MAC: Mines and Communities

Mines ministry plays Naxal card

Published by MAC on 2007-04-13

Mines ministry plays Naxal card

NEW DELHI, Financial Express

13th April 2007

The ministry of mines has written to the finance ministry, seeking withdrawal of the Rs 300-a-tonne duty on iron ore exports levied in Budget 2007. The ministry said this duty would lead to job losses in iron ore-rich states and thereby heighten Naxalite activities. Jharkhand, Chhattisgarh, Orissa, Karanataka and Goa have among the country's largest iron ore deposits.

Describing the levy as premature, the ministry of mines note stated that iron ore-rich states were largely under-developed and had large forest reserves and tribal populations. Agriculture had limited possibilities and there was little scope for manufacturing due to poor infrastructure.

The ministry has argued that the export duty would erode Indian iron ore's competitive edge vis-à-vis Australia and Brazil, as prices would shoot up by $7-8 a tonne. This would cause additional unemployment of about 5-6 lakh people in these "backward states". Hence, Naxalite activities would gather momentum and could be difficult to contain, it warned

"It need not be over-emphasised that the mainstay of these backward states is mining activity and the move to tax will have an adverse impact on the employment potential in these areas," the ministry said.

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