Crisis and Revanchist Resource Extraction


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It is increasingly apparent that India is in the midst of an economic crisis. Most sectors are on a downward trajectory, the Rupee is in free-fall, and inflation has never really been adequately controlled despite government assurances. So much is clear from TV discussions and opeds in the last fortnight. It is, we are told, the time to introspect; to diagnose, strategize and correct. In all of this, a specific line of thought has emerged (see PanagariyaDebroy and Gupta), which posits the crisis as a result of some combination of UPA misgovernance and jholawala activists’ misdirected notion of social good. So while Arvind Panagariya rails against the Ministry of Environment and Forests (which approves close to 100% of all projects, however ill conceived), Shekhar Gupta is squeezed the wrong way by activists, who, he argues, unnecessarily instigate trouble by inciting poor villagers and tribals to act against their own interests that are better served by unfettered extraction of resources from their lands and forests. Accordingly, this argument demands a ‘streamlining’ of regulatory frameworks on the one hand, and a revanchist offensive against disruptive elements on the ground and in the universities. The tragic aspect of this farcical discourse is that it is widely held and is being made in all seriousness.

On the decline of the mining sector, Shekhar Gupta has the following to say: “the leadership of UPA 2 concluded that mining was immoral, unethical and unnecessary. That it was responsible for all kinds of problems in east-central tribal India, from environmental degradation to tribal destitution and Maoism. So stop mining, shut down this wretched extractive industry, and these problems will disappear.” The way out of it then, according to Bibek Debroy, is to “sort out procedures (land, forest, environment), so that all investments — and not just FDI — are triggered”. As simple as that.

No doubt, the UPA is utterly short of ideas and bereft of spine. But to accuse them of pandering to the said activists is laughable, when we know fully well—and not only via the Radia tapes–who enjoys the most access to the state and its policy. Specifically on mining, despite their general incompetence, one cannot place the decline at the doorstep of the government nor, of course, of activists supposedly bent on stalling development. Such analysis in reality shows little understanding of global factors or local conditions, and is driven wholly by national accounting concerns and within this, a fetish for national statistics. Globally, even a cursory look at prices and production is significantly revealing: aluminum, copper, steel are all down about or more than 50% of their 2007-08 price levels. Smaller companies are folding left and right, and bigger ones are consistently struggling. Surely, the jholawaalas, who Gupta chides as the Maoists’ ‘intellectual backers’, haven’t caused the global meltdown. One would, from a sensible commentator, expect a few words on speculators and investment bankers, but to him they’re the victims of ‘red tape’ and activism. If anything, should not the alleged success of activists in stalling production and the consequent decline in supply actually push prices upwards?

On the grassroots, considering how extractive industry operates, it is not surprising that Gupta and many of our free-market boosters get things so wrong. For them, land, forests and the earth’s crust are essentially resources to be tapped for private profit and national growth, or factors of production for individual businesses. At best, this is a misguided analysis on two counts. First, it is a blinkered and entirely simplistic view of space, and conceives of it as a blank wall upon which policies are painted and businesses drilled in. These places are, however, inscribed by lives, histories, meanings and stakes, and not only of the powerful. It is entirely unsurprising that communities resist, with whatever at hand, agencies, however well meaning, which forcibly take land or forests away from them. No doubt, some NGOs have spun this kernel of politics into a profit-making business, but for the most part, activists are responding to and not creating the conflict.

Second, analysts like Gupta, Debroy, or Panagariya are essentially misguided on how extractive industry actually works on the ground. Forget everything else; one simply needs to visit sites after mining companies have done their thing. These are zones of destitution and environmental devastation: hardly any private company and only a few public sector enterprises approach ecological damage-limitation or restoration with any degree of seriousness and only rarely do they implement plans with success. Instruments like compensatory afforestation have been typically reduced to a hoop to be crossed, a service in any case offered by a combination of private consultants and extra-legal brokers.

Regulations are flouted, leases illegally enlarged, and books cooked as a rule. Across India, mining greases the same vast networks of protection and patronage that the public distribution systems do, but while commentators self-identifying as ‘reformers’ are unendingly annoyed by state corruption, they are much less troubled by the public-private partnerships that personify crony capitalism. Mining-led local economic development is, in reality, a euphemism for private profiting and the enrichment of agents in the regional bureaucracy, technocracy, law enforcement, and even local democratic or traditional institutions. Gupta and his ilk are, in short, the ‘intellectual backers’ of this precise nexus.