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New minerals policy sees natural resources as shared inheritance

SabrangIndia 04 Apr 2019

India's National Mineral Policy 2019 (NMP2019) acknowledges "natural resources, including minerals, are a shared inheritance where the state is the trustee on behalf of the people to ensure that future generations receive the benefit of inheritance




 
In March 2019, the Indian government has come up with a new National Mineral Policy (NMP) that replaced the earlier 2008 Policy.
 
The Policy lays a systematic foundation for the implementation of the Intergenerational Equity Principle.
 
“We have been arguing that we need to see minerals as a shared inheritance, great wealth that we must protect for future generations to inherit. As a corollary, mining is the sale of minerals, and in exchange for our mineral wealth we receive royalties and other amounts. These are erroneously treated as "revenue", "tax" or "income" with grave consequences - the resource curse, climate chaos, Dutch disease, corruption, crony capitalism, growing inequality, etc,” a statement by the editors of “The Future We Need”Movement and Goa Foundation NGO organisation, an advocacy group for mineral rights, read.

India's National Mineral Policy 2019 (NMP2019) acknowledges "natural resources, including minerals, are a shared inheritance where the state is the trustee on behalf of the people to ensure that future generations receive the benefit of inheritance.” “This and other languages in the policy reflects Goa Foundation's advocacy and that of a larger campaign we coordinated across India. With this, three key ministries - finance, environment and mines - have accepted the shared inheritance perspective. The policy review was ordered by the Supreme Court following a discussion on implementation of Intergenerational Equity. The policy proposes a number of steps including a variety of caps on extraction and the need for #ZeroLoss. While we hope the government implements the policy, it also offers concrete grounds for further advocacy and public interest litigation,” they said. 

India's policy may help other countries adopt a shared inheritance perspective. Earlier in January, Publish What You Pay held its General Assembly where Goa Foundation made a presentation on our advocacy messages. The General Assembly communique calls on “governments, companies and intergovernmental institutions including multilateral development banks to acknowledge and explore, where citizens demand this, the concept of oil, gas and minerals as a shared intergenerational inheritance”.
 
Key proposals of the National Mineral Policy 2019
 
  • Proposes to increase the production of major minerals by 200 per cent in seven years, and reduce trade deficit in the mineral sector by 50 per cent in seven years.
  • Aims to attract private investment through incentives like the financial package, right of first refusal at the time of auction etc. or any other appropriate incentive according to international practices.
  • Introduces the concept of Exclusive Mining Zones which will come with in-principle statutory clearances for grant of mining lease.
  • Emphasises on simplifying the clearance process and making it time-bound for mineral development and commencement of mining operations.
  • Proposes to identify critically fragile ecosystems and declare such areas as “no-go areas”/ “inviolate areas”.
  • Encourages merger and acquisition of mining entities, and transfer of mining leases that have been granted in a transparent manner to ensure a seamless supply of ores and scaling up of business.
  • Focuses on a long term export-import policy for the mineral sector to provide stability for investing in large scale commercial mining activity.
  • Proposes harmonising royalty and all other levies and taxes with mining jurisdiction across the world.
  • Emphasises on ensuring the welfare of mining-affected people/communities and ensuring rehabilitation and resettlement, by a suitable implementation of all relevant Acts / Rules.
  • Introduces the concept of Inter-Generational Equity in mineral resource exploitation.
  • Proposes development of an over-arching inter-ministerial body, under the aegis of the Ministry of Mines, to institutionalise mechanisms of sustainable mining. The body will also advise the Government on rates of royalty, dead rent etc.

A new standard on Natural Resources is the highest priority in the final Work Plan 2019-2023 of the International Public Sector Accounting Standard Board (IPSASB). “This too is a result of advocacy by Goa Foundation and a global campaign coordinated by us,” the advocacy group said.

“At present, governments incorrectly treat royalties as "income". Politicians love it - "easy money" which can be used to retain power. Naturally, minerals are extracted at a faster and faster pace. In reality, minerals are usually sold for very large losses - Australia lost 82% of the value of its minerals extracted over 2000-10, a total loss of USD 159 billion! This is a per-head tax of USD 7,000 on every Australian which made a few miners super-rich. Proper accounting would disclose these capital losses as government expenses. Politicians would have to explain to voters why they are selling the family silver for a pittance and consuming the proceeds, leaving nothing for future generations. The error in treating royalties as “income” instead of extraction of mineral wealth originates in the standard for GDP (UN SNA 2008), and is difficult to correct due to opposition from rulers of resource-rich nations and the macroeconomics community (as historical GDP, growth and per capita income series will change significantly, questioning a lot of what is thought to be settled,” they said.

“While the new IPSAS on Natural Resources will take years to agree and even longer to implement, the crucial first step has been taken. In a similar vein, we met with the IMF in August last year to discuss amending the other key standard, IMF's Government Finance Statistics Manual 2014 (GFSM). Advocacy has begun with UN Statistics as well to correct the SNA 2008 (System of National Accounts) and the SEEA (System of Environmental-Economics Accounts),” they added.
 
The Future We Need is a global movement asking for natural resources to be viewed as a shared inheritance we hold as custodians for future generations. Whose Mine Is It Anyway is a campaign to make government finances and national income statistics treat mining as the sale of minerals.
 
The Goenchi Mati Movement is advocating these principles for all mining in Goa, India. A joint campaign is asking for these principles to be part of India’s National Mineral Policy.
 

