One way to motivate the impact of natural resource availability is to estimate whether populations in mineral rich areas have emerged out of poverty better than other areas.
To this end, poverty trends for the mineral-rich states with other states is contrasted between 1993-94 and 2011-12, the latest year for which NSSO data is available.
At first blush, the mineral-rich states seem relatively successful. Their poverty ratio fell by around 31 percentage points over nearly two decades, compared with 28.5 percentage points in the other states.
Viewed from a different perspective, however, the mineral states seem less successful. In particular, the Scheduled Tribes (ST) population of the mineral-rich states, which actually forms the predominant population in these areas, saw only a 17 percentage point decline in poverty, smaller than the 22 percentage points fall in the other states.
Resource-rich states, especially Jharkhand, Chhattisgarh and Odisha (with the exception of Gujarat) are at low levels of per-capita GSDP, with low levels of monthly per-capita expenditure.
With the intention of ensuring that the revenue from minerals are utilized for the development and welfare of the citizens of the concerned states, the Mines and Minerals (Development and Regulation) Amendment Act, 2015 included the following in the Act:
Establishment of a trust, to be called the District Mineral Foundation (DMF) for districts affected by mining related operations.
The composition and functions of DMF are to be prescribed by the respective State governments. The foundation shall work for the benefit and interest of persons affected by mining related operations.
One way to increase citizens’ participation is via creation of a dedicated Fund to which all mining revenue must accrue.
The assumption here is that minerals are part of the commons, owned by the state as trustee for the people – including future generations. Therefore, the revenue from the natural resources should be saved in a non-wasting asset- in a Permanent Fund. The real income accrued by the Fund can be redistributed to citizens affected by and having a stake in the extraction of the resource.
An alternative structure would be to redistribute the gains from resource use directly into the accounts of the concerned citizens as part of a UBI.
However, to make this income transfer effective and to make the citizens feel invested in the management of the resources, the state could impose a nominal tax on the post - UBI disposable income of citizens and use this revenue for development purposes.
White Tigers: Those states—Gujarat, Maharashtra, Tamil Nadu, Karnataka, Kerala, and Andhra Pradesh—which have grown faster and advanced more rapidly economically.
Other Indias: Other Indias comprise hinterland India (the India of rivers) as well as India of forests, of natural resources, and of ‘Special Category’ status.
