With the Narendra Modi government announcing that 100% foreign direct investment (FDI) will be allowed into the country’s coal mining sector, it is very likely that world’s biggest mining conglomerates will eagerly step in. India has an estimated 319 billion tonnes of cumulative coal reserves, mainly in Jharkhand, West Bengal, Chhattisgarh, Odisha and Madhya Pradesh, with more in Telangana, Andhra Pradesh, Maharashtra, and smaller deposits in several other states, including the North-East. 

At present, about 92% of the mining is done by the public sector behemoth Coal India Limited (CIL) and the smaller public sector undertaking, Singareni Collieries Company Limited (SCCL). In 2018-19, India produced about 730.54 million tonnes (MT), according to provisional figures of the coal ministry, of which 606.89 MT was produced by CIL and about 64.4 MT by SCCL. 

On the face of it, there appears to be no need for the government to invite foreign companies to exploit India’s coal deposits. The public sector undertakings are doing well, their production is growing, they have paid almost Rs.1.27 lakh crore as dividends and reserves to the government in the past decade, in addition to various taxes and royalties amounting to Rs.44,000 crore last year. They are also a source of huge employment, with some five lakh employees working in CIL itself, although just about 2.7 lakh of them are regular employees (the rest are on various types of contract or casual workers). In fact, CIL is counted amongst the world’s top 10 coal mining companies.

So, it seems strange that foreign capital – that means, foreign companies – are being invited to a invest in Indian coal mines. Why this is so has been written about earlier in Newsclick, but here, let’s take a look at who all are likely to join this party.

The Big Mining Companies

According to a recently published report of the global auditing company PricewaterhouseCoopers (PwC),  the revenue of the world’s top 40 mining companies was a staggering $683 billion in 2018 and was likely to increase to $686 billion in 2019. Their combined profit before tax was $93 billion in 2018 and was likely to increase to $109 billion in the current year. That’s a jump of nearly 13%! Their net profit (after taxes and all other deductions) was $66 billion in 2018, likely to increase to $76 billion in 2019 – an increase of a phenomenal 15%.

These mining conglomerates are part of the larger set of major transnational companies (TNCs) that are today dominating the world’s economy. As a Tufts University/UNCTAD study of 2015 showed, the top 2,000 TNCs held assets that were 229% of world GDP, while their net sales made up nearly half (48.8%) of world GDP (gross domestic product) . The mining companies – or more properly, the extractive industries’ companies – made up about 5.5% of these 2,000 top TNCs. The study revealed that profits of extractive TNCs rose from 9.3% in 1996 to 13.3% in 2015.

What about coal mining specifically? As the table below, drawn from Statista, shows, five of the top 10 coal mining giants in the world are Chinese and one is Indian – Coal India. The Modi government is unlikely to invite the Chinese to exploit Indian coal. So, the potential candidates are the top three, or number five.

Note that Coal India is already among the top 10, yet the balance is being shifted elsewhere – out of India, towards one of the British or Australian companies. 

How Do Mining TNCs Make Profit and Where Does It Go?

These giant companies are not coming to India to do charity work. They want to make profits — more and more. Various studies, summarised here, have shown that these companies ensure large profits by
 

• Intentionally establishing operations in countries where it is possible to exploit low-wage workers.
• Investing in locations where it is possible to take advantage of regressive tax codes.
• Ensuring business-friendly production-sharing agreements with local governments.

Nate Singham, writing in Common Dreams (from where the above is drawn) quotes empirical studies done by the Tricontinental Institute of Social Research (TISR) in Zambia to show that Konkola Copper Mines (KCM) corporation, a subsidiary of Vedanta, gives an average monthly wage of $172 to local mine workers whereas the statutory monthly minimum wage in Zambia is $176.4. TISR reviewed wage agreements to supplement their empirical surveys and found that the owner of Vedanta, Anil Agarwal, earned 584 times of what the temporary contract worker was earning in copper mines.

The PwC report quoted above shows that the top 40 mining companies spent, on an average, just 22% of the value generated by their mining business went to their employees while 25% went to shareholders. This shows that the mining operations of these TNCs are highly exploitative of labour. It is this key factor that will draw Big Coal to India because wages here are quite low, especially among contract workers.

The tax part is also important. The PwC report shows that the top 40 mining companies paid $27 billion as taxes of all kinds in 2018 over revenues of $683 billion. That’s an effective tax rate of just 3.95%! With these kind of tax rates, it is small wonder that the mining companies are raking in profits with both hands.

It might be argued that India will not have such low tax rates as prevalent in very poor and weak African countries. That is possible, but here we need to note the immense power these TNCs wield over the political rulers of the countries they operate in. Once they get their teeth into mining operations in a country – as Modi is inviting them to do in India – the full force of their deep pockets, their political clout with governments in the UK, the US or Australia, their connections with multilateral finance agencies, such as the International Monetary Fund and World Bank, and with financial institutions, like banks, will become increasingly evident in India too. They will ensure that by hook or by crook, their profit margins are not affected by anything, especially taxation. 

So, as New India gets ready to welcome these ruthless giants to start operating fully in the country’s natural resources sector, dark clouds are amassing for lakhs of workers who will see retrenchments, changes in service conditions and curtailment of benefits. More than that, the country will be sucked dry by these companies. Keeping this in mind, the five lakh coal workers who are going on a protest strike on September 24 against this disastrous decision, deserve a salute – they are not just fighting for themselves; they are fighting for the country’s sovereignty.