New minerals policy sees natural resources as shared inheritance

India's National Mineral Policy 2019 (NMP2019) acknowledges "natural resources, including minerals, are a shared inheritance where the state is the trustee on behalf of the people to ensure that future generations receive the benefit of inheritance




 
In March 2019, the Indian government has come up with a new National Mineral Policy (NMP) that replaced the earlier 2008 Policy.
 
The Policy lays a systematic foundation for the implementation of the Intergenerational Equity Principle.
 
“We have been arguing that we need to see minerals as a shared inheritance, great wealth that we must protect for future generations to inherit. As a corollary, mining is the sale of minerals, and in exchange for our mineral wealth we receive royalties and other amounts. These are erroneously treated as "revenue", "tax" or "income" with grave consequences - the resource curse, climate chaos, Dutch disease, corruption, crony capitalism, growing inequality, etc,” a statement by the editors of “The Future We Need”Movement and Goa Foundation NGO organisation, an advocacy group for mineral rights, read.

India's National Mineral Policy 2019 (NMP2019) acknowledges "natural resources, including minerals, are a shared inheritance where the state is the trustee on behalf of the people to ensure that future generations receive the benefit of inheritance.” “This and other languages in the policy reflects Goa Foundation's advocacy and that of a larger campaign we coordinated across India. With this, three key ministries - finance, environment and mines - have accepted the shared inheritance perspective. The policy review was ordered by the Supreme Court following a discussion on implementation of Intergenerational Equity. The policy proposes a number of steps including a variety of caps on extraction and the need for #ZeroLoss. While we hope the government implements the policy, it also offers concrete grounds for further advocacy and public interest litigation,” they said. 

India's policy may help other countries adopt a shared inheritance perspective. Earlier in January, Publish What You Pay held its General Assembly where Goa Foundation made a presentation on our advocacy messages. The General Assembly communique calls on “governments, companies and intergovernmental institutions including multilateral development banks to acknowledge and explore, where citizens demand this, the concept of oil, gas and minerals as a shared intergenerational inheritance”.
 
Key proposals of the National Mineral Policy 2019
 
  • Proposes to increase the production of major minerals by 200 per cent in seven years, and reduce trade deficit in the mineral sector by 50 per cent in seven years.
  • Aims to attract private investment through incentives like the financial package, right of first refusal at the time of auction etc. or any other appropriate incentive according to international practices.
  • Introduces the concept of Exclusive Mining Zones which will come with in-principle statutory clearances for grant of mining lease.
  • Emphasises on simplifying the clearance process and making it time-bound for mineral development and commencement of mining operations.
  • Proposes to identify critically fragile ecosystems and declare such areas as “no-go areas”/ “inviolate areas”.
  • Encourages merger and acquisition of mining entities, and transfer of mining leases that have been granted in a transparent manner to ensure a seamless supply of ores and scaling up of business.
  • Focuses on a long term export-import policy for the mineral sector to provide stability for investing in large scale commercial mining activity.
  • Proposes harmonising royalty and all other levies and taxes with mining jurisdiction across the world.
  • Emphasises on ensuring the welfare of mining-affected people/communities and ensuring rehabilitation and resettlement, by a suitable implementation of all relevant Acts / Rules.
  • Introduces the concept of Inter-Generational Equity in mineral resource exploitation.
  • Proposes development of an over-arching inter-ministerial body, under the aegis of the Ministry of Mines, to institutionalise mechanisms of sustainable mining. The body will also advise the Government on rates of royalty, dead rent etc.

A new standard on Natural Resources is the highest priority in the final Work Plan 2019-2023 of the International Public Sector Accounting Standard Board (IPSASB). “This too is a result of advocacy by Goa Foundation and a global campaign coordinated by us,” the advocacy group said.

“At present, governments incorrectly treat royalties as "income". Politicians love it - "easy money" which can be used to retain power. Naturally, minerals are extracted at a faster and faster pace. In reality, minerals are usually sold for very large losses - Australia lost 82% of the value of its minerals extracted over 2000-10, a total loss of USD 159 billion! This is a per-head tax of USD 7,000 on every Australian which made a few miners super-rich. Proper accounting would disclose these capital losses as government expenses. Politicians would have to explain to voters why they are selling the family silver for a pittance and consuming the proceeds, leaving nothing for future generations. The error in treating royalties as “income” instead of extraction of mineral wealth originates in the standard for GDP (UN SNA 2008), and is difficult to correct due to opposition from rulers of resource-rich nations and the macroeconomics community (as historical GDP, growth and per capita income series will change significantly, questioning a lot of what is thought to be settled,” they said.

“While the new IPSAS on Natural Resources will take years to agree and even longer to implement, the crucial first step has been taken. In a similar vein, we met with the IMF in August last year to discuss amending the other key standard, IMF's Government Finance Statistics Manual 2014 (GFSM). Advocacy has begun with UN Statistics as well to correct the SNA 2008 (System of National Accounts) and the SEEA (System of Environmental-Economics Accounts),” they added.
 
The Future We Need is a global movement asking for natural resources to be viewed as a shared inheritance we hold as custodians for future generations. Whose Mine Is It Anyway is a campaign to make government finances and national income statistics treat mining as the sale of minerals.
 
The Goenchi Mati Movement is advocating these principles for all mining in Goa, India. A joint campaign is asking for these principles to be part of India’s National Mineral Policy.
 

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