The recent Supreme Court ruling on the mining industry has far reaching repercussions. Exports of iron ore have stopped and we have lost a foothold in the world market. Our own industry would now need time to revive. Could we have adopted any other way to stop the illegal activities but maintain the tempo of exports and overcome the current impasse?
It all began with the findings of the Lokayukta report on the state of affairs of the mining industry in Bellary, in particular, and Karnataka, in general, resulting in the debarring of iron ore exports and the illegalities associated with it.
The Supreme Court had appointed the Central Empowered Committee (CEC) to investigate the matter. After a detailed study, the recommendations were submitted to the Supreme Court, as a sequel to which, 49 mining leases were cancelled in Karnataka. Mines on the border of Andhra-Karnataka have also been debarred from carrying out any mining operations until clear land-border demarcation has taken place. No time-frame has been fixed for this demarcation to take place.
The CEC had classified the mines into three categories; those with no illegalities were grouped as ‘A’ while those with maximum illegalities were put in category ‘C’. The apex court had observed that sales made by these ‘C’ category mines should be forfeited to the state. The court has lifted the embargo on the issue of granting fresh (or new) mining leases.
In the case of mines classified as ‘B’, they have been directed to compensate the exchequer for the losses caused by them. Full details are to be studied further.
Prima facie, the 45 mines in ‘A’ category and the 70 in ‘B’ category would now be able to re-start their operations. However, as these mines were closed down in 2011, it is not an easy task to revive the operations overnight. The logistics are daunting; experienced labour may have possibly moved to other areas; all the unused, rusted and abandoned equipment will have to be completely checked, possibly overhauled and maintenance repairs carried out before they can be put into operational use. The industry has shown relief that at least now 115 mines can plan their revival programmes.
It will therefore, take some time and great efforts to start and increase the production to 20 million tonnes (MT) to 21 MT, a reachable target, once all other things are in place. But this may be possible over a span of 16 to 18 months at the earliest, if the owners are able to put their heart and soul into the mines.
China, the main importer, in the meantime, has also located other sources of supply and the steel industry, on the whole, did not have a great year or two to report! Now, when India wants to revive its Chinese connection, it is most likely that they may demand their pound of flesh!
In such a scenario, it is most likely that the iron ore produced would find its way to meet the demand of the indigenous producers themselves and would help the industry. The international prices are lower today than they were two years ago and so the recovery factor is too early to predict.
On top of these, various clearances and approvals that are part of the relicensing procedure for mining to recommence production will have to be complied with. It is anybody's guess if it can be achieved in a short span of time and if so, at what cost?
And this is probably the first time such a major event has taken place in our mining history.
Just a thought—would it have helped if instead of simply banning the exports in totality, allowing the shipments to take place without hindrance, carrying on the investigations, but realise the payment and keep it in an escrow account with the government, till the matter was resolved?
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
Those enrolling on the UID database have not been informed that their data is to yield profit for the UIDAI, Rs288.15 crore a year and its only investor, the government, does not even own the data. How many in the government are even aware of this investing of ownership in an entity that continues to remain deliberately undefined and opaque
The Unique Identification Authority of India (UIDAI) was set up by an executive notification dated 28 January 2009. As per the notification, the Planning Commission was to be the nodal agency “for providing logistics, planning and budgetary support” and to “provide initial office and IT infrastructure”. As part of its “role and responsibilities”, the UIDAI was to “issue necessary instructions to agencies that undertake creation of databases, to ensure standardisation of data elements that are collected and digitised and enable collation and correlation with UID and its partner databases”. It was to “take necessary steps to ensure collation of the National Population Register (NPR) with the UID”. And, the UIDAI “shall own and operate” the UID database.
In July 2009, Nandan Nilekani was appointed as the chairman of the UIDAI, representing a lateral entry of a person from the private sector into the government, with the rank of a Cabinet minister.
The UID project proceeded without a law, despite the seriousness of privacy and security concerns till, caving in to public pressure, a draft Bill was prepared by the UIDAI in June 2010; and it was not till December 2010, after the project had begun to collect resident data, that this Bill was introduced in Parliament. The Bill stayed close to the framework for corporate control over databases that was later enunciated in the report of Technology Advisory Group on Unique Projects (TAG-UP) of which Mr Nilekani was the chair, and which gave its report in January 2011.
The Bill to give statutory status to the UIDAI was roundly rejected by the Parliamentary Standing Committee on Finance in December 2011. The Parliamentary Committee recommended that both the Bill and the UID project be sent back to the drawing board. There has been no effort since to reintroduce the Bill. Every time the UIDAI is confronted with questions about the legality of its enterprise, its officers assert that the executive order of 28 January 2009 is the legal instrument from which they derive their authority; and that order makes them the ‘owner’ of the database.
In the context of the UID project:
• Residents from whom the data is being collected have not been informed that the government is not the owner of the data, or of the database; nor what the legal status of the ownership by the UIDAI will mean for the citizen/resident;
• the UIDAI set up a Biometrics Standards Committee in September 2009, which gave its report in December 2009. Its report reveals that the UIDAI intended to “create a platform to first collect identity details of residents, and subsequently perform identity authentication services that can be used by government and commercial service providers”;
• the “UIDAI Strategy Overview”, in April 2010, estimated that it would generate Rs288.15 crore annual revenue through address and biometric authentication once it reaches steady state, where authentication services for new mobile connections, PAN cards, gas connections, passports, LIC policies, credit cards, bank accounts, airline check-in, would net this profit. Those enrolling on the UID database have not been informed that their data is to be yield profit for the UIDAI; they were perhaps expected to read up from the UIDAI website.
