This bill will increase the financial burden on mining companies as it requires them to share 26% of their profit with the local population. It was reported by different media that industry was trying to lobby some changes in the draft bill before it was placed before the cabinet.
However, the lobbying did not affect the ministry of mine and the bill was tabled based on recommendations that were given by a group of ministers. Although the bill was scheduled to be placed before the parliament during its monsoon session but then it was shifted to winter session. The bill was first cleared by the ministerial panel headed by Pranab Mukherjee.
The aim of the current proposed bill is to replace the old legislation with the new one that requires mining companies to share 26% of their profits with the people affected due to mining activities. While all other companies will share the same amount with the locals that they pay to the state government as royalty.
The proposal states that every district will have its Mineral Development Fund. All miners and other companies will share their profit or an amount equivalent to royalty with this fund. The fund will be spend the amount on the local population and the area development.
It has also been proposed in the bill that a 2.5% central cess and a 10% state cess on royalty will charged.
'The legislation also has punitive provisions to prevent illegal mining.' mines secretary, S Vijay Kumar said to a newspaper.
This will be definitely increase the cost of mining in the short run but it will help the country achieve inclusive growth. Also such measures will allow the government to reduce its deficit as the development costs of such areas will be covered.
In the immediate aftermath, the share prices of mining companies will take a steep fall. But such panics will also bring up new opportunities.