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The concept of nationalism with the government running the mines through a subsidiary seems like a panacea for all the problems associated with mining
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There is this almost-romantic notion that nationalization of mining will resolve all issues and stake holders will live happily ever after. This approach to mining has been put forth in petitions filed before the Supreme Court and now by union leader Christopher Fonseca, whose chief concern is the workers who have been at the receiving end ever since mining came to a grinding halt in 2012. Fonseca explained that once the mines are nationalised, the state becomes the centre of gravity for the sector and the government takes on the responsibility of citizens who will no longer be dependent on the whim or fancy of private players. He also stated that anti-labour practices in the sector will come to a halt. This pitch for nationalisation was raised in a petition filed by the Goa Foundation earlier and is obliquely the subject matter of a petition which in being heard in the Supreme Court.
In theory, like Marxism, the concept of nationalism with the government running the mines through a subsidiary seems like a panacea for all the problems associated with mining. There are numerous enterprises which are run by the government. These enterprises are successful only in areas where they have a near monopoly, like petroleum for instance. In areas where they have to compete, these organisations tend to fail because there is no accountability. Today many have become parking places for retired bureaucrats and the general trend is a retreat of government from the field of business. This is why the government opened the coal sector to private players, even though Coal India is still a player. Dilution of government equity is a process that started long ago and the disinvestment target set by the Centre in the 2015-16 budget is a whopping Rs 69,500 crore. In the next two years the government hopes to gain Rs 1 lakh crore through disinvestment.
The trend in the rest of the world and India is less government in the field of business. This principle was articulated by Prime Minister Narendra Modi in the run up to the 2014 elections. At the time of independence, a fledgling private sector made it imperative for the government to get involved in key sectors. That situation no longer exists and it seems natural for the government to withdraw and private enterprise to fill the vacuum.
Fonseca's concern for the average worker is genuine, but the proposal put forth by him and others for nationalisation of mines is out of sync. Like Fonseca, we also realise that mining has to re-start, but there are problems. Iron ore prices have plummeted from the peak levels to rock bottom. Last week the price of Fe 56 grade was $ 25 per tonne. What makes mining unprofitable is the combination of international prices of iron ore and the tax regime which was formulated when prices were at a peak. The belligerent stance taken by truckers is a sure sign that there isn't enough money to go around. Those who reckon that nationalisation will bring huge benefits to the state are living in a Marxist dream where profits accumulate only on paper.