• as set out in the TAG-UP report, the data we think we are giving to the government is to end up on the database of what will be in the nature of a private company once it reaches steady state. When it is still a start-up, and till it reaches steady state at least, it will be funded by the government. After that, the government, like other commercial service providers, will become the customer of the UIDAI;
• with the UIDAI owning the database, the column in the UIDAI enrolment form for “information sharing consent” acquires a new significance. The UIDAI has all along been claiming that it will only be providing authentication by saying ‘yes’ or ‘no’, and nothing more. But, when the consent to share information is recorded on the database as having been given, the UIDAI may give all data on their database to any “service provider”, a term of wide and undefined import. That is, it is not only authentication services that the UIDAI will provide; through this consent, it is also assuming the authority to make money on the data that it holds, both demographic and biometric. This will provide it one more avenue to find customers, and one more product to market. Mr Nilekani often refers to the UID database as “open architecture”, and avows that a wide array of applications can be built on it;
• the claim that enrolment is voluntary has rung hollow for some time now. For one thing, the UIDAI plainly has no authority to compel anyone to enrol or to use their service. However, the UIDAI has been hard at work urging governments, banks, oil companies and other institutions to adopt the UID, to re-engineer their databases to fit the UID and to seed all their systems with the UID. The push is for ubiquity. The UIDAI has been complicit in the coercion and bullying that is now part of the UID enrolment process, and its silent acquiescence while people are threatened with exclusion from services and benefits if they have not enrolled, for a UID is one dimension of complicity. It is easy to understand why this is happening, for, as critics have observed, the services, and the people, have little to gain from the UID, while the UIDAI finds compulsion an easy way to expand their database;
• the non-existence of a law that says where the liability will lie in the event of identity fraud, or failure of the system of authentication resulting in denial of services, for instance, places the burden on the individual with no responsibility on the UIDAI for the consequences of the failures of fraud;
• while ubiquity of the UID would be a recipe for tracking, profiling, tagging, converging of databases and result in violations of privacy in which ways that could threaten personal security, this would become a mere incidence of the business, leaving the resident/citizen unprotected;
• the 2009 notification that set up the UIDAI says that the UIDAI is to “take necessary steps to ensure collation of the NPR (National Population Register) with the UID”. Registering in the NPR is compulsory under the Citizenship Act and the Citizenship Rules of 2003. Although biometrics is not within the mandate of the NPR, they have also been collected in the process of building up the NPR database. Therefore, the data mandated to be given to the NPR is being handed over to the UIDAI to be ‘owned’ by the UIDAI!
I wonder how many in government are even aware of this investing of ownership in an entity that continues to remain deliberately undefined and opaque.
(Dr Usha Ramanathan is an independent law researcher and has been critically following the policy and practices of the UIDAI since 2009)
This is the second of a two-part series on essential facts about mutual funds. The first part explained 15 reasons why mutual funds are good for you
Investing in mutual funds is simple. But, you must have discipline and patience. It is all about commonsense. You just have to hold your mutual funds for long periods. Mutual funds are excellent vehicles for accumulating wealth. They have great potential for creating lasting wealth in the long-term. Yet, people make mistakes in buying and selling them. Remember, most of the times, you lose patience first, before you lose money. But, these mistakes are very much avoidable. Let us see what these mistakes are and how to avoid them. And how you can make mutual funds worth your while!
Buying High and Selling Low. People have let themselves down frequently by buying high and selling low. Past data shows almost 80% of the mutual funds investments happen after the market has run up and equities are no longer cheap. It leads to disappointment, because, the market either goes down or remains sideways for long periods. Then people get tired of waiting and sell their mutual funds, even at a loss. You can avoid “buying high and selling low” by taking these three simple steps:
Don’t Chase Top Performing Funds. It is normal to crave for funds with the best recent performance. You want the fund with the best performance in your portfolio because at the moment of the decision it makes you look good and moreover you are averse to the risk of looking bad in your own eyes and in the eyes of your dear ones. But you must avoid this most common mistake of investing in a fund that has been going up fast, on the assumption that it will keep going up because, past performance is a poor predictor of future returns. Remember, when it comes to top performing schemes, this year’s hero is usually next year’s zero.
Don’t Rush To Sell The Fund That Hurts To Own. Don’t be anxious to get rid of a mutual fund that is most painful to own. Most funds performance falters because the stocks they own go temporarily out of favour. Remember, it is most likely to be a future bargain. By selling your fund when it is out of favour, you not only lock-in a loss but also lock yourself out of the inevitable recovery, which could be lurking just around the corner. If you are not prepared to stick with a fund through three lean years, then you should not buy it in the first place.
Don’t Lose Patience. As a mutual funds investor, you must demonstrate an unusual degree of patience. Remember, patience is your single most powerful ally. You should be willing to wait considerably longer than the typical average individual investor to get a reward. It is extremely rewarding to hold your mutual funds for long periods, say about 10 years or more. The longer the holding period, the greater is the probability that you would gain more per year. Accumulation of wealth is guaranteed when you allow returns to compound over long periods. The importance of patience in investing can never be over emphasized. Benjamin Franklin famously said, “He that can have patience can have what he will”. And even the famous stock market speculator, Jesse Livermore had this to say, “Throughout all my years of investing I have found that big money was never made in the buying or the selling. The big money was always made in the waiting.”