The 'Resource Curse' of the Scheduled Areas – Case of the

Bauxite Industry in Tribal Eastern India

Procedural Paper PresentationPatrik Oskarsson

1 December, 2006

Supervisors: John Cameron

Oliver Springate-Baginski

Presentation Outline

− Introduction

− Research Objective & Justification

− Conceptual Framework

− Research Questions

− Methodology

− Research Design

− Ethics

Introduction - Nimmalapadu Village, Andhra Pradesh

Introduction - Iron Ore Mines in Keonjhar District, Orissa

Introduction - Open Cast Coal Mine

Introduction - Nimmalapadu Village, Andhra Pradesh

Introduction – Distribution of Benefits and Costs in Federal India

• Sets Policies and Royalties on Major Minerals (bauxite, iron, coal etc.)

• Major involvement in clearances (mainly environmental)

• Owner of biggest aluminium company

• Land rights, land records

• Competes for investment with other states

• At the center of demands for ‘development’ from voters

• Responsible for health and education

• Faces main costs of mining and industry in the form of land alienation and environmental degradation

• Few income opportunities from industrialisation because of lack of skills

Union

StateScheduled

Area

Objective and Justification

ObjectiveHow can the strategy of the state governments of Andhra Pradesh and Orissa in Eastern India to promote and expand the bauxite mineral industry be understood given the conflict between this industry and not only, a) the rights of the local tribal communities but also, b) an apparent imbalance between the costs and benefits to and distribution within the state itself?

Justification for topic- Tribal People among India’s poorest communities- The main deposits of minerals (metals and coal) are found in tribal areas of Central-Eastern India- India’s economic growth and integration with the world economy is causing rapidly increased mining- It is not very clear who actually benefits from mining and industry- Local state research is important when the state is becoming more independent from the national government

‘Resource Curse’ of the Scheduled Areas:

• Continued poverty• Increased inequality (to the rest of the state)• Environmental concerns• Potentially increased militant activities

Land RightsPolitical Economy of

Industrialisation

Legal Verdicts and

Implementation

Customary Rights

Economic Incentives

Political Incentives

Elite Capture

Social Mobilisati

on

National and ‘Society’ Rights

Land Use

Conceptual Framework

Power

Key Concept 1 – Land Rights

Individual and Group Rights

Government and ‘Society’ Rights

National

State

• Constitution declares Scheduled Tribes and Scheduled Areas• Tribal education and job Reservation• Right to life and livelihood• Tribal right to land (and the non-transferability of this land)• Right to have any law adjusted to specific conditions of Scheduled Areas

• Right to acquire land for the benefit of greater society, the state’s eminent domain• Rights to all major sub-surface minerals (bauxite, iron, coal etc.)• Right to all minor sub-surface minerals (limestone, marble etc)

Key Concept 2 – Political Economy of Industrialisation

Union

• The Indian constitution defined India as a socialist republic with poverty alleviation and social empowerment as its highest goals• Industrialisation as one of the main means of reducing poverty (Kohli 2004) • Indian state as captured by various interest groups and unable to live up to its ideals (Bardhan 1984; Rudolph & Rudolph 1987) • Change with economic reforms from 1991 implied that the structure was not as rigid as authors had earlier indicated Jenkins (1999)

State

• Union government budget constraints has meant increasing independence of the states• Regional parties dominating/influencing national governments• Rise of competition states but also fiscally pressured states• Reform by stealth since it would have gone against the wishes of the general electorate (Jenkins 1999)

Studying the State:• The developmental state as it is experienced by the poor (Corbridge et. al. 2005; Rudolph & Jacobsen 2006)• Multiple formal and informal interests within the state (different political parties, departments within the bureaucracy, urban/ rural divide, the legal system as formally independent)

Key Concept 2 – Political Economy of Industrialisation

Key Concept 3 – The Resource Curse

• 1950-1980 Mineral Resources (metals, oil, gas, gemstones) are good!

