Through a public notice issued on July 22, the Ministry of Coal has sought to relax the rate of penalties for mining leaseholders by amending the Mineral Concession Rules, 1960. Royalties or rents are the only revenue earned by the public exchequer from auctioning of mineral blocks. However, through the public notice, the ministry, while seeking to reduce the penalty rates, has made no bones about the fact that the amendment is meant for the “Ease of Doing Business”, a policy followed vigorously by the Modi government to ensure greater participation of the private sector in the country’s economic governance.

“Central Government has taken various initiatives aimed at promotion of Ease of Doing Business. Decriminalisation or minor violations under various laws is another step in this regard so as to minimise the risk of imprisonment for entrepreneurs/citizens for relatively minor violations. Hence, the Ministry of Coal has undertaken a review of penal provisions in Mineral Concession Rules, 1960 (hereinafter, “MCR”) to identify violations which could either be decriminalised or violations for which the penalty can be reduced,” states the public notice.

Under the original rules, delay in payment of royalties beyond a period of sixty days envisages a penalty at a rate of 24% simple interest/annum. The penalty interest rate on late payment of rents and royalties for minerals other than coal had already been halved by the central government last year. By amending the Minerals (Other than Atomic and Hydro Carbons Energy Mineral) Concession Rules, 2016, the Central government had already reduced the interest payable on delayed payments from 24% to 12% last year.

The Union Ministry of Environment, Forests & Climate Change (MoEF&CC) issued the new set of forest conservation rules through a Gazette notification dated June 28. Activists and experts allege that changes to these laws would have far-reaching consequences for communities belonging to the Scheduled Tribes, as well as other forest dwellers, who have been living over lands rich in minerals for the past several generations.

Earlier, consent of local communities was mandatory for the Central government before approving projects proposed over forestland by private companies. However, the new forest conservation rules notified in June make it possible for the central government to approve the handover of forest land and collect payment from private developers even before the concerned state government has obtained the approval of forest dwellers.

“Prima facie, the proposed amendments violate the provisions of rights conferred on local communities by landmark laws, including consent of Gram Sabhas, the local self-governing councils constituting all adult members of any particular village, is mandatory. The proposal will have far-reaching adverse consequences on forests and wildlife as well,” said Rebbapragada Ravi, Chairperson of mines, minerals and PEOPLE (mm&P), an alliance of individuals and communities affected by mining.

The Panchayat (Extension to Scheduled Areas) Act, 1996 and the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 – known popularly as the Forest Rights Act – guarantees public participation of local communities as legitimate stakeholders whenever any forest land is diverted for non-forest use. The silence of the Union Ministry of Tribal Affairs, the custodian of the aforementioned laws, over the new rules notified by the MoEF&CC has raised several eyebrows.

Dilutions to the country’s environmental regulatory regime – including removal of provisions for prosecution against violations deemed apparently “minor” – as well as laws governing the exploration of minerals are being made almost simultaneously with the opening up of the coal sector for private players for the purpose of commercial trading without end-use restrictions. The central government had notified 122 coal blocks for auction for commercial mining by private players in March 2022, bids for which are yet to be finalised.

The government has received 38 bids against the blocks notified for auction, including those from some of the biggest corporate houses in the country. Since the Modi government announced its decision in June 2020 to open the coal sector to private players for commercial mining, 47 mines have been auctioned successfully following a two-stage bidding process.

It has been alleged that the Central government’s bid to allow the diversion of forest land through the new rules without obtaining the consent of Gram Sabhas also goes against the landmark Supreme Court judgement of April 2013 upholding the rights of tribal communities over local resources before mining of bauxite from the Niyamgiri Hills in Odisha for an aluminium smelter belonging to the multi-billionaire Vedanta Group.

In this judgement, the Supreme Court ruled that the rights of tribal communities were to be protected if they felt that the bauxite mining project “in any way, affects their religious rights.”

The amendments proposed to Mineral Concession Rules 1960, while apparently detrimental to the public interest, are profitable for mining agencies in more ways than one. In its present form, the rules state that royalties will be chargeable upon the project proponent on processed minerals if the processing of the minerals after excavation is carried out within the premises of the mining lease area. However, the amendments that have been proposed seek to dilute this: The final royalty amount will now be determined after sampling of the processed mineral or final declaration of the National Coal Index on the quality of processed coal removed from the lease area.

The Campaign for Survival and Dignity, a national forum of tribal and forest dwellers, has written to the MoEF&CC highlighting that the new set of rules aimed at easing the mining of minerals turns a blind eye towards the existing reality that largescale diversion of forest lands has been taking place in the country using “fraudulent certification of FRA implementation.” I

Implementation of the Forest Rights Act, 2006 has been tardy across the country, with a process underway in all states to undertake reviews of rejected applications claiming individual and community rights over forest land in accordance with an order of the Supreme Court of India.

As per data compiled by the Union Ministry of Tribal Affairs, a whopping 16.5 lakh claims in all under the Forest Rights Act, 2006 have been rejected by various state governments. More than 5.36 lakh applications are pending disposal. On average, the rate of approval of forest rights claims is a meagre 50% across the country.

“The new forest conservation rules require that state governments and Union territories ensure compliance with the Forest Rights Act, 2006 before actually handing over the land that has already received clearance for diversion from the central government. In effect, the proposal for consent will be placed before concerned Gram Sabhas after the forest land has already been diverted. Therefore, state governments are bound to come in conflict with local communities, including tribals and other forest dwellers, while seeking to implement the new set of rules,” said Tushar Dash, an independent Bhubaneshwar-based researcher.

For the coal sector, in particular, the Central government has been continuously diluting rules to ease the mining of fossil fuels by the corporate sector. Last year, the central government allowed captive coal block leaseholders to use 50% of extracted minerals for commercial trading after meeting their end-use requirements. This had been justified on the assumption that it would reduce the import bill of coal and help bridge India’s trade deficit.

The writer is an independent journalist.