Falling rupee is due to the mining ban. Is it?

The mining sector will now have us believe that it is not just the Goan economy that depends on it, but that the entire nation’s economy trembles when mining operations in Goa are stopped. Vedanta’s executive chairman, Anil Agarwa, has linked the falling value of the rupee against the dollar to the stoppage of iron ore exports from Goa and has called for an immediate resumption of mining operations in the State. His words in a tweet were “Natural resources imports have skyrocketed. Aluminum imports are up by 20%, enormous amounts of oil, copper, sulphuric acid and fertilizers are being imported and iron ore exports worth billions from Goa have stopped. These domestic factors are contributing to slide of rupee.” He then said, “Need of the hour is to urgently restart Goa mining…”

All of the iron ore dug up from the soil of Goa is exported, so it earns much needed foreign exchange, helping maintain the balance of exchange. Today fuel is one of the major imports of the country and to keep the balance exports need to be promoted. But naming the ban on mining operations in Goa to the falling rupee seems rather farfetched. The fact left unsaid is that the Goa mining sector has never been in operation during the monsoon season. There is no mining during the months of June to September, so linking the falling rupee to the current ban on mining operations is preposterous. 

The expected impact on the Goan economy of the mining ban of 2012 that lasted till 2015 did not materialise. If at all the value of the rupee should have dipped, it should have been at that point of time, as the operations remained shut for three years. There were financial setbacks, but none that really shook the economy of the State, so to accept the argument that the rupee fall has to do in a small way with Goa’s mining ban is difficult. There are no statistics of figures to substantiate this argument, and until these are provided, this will remain just a theory. 

If there indeed has been some major fallout on the economy due to the mining operations ban, why isn’t the government taking any serious and immediate steps to recover the mining loot that runs into thousands of crores of rupees? Even six years after the Justice Shah Commission report was tabled in Parliament there is still a debate on the amount of the loss to exchequer with the government refusing to accept the Justice Shah Commission figure of Rs 35,000 crores. While the process has begun, the speed at which it is moving does not inspire confidence that the authorities mean business in getting to the bottom of the issue.

Bringing in this new angle to the mining issue, raises another question. Is it that making a plaintive plea to the government by pointing out to the plight of the mining dependants hasn’t worked, so is the falling rupee now being used to push for resumption of mining without the proper checks and balances being put in place? The reason mining operations have been stopped is because of an illegality in the second renewals of leases. Without resolving this can the sector be reopened for operations? Besides, as per the existing law auction of mining leases is the procedure to be adopted in giving leases and not renewals. The government has made little progress in auctioning of leases. 

Regularly bringing up the issue of restarting mining operations and thereby putting pressure on the government to restart mining has to end. We are days away from a new mining season and operations aren’t likely to start this year. The time should be better utilised to clean up the mess and begin anew on a clean slate.