• 1990 → Mineral Resources are bad!• Three types of curses:

1. Poor economic performance2. Political regimes with low levels of democracy3. Internal conflicts and civil war

• Ross (2004:28) defines the resource curse as "the distributional conflicts that commonly arise when resource wealth is unevenly distributed around the country".

• Strong empirical evidence and acceptance in policies that there is a resource curse. But some countries have managed to overcome the curse (Rosser 2006)!

• Resources are not per se cursed. Literature on the resource curse have focused too much on the inherent qualities of resources and how these produce poor political, economic or other outcomes (Ross 2004; Rosser 2006).

New Opportunities in the Scheduled Areas:

• Acquiring land which may or may not be used for

industrial purposes

• Resources used to attract domestic and international

private investment

• Extracting rents which require little accountability

(compared to for example direct taxation)

• Creation of high value jobs for the educated middle class

Scheduled Area Experiences of Mining:

• Few new jobs but those available will mean increased

income. The local skill and educational level is not adapted

to industry

• Environmental problems/ Water Scarcity

• Displacement/Land Alienation

Key Concept 3 – The Resource Curse

Objective and Research Questions

ObjectiveHow can the strategy of the state governments of Andhra

Pradesh and Orissa in Eastern India to promote and expand the bauxite mineral industry be understood given the conflict between this industry and not only, a) the rights of the local tribal communities but also, b) an apparent imbalance between the costs and benefits to and distribution within the state itself?

Research Questions1. What have been the changes to tribal rights to land and

livelihood in the Scheduled Areas of eastern India in relation to economic reforms and industrialisation since the 1990s?

2. What are the characteristics of the political economy of the mineral industry in relation to the benefits driving demand for increased mineral industry expansion and the mitigation and distribution of associated costs?

3. What conclusions can be made about the functioning and importance of the local state in relation to the extraction and processing of bauxite and the existence of endemic poverty in the tribal areas of India?

Methodology

Comparative State Analysis - India as ‘controlled laboratory’ when studying the local state (Jenkins 2004):– Same national regulations (Constitution, legal framework,

major mineral rules, environmental clearances)– The states (Andhra Pradesh and Orissa) have similar

institutional setup and similar but still different land rights– Same resource (bauxite) with same geology and technical

process– Different languages, political and economic histories

• Components:– Policy Analysis (Roe 1994; Hajer & Wagenaar 2003)

• Key Informant Interviews• Legal Judgements and their implementation• Cost/Benefit Analysis• Policy Debates

Methods - Research Design

State Orissa Andhra Pradesh

Deposits Biggest bauxite deposits in India (also iron, coal etc.)

Bauxite as main mineral in scheduled areas (also coal)

Current Industry

NALCO is operating but many upcoming mines and plants in south Orissa

Attempts to circumvent the Samatha Judgement through a joint venture

Economy Mineral Industry as only hope for economic development (mines and related industry).

Mineral industry relatively marginal (IT, pharmaceuticals, also agriculture)

Regimes • Elitist and coastal domination• Violently trying to push for the industrial development that is seen as the only hope for the state to prosper.

• Populist and rhetorically supporting the struggling rural population. • Desperate to provide any sort of ‘development’, especially now through irrigation projects.

Tribes 8 million (22% of state total)

4.5 million (7% of state total)

Methods – Data Collection

Union (Delhi)

State (Andhra

Pradesh and Orissa)

Scheduled Area (about 5-6 large

projects in research area)

• Key Informant Interviews

• Analysis of Public Industrial Policies and Budget Documents (national scope)

• Key Informant Interviews

• Analysis of Public Industrial Policies and Budget Documents, legal documents and judgements, investment agreements (MoUs) (local state scope)

• Annual reports of companies

• Field Survey• Analysis of

mining leases, land records, satellite imagery

Ethics in Research

• Difficult Situation in Orissa means rural fieldwork will be minimised.