Courtesy: News Click
 

 

Petrol and diesel prices will be reduced by Rs.2.50 per litre each, Finance Minister Arun Jaitley announced at a press conference on Thursday  in Delhi. He urged states to match this with a similar Rs.2.50 cut in their share of taxes. So far, Kerala and Delhi have refused to do so, while six BJP-ruled states have agreed.

Have a look at the charts below – it shows the great cut in prices in perspective. These are based on daily data maintained by the Petroleum Planning & Analysis Cell (PPAC) under the oil ministry.

Last year, the government switched over to daily price fixing of these two fuels. At that time, petrol was being sold at Rs.65.48 per litre and diesel at Rs.54.32/litre.

On October 4, after the Rs.2.50 cut, the rates are: petrol – Rs.81.50 and diesel Rs.72.95 per litre! In other words they are about 24% higher than they were in June 2017. The great cut announced by Mr.Jaitley amounts to a measly 3% of the cost it was selling at.

India’s retail oil prices are made up of the cost at which oil is imported plus excise, VAT and dealers’ commission. As per Indian Oil Corporation, on October1,  2018, the price being charged to dealers was Rs.42.79 per litre of petrol and Rs.46.22 per litre of diesel. The rest of it is all taxes, with a small amount (Rs.3.66 for petrol and Rs.2.52 for diesel) going as dealers’ commission.

In other words, it is the government. which has been reaping enormous profits from the sale of petrol and diesel. It is estimated by PPAC that in 2017-18, the petroleum sector contributed a staggering Rs.3.44 lakh crore to the Centre’s treasury through these taxes and dividends. The contribution to state exchequers was another Rs.2.09 lakh crore. The total amount is a mind boggling Rs.5.5 lakh crore – all through jacking up prices of petrol and diesel even though international prices were low.

The Modi government has failed to raise resources by taxing the rich. It has allowed corporate bodies to abscond with lakhs of crore rupees worth of bank loans. It has sold national assets to private entities. It has privatised various services to benefit them. Yet when it comes to giving some relief to the common persons, it has been callously obstinate, refusing any cuts in prices of essential commodities like oil.

And, now Mr. Jaitley announces a cut of Rs.2.50 as if it is a great concession and relief to the public. You must be joking Mr.Jaitley, right?

Courtesy: Newsclick.in

It is customary to believe that Modi led BJP is unbeatable in Gujarat. But there is a strong element of hype in this belief. Electoral trends of vote shares in the past several elections in Gujarat show that the BJP’s stranglehold is cracking up, and it is not at all certain that they will win the forthcoming Assembly elections.

The state has seen six elections since 2007: two each of local bodies’ elections (in 2010 and 2015), Assembly (2007 and 2012), Lok sabha (2009 and 2014). Till 2014 the gap between BJP and its only challenger in Gujarat, Congress, was seemingly widening. In the 2012 Assembly elections BJP got nearly 48% vote share as opposed to the Congress’ 39%. In the 2014 Lok Sabha elections, BJP won all 26 Lok Sabha seats in the state capturing a phenomenal 59% of vote share. This is what created the image of invincibility.

But in the last elections held in the state – the local bodies’ elections of 2015 – the whole equation started changing. For the first time in over a decade, ruling BJP lost the rural local bodies to Congress, while in urban local bodies the BJP still won but with a much reduced gap. The Congress won 24 of the 31 district panchayats and 134 of the 230 taluka panchayats. In 2010 it had held only 6 district panchayats and 67 taluka panchayats.

In terms of vote share, Congress increased its vote share from 44% in 2010 to nearly 48% in 2015 in district panchayats; and from 42.4% to 46% in taluka panchayats. On the other hand, BJP’s vote share declined from over 50% to 44% in district panchayats and from 48.5% to 42.3% in taluka panchayats.

Clearly, rural areas, in the throes of a deep agrarian crisis, had turned against the BJP. The vehicle of this change was the patidar agitation led by Hardik Patel, which started in early 2015, before the local bodies’ elections were held in August of that year. The Patel community had been supporting BJP solidly for years but it became hostile to the rulers after the police crackdown on their agitation for job reservation in which 14 lives of Patel youth were lost.

In local bodies of urban areas the BJP held its ground in the 2015 elections although their vote share dipped. It retained all 56 municipalities and all 6 municipal corporations although its vote share reduced from 48% to 45% in the former and from 52% to 50% in the latter.

The rural-urban divide in the BJP’s vote base had thus crystallized in the 2015 elections. And, now after two years there is no reason to believe that there has been a reconsolidation behind BJP. In fact other fissures have emerged that may further damage BJP’s position and its support base has been further eroded. Other Backward Classes and dalits, have started fighting for their rights in opposition to BJP. The dalits have raised their voice at continued atrocities against them, sparked off by the Una incident of stripping and public beating of dalit youth for going about their traditional occupation of flaying and disposing off cattle carcasses. There are rumblings of dissent in tribal areas against continued neglect by the BJP govt.

In short, the whole social base built by BJP after the communal holocaust of 2002, based on an imposed Hindutva identity that subsumed various castes and social identities has been torn asunder by the much deeper agrarian economic crisis. Food grain and oilseed production is stagnating for the past nearly a decade, and cotton output is stagnating for the past 6-7 years with some ups and downs, as per RBI data on output. Farmers’ debt is increasing while incomes are stagnating. All this is finding expression in various caste based movements, but also in farmers’ agitations on their issues. Unemployment is increasing generally as industrial production has plateau-ed off.

So, the BJP may well be on the brink of a shock in the coming Assembly elections.

Courtesy: Newsclick.in

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