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									  The 'Resource Curse' of the
 Scheduled Areas – Case of the
Bauxite Industry in Tribal Eastern

 Procedural Paper Presentation
              Patrik Oskarsson
            1 December, 2006
                       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

        Union                                                Scheduled Area

• Sets Policies and          • Land rights, land records • Faces main costs of
  Royalties on Major         • Competes for investment      mining and industry in
  Minerals (bauxite, iron,     with other states            the form of land
  coal etc.)                 • At the center of demands     alienation and
• Major involvement in         for ‘development’ from       environmental
  clearances (mainly           voters                       degradation
  environmental)             • Responsible for health and • Few income
• Owner of biggest             education                    opportunities from
  aluminium company                                         industrialisation
                                                            because of lack of
                                                  Objective and Justification

How 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
                                                               Conceptual Framework

                                                                 Political Economy of
       Land Rights

        Land Use
                                                                   Economic Incentives
Customary        National and
  Rights        ‘Society’ Rights                            Social                          Elite
                                                          Mobilisation                     Capture
     Legal Verdicts and
      Implementation                                                    Political Incentives

                          ‘Resource Curse’ of the Scheduled
                           • Continued poverty
                           • Increased inequality (to the rest of the
                           • Environmental concerns
                                                    Key Concept 1 – Land Rights

           Individual and Group Rights           Government and ‘Society’ Rights

            • Constitution declares             • Right to acquire land for the
            Scheduled Tribes and Scheduled      benefit of greater society, the
            Areas                               state’s eminent domain
            • Tribal education and job          • Rights to all major sub-surface
            Reservation                         minerals (bauxite, iron, coal etc.)
            • Right to life and livelihood

            • Tribal right to land (and the     • Right to all minor sub-surface
            non-transferability of this land)   minerals (limestone, marble etc)
 State      • Right to have any law adjusted
            to specific conditions of
            Scheduled Areas
               Key Concept 2 – Political Economy of Industrialisation


• 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
• 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)
               Key Concept 2 – Political Economy of Industrialisation


• 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 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 performance
   2. Political regimes with low levels of democracy
   3. 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
                                      Key Concept 3 – The Resource Curse

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
                                            Objective and Research Questions

How 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 Questions
   1. 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?

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      Bauxite as main mineral in
                   (also iron, coal etc.)                 scheduled areas (also coal)
Current Industry   NALCO is operating but many            Attempts to circumvent the
                   upcoming mines and plants in           Samatha Judgement through a
                   south Orissa                           joint venture
Economy            Mineral Industry as only hope for      Mineral industry relatively marginal
                   economic development (mines            (IT, pharmaceuticals, also
                   and related industry).                 agriculture)
Regimes            • Elitist and coastal domination       • Populist and rhetorically
                   • Violently trying to push for the     supporting the struggling rural
                   industrial development that is         population.
                   seen as the only hope for the state    • Desperate to provide any sort of
                   to prosper.                            ‘development’, especially now
                                                          through irrigation projects.
Tribes             8 million (22% of state total)         4.5 million (7% of state total)
                                            Methods – Data Collection

                          (Andhra Pradesh
                            and Orissa)               Scheduled Area (about 5-
   Union (Delhi)                                         6 large projects in
                                                           research area)

• Key Informant         • Key Informant           •    Field Survey
  Interviews              Interviews              •    Analysis of mining
• Analysis of Public    • Analysis of Public           leases, land records,
  Industrial Policies     Industrial Policies and      satellite imagery
  and Budget              Budget Documents, legal
  Documents (national     documents and
  scope)                  judgements, investment
                          agreements (MoUs) (local
                          state scope)
                        • Annual reports of
                                                Ethics in Research

• Difficult Situation in Orissa means rural fieldwork will be
    • 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)

     • Preliminary Fieldwork Carried out in October 2006
     • Second Phase of Fieldwork Planned for January – May 2007

                        2005      2006           2007                                     2008       2009
PhD Plan                  Oct …   Sep Oct Nov Dec Jan Feb Mar Apr May …   Sep Oct Nov Dec Jan    …   Jan    Feb   Mar
Feasibility Trip to India
Work on Procedural
PP Presentation
 In Delhi
 In Andhra Pradesh
 In Orissa
Data Analysis
Writing Up
                                        The End

Thank You!

Comments appreciated
               Extra Slides

Extra Slides
                                                     Indian Bauxite Export Statistics

   • Bauxite is aluminium ore of different chemical compositions
   • Alumina, aluminium oxide (Al2O3)
   • 95% of all bauxite is turned into aluminium
              Bauxite                            Alumina                            Aluminium
Year          Value (million    Quantity         Value (million    Quantity         Value (million
              USD)              (thousands kg)   USD)              (thousands kg)   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,
                                                           Methods - Data Collection

Type of            Sources                                                Method
Economics of       Costs                                                  Cost/Benefit
mineral industry   • Cost of excavation and transport, Forest             Analysis
                   clearance, Water usage, Carbon dioxide usage,
                   input materials
                   Benefits (state and national benefits should be
                   • 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
Politics of        Legal documents, policy statements                     Document Analysis
                   Key informants: Politicians, Bureaucrats, Activists,   Semi-Structured
                   Industrialists and Academics                           Interviews
                                                           Methods - Data Collection

Type of             Sources                                                Method
Land use            Land Records and Mining Leases                         Document Analysis

                    Satellite Imagery and GIS

                    Field Survey
Policy Narratives   Key informants: Politicians, Bureaucrats, Activists,   Semi-Structured
                    Industrialists and Academics                           Interviews
                                    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:

                                                           International Agencies
                             National Government
                                                              (fiscal discipline,
                               (fiscal discipline)
Pressure from ‘above’

                                                                                Political Party and its
                                                                              supporters, industrialists
                                             State Government
                                                                                and other important

Pressure from ‘below’
                    Jobs for the Urban                                   Welfare Measures for
                       Middle Class                                       Landless and other
                                             Support to farmers
                   (powerful group with                                    rural poor (vote
                                                (vote bank)
                          money)                                                 bank)
                                                             Data Analysis


                    Policy Analysis

 Cost/       Land Use,       National and State        Key           Court
Benefit    Land Records,      Distribution of       Informant     Judgements
Analysis      Mining       Royalties/ Welfare and   Interviews
              Records      Local Support Systems
        Valley View of Land Usage in Tribal Areas of Orissa

                     Agricultural land limit


                                       10% slope mark

                 Industry                  Source: Interview Researcher,
                                           Orissa, 2006-10-26
                       Bauxite Mining in Kashipur on Bapthimala Mountain

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

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

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

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