• Local protest movements against industrialisation often facing state violence

• Low-level Maoist insurgency

• Other means will be sought to estimate social impact and focus on state-level mechanisms (land records, mining leases, satellite imagery)

Timeline

• Preliminary Fieldwork Carried out in October 2006• Second Phase of Fieldwork Planned for January –

May 2007

PhD PlanFeasibility Trip to IndiaWork on Procedural PP PresentationFieldwork In Delhi In Andhra Pradesh In OrissaData AnalysisWriting Up

2005

Dec … JanDec Jan

2006

JanOct … Sep Apr May

2007 2008

… SepFeb MarOct Nov Mar

2009

Oct Nov Feb

The End

Thank You!

Comments appreciated poskar@gmail.com

Extra Slides

Extra Slides

Bauxite Alumina Aluminium

Year Value (million USD)

Quantity (thousands kg)

Value (million USD)

Quantity (thousands kg)

Value (million USD)

1997-1998 0.84 86,876.07 87.32 427,182.89 259.59

1998-1999 5.74 98,942.25 38.78 216,878.74 142.53

1999-2000 6.99 596,800.99 21.07 86,062.45 247.16

2000-2001 27.38 1,248,175.41 43.26 189,309.53 337.22

2001-2002 14.10 979,570.45 45.32 263,103.58 340.17

2002-2003 32.14 1,785,350.22 191.29 1,101,614.37 375.48

2003-2004 37.20 896,137.07 173.09 808,178.53 404.91

2004-2005 29.86 1,016,141.85 294.06 957,703.69 541.27

2005-2006 68.80 2,355,277.13 400.53 1,025,022.97 606.16

Source: Export-Import Data Bank, Department of Commerce, Government of India, http://dgft.delhi.nic.in/

Indian Bauxite Export Statistics

• Bauxite is aluminium ore of different chemical compositions • Alumina, aluminium oxide (Al2O3)• 95% of all bauxite is turned into aluminium

Methods - Data Collection

Type of Information

Sources Method

Economics of mineral industry

Costs• Cost of excavation and transport, Forest clearance, Water usage, Carbon dioxide usage, input materialsBenefits (state and national benefits should be separated)• Royalty (64 rupees per ton of bauxite), CESS Income taxes and Excise, Employment, Customs• Based on annual reports and other official data where possible. International cases to be used where possible

Cost/Benefit Analysis

Politics of distribution

Legal documents, policy statements

Key informants: Politicians, Bureaucrats, Activists, Industrialists and Academics

Document Analysis

Semi-Structured Interviews

Type of Information

Sources Method

Land use Land Records and Mining Leases

Satellite Imagery and GIS

Field Survey

Document Analysis

Policy Narratives

Key informants: Politicians, Bureaucrats, Activists, Industrialists and Academics

Semi-Structured Interviews

Methods - Data Collection

Key Concept 3 – The Resource Curse

• Indigenous Peoples and the Resource Curse:• Local states can get caught up in resource struggles (Scholtz 2006)• Linguistic and cultural differences, remoteness of location often makes the ‘curse’ more likely to happen• Extra contributions to the local area might not even be enough to avoid a ‘resource curse’ (Ross 2004)

Key Concept 3 – The Politics of Industrialisation in India

Pressures on the Local State:

State Government

Jobs for the Urban Middle

Class (powerful group with

money)

Agricultural Support to

farmers (vote bank)

Welfare Measures for Landless and

other rural poor (vote bank)

National Government (fiscal

discipline)

International Agencies (fiscal

discipline, transparency)Pressure from

‘above’

Pressure from ‘below’

Political Party and its supporters,

industrialists and other important

groups

Data Analysis

Policy Analysis

Cost/ Benefit Analysis

Land Use, Land

Records, Mining Records

National and State Distribution

of Royalties/ Welfare and

Local Support Systems

Conclusions

Discourse Analysis

Key Informant Interviews

Court Judgement

s

Mines

Industry

Agricultural land limit

10% slope mark

Valley View of Land Usage in Tribal Areas of Orissa

Source: Interview Researcher, Orissa, 2006-10-26

Layer of Bauxite on top of the mountain (thickness 15-20 metres)

= Village located along the mountainside= Land claimed by tribal people as traditionally used

Source: Interview Researcher, Orissa, 2006-10-26

Bauxite Mining in Kashipur on Bapthimala Mountain