Majority Report of the Committee Constituted to ... - Forest Rights Act

Majority Report of the POSCO Enquiry Committee Preface
Preface
This Committee has been constituted with the purpose of examining the POSCO-India project, a
combined mine – steel plant – port project in Orissa, on certain specific grounds. In particular
we have been asked to examine compliance with and implementation of various critical
environmental laws, such as the Forest Rights Act, the Environment (Protection) Act and the
Coastal Regulation Zone notification. In this report we have thus limited ourselves to the basic
question of whether the project and the State and Central authorities have complied with the law
in their actions. We have focused on the proposed sites of the steel plant and port, which are the
main areas where clearances have been obtained and agitations have occurred.
However, in the context of a large project such as POSCO, with social, environmental and
economic implications far beyond the project area, it is inevitable that the debate over our
findings will extend beyond narrow interpretations of law. Issues of “balancing” environmental
concerns with development concerns are likely to be raised. In this context we wish to make a
few observations as to why we feel that legal compliance is vital in such projects, and why such
compliance is in fact the only way that any balance can be achieved.
The POSCO-India project will be, if it is completed, the single largest Foreign Direct Investment
(FDI) in India till date. It will also be the largest greenfield steel plant in Asia and one of the
single biggest mining operations in our country. These figures are often cited as evidence in
themselves of the good that will result from this project. But it is important to recognise that
industrial projects, and particularly extractive industries such as this one, do not always produce
positive social results. Many of the gains may fail to materialise, and many of the losses be
magnified, if proper regulation is not in place.
In the words of the World Bank's Extractive Industries Review:
“Extractive industries can cause environmental degradation. Exploration and
development of extractive industries can lead to land clearing and habitat loss...
And environmental degradation can in turn destroy livelihoods dependent on
local resources.... These industries can also lead to social disruption and cause
conflict among communities. … The poor, lacking the necessary skills and
education, often fail to benefit from jobs created in the extractive industries; in
many cases, employees are brought in from outside of the area. Often these
negative impacts from a project occur before it even starts to generate
revenues... In a number of countries, extractive industries have been linked to
human rights abuses and civil conflict.” 1
The literature on development economics abounds with references to the “resource curse”.
Valuable natural resources, like iron ore in the case of the POSCO project, offer the possibility of
enormous profits purely from extraction and from leveraging international market prices. Such
profits in turn generate an incentive to “cut and run”, to extract as cheaply as possible, with as
little employment and running costs as necessary, and to leave as soon as costs or problems
begin to rise. Moreover, there is little incentive to invest in long term infrastructure for the area
1 Striking a Balance: the Final Report of the Extractive Industries Review, World Bank, 2003, pp.20-21