THE hold of the mining lobby on politics and government is nowhere as unconcealed as it is in Karnataka, a State that occupies the fourth place in iron ore reserves and production after Bihar, Orissa and Chhattisgarh.
The resignation in Bangalore on June 23 of N. Santosh Hegde, the Lokayukta of Karnataka, over non-cooperation from the State government in his fight against corruption, has put the spotlight once again on the nexus between the mining lobby and the government, and the culture of corruption, political patronage and illegality that it has spawned. For the Bharatiya Janata Party (BJP) government, led by Chief Minister B.S. Yeddyurappa, the disclosures by the Lokayukta, coming on the eve of the second anniversary celebrations of the State government, could not have been more embarrassingly timed. In the face of the stinging indictment of the government's record on curbing mining-linked corruption, the achievements that it would like to highlight now sound somewhat unconvincing.
Santosh Hegde pulled no punches when he explained the reasons for his resignation. He said that the Lokayukta police had seized 99 lorries that were illegally transporting iron ore from Bellary to Belekeri and Karwar ports with bogus documents. He had asked the Deputy Conservator of Forests, Karwar, to search the port after taking permission from the jurisdictional police. The DCF followed the instructions, seized eight lakh tonnes of ore, and followed this up by filing cases under the Prevention of Corruption Act against the companies that owned the ore and the port officials involved. However, a senior Minister interceded on behalf of the companies and had the official suspended, the Lokayukta said.
I realised that I could not protect officials who discharge their duties on my directions. I decided that I should not continue in the post as I was already fed up with the continued non-cooperation of the government, he said. Coming from the author of a comprehensive and authoritative report on mining irregularities, this is a serious indictment of a government that appears helpless against the clout of an aggressive mining lobby.
Despite public protests, political pressure, media exposures, court directives, a well-documented report on mining irregularities in Bellary district by the Karnataka Lokayukta in 2008, and, more recently, a series of Supreme Court directives, irregularities in the mining sector abound. Neither the State nor the Central government has been able to stop them. These include unauthorised ore extraction, encroachments, violation of statutory provisions, and massive environmental destruction.
Although all mainstream political parties in the State, including the Congress and the Janata Dal (Secular), have in different degrees been funded by mining profits, it is the BJP that has been responsible for the legitimisation of the mining-politics nexus. It brought many mining barons with suspect business ethics into the fold and, once it came to power in Karnataka in 2008, into active politics. The Bellary billionaires, G. Karunakara Reddy, G. Janardhana Reddy, G. Somashekhara Reddy and their confidant B. Sriramulu, have a direct share in political power. Three of them are Ministers in the Yeddyurappa Cabinet, while Somashekhara Reddy is the Chairman of the powerful Karnataka Milk Federation.
Karnataka's mining boom, which started in the late 1990s, is centred in Bellary district, which is said to have reserves of about 1,000 million tonnes of iron ore. In 2001-02 and 2002-03, the production of iron ore from the Bellary zone was 12.4 million and 13.9 million tonnes respectively, just about 1.2 per cent of the total reserves. The mining frenzy of the last decade in one of the poorest districts of Karnataka was the outcome of two factors. The first was the opening up of the mining sector to private exploitation in 1999, while the second was the steady and steep increase in the global price of iron ore from 2003, driven by the demand in a steel-hungry China.
According to the Lokayukta report, between 2000-01 and 2005-06, the production of iron ore increased from 12.09 million tonnes to 184.05 million tonnes. Exports in the same period went up from 6.19 million tonnes to 90.76 million tonnes. The price of iron ore rose from Rs.274 per tonne to Rs.1,061 per tonne, and the total export value increased from $184.09 million to $5,216.39 million.
A total of 196 iron ore mining leases had been granted until 2000. In the years of the China Boom, only 11 new leases were granted by the State government in Bellary.
The decade of the 2000s saw the transformation of Bellary from a district known for its green cover and wildlife into a centre of uncontrolled mining which accounted for nearly 20 per cent of the country's iron ore production.
The area was denuded of its forest cover as hills were blasted and flattened for their ore. With a greed reminiscent of the phase of primitive accumulation that accompanied early capitalism, Bellary was stripped of its wealth and resources by a clutch of companies whose owners became billionaires overnight, even as mine labour (including an army of child labourers) toiled in shocking conditions of work. Soon, the demand for the regulation of mining grew from political parties, labour unions and non-governmental organisations.
In response to this popular demand, and because the large-scale illegalities taking place in Bellary could be ignored no longer, the JD(S)-BJP coalition government led by H.D. Kumaraswamy asked the Karnataka Lokayukta in March 2007 to investigate the allegations of profiteering from illegal mining and large-scale corruption in political and public life resulting from it. In a government order, the Lokayukta was asked to fix responsibility and initiate suitable action against all public servants including Ministers whether in office or otherwise.
In December 2008, Santosh Hegde submitted a 274-page report, with five annexures. It is the most comprehensive survey and investigation so far of the structure and evolution of the mining sector. The report fixed responsibility on those who were responsible for illegal or irregular acts and recommended that action be initiated against former Chief Minister N. Dharam Singh, who held the portfolio of the Department of Mines and Geology, for contravening the law.
The State government responded with an action-taken report running into 11 volumes. It impressed no one, least of all Santosh Hegde, who dismissed it as an action to be taken report.
For the Reddy brothers, directors of Obulapuram Mining Company (OMC), which held mining leases across the border in Andhra Pradesh, the Lokayukta report did little more than marginally tarnish their image. Such was their influence with the party's Central leaders, notably Sushma Swaraj, that they even received tacit support when they raised the banner of dissidence against Yeddyurappa in November 2009, a revolt that petered out soon enough but served to show a chastened Chief Minister who called the shots.
It is not as though there has been no action taken by the State government against illegal mining. Following the Lokayukta report, cases were booked by the Karnataka Department of Forests, Mines and Geology, against 16 mining companies and their operations were shut down. The companies, however, got the High Court to stay the orders, and mining operations were resumed. In December 2009, a special task force of the Indian Bureau of Mines inspected 25 mines and issued orders for the suspension of mining operations in 12 of them on the grounds that they violated the approved mining plan. In April-May 2010, the task force issued similar orders against another 18 companies. While on paper the order stands, there have been allegations that secret and illegal movement of ore is still taking place from these mines.
The Reddy brothers, too, have emerged victorious from a string of court cases against them by the Andhra Pradesh government. In November 2009, the State government suspended mining operations of OMC on the grounds that it was transporting ore on an illegally constructed road through reserved forest area. The company appealed the order in the Andhra Pradesh High Court, which issued an interim stay. The Andhra Pradesh government then went to the Supreme Court, which remitted the case back to the High Court in February 2010. The State went again in appeal to the Supreme Court, which in May once again revoked the stay saying that OMC could mine in undisputed areas. The Supreme Court also asked the Survey of India to conduct a fresh survey of the area. Both Andhra Pradesh and Karnataka governments have alleged that OMC has shifted the inter-State boundary, while adjacent mining companies have alleged widespread encroachment by OMC into their lease areas.
If the state is not seen to be fulfilling its duties as the guardian of the valuable mineral and forest resources of the district and as a fair arbiter in the conflicts over mining rights that have intensified among mining companies in the area, then it is only strengthening the perception that has already gained credence in the public mind that the mining lobby is so powerful that it can subvert the process of justice and use the administration to serve its business and political ends.
