25 August 2010

Natural resource or political resource curse?

With Vedanta not getting an environmental clearance for its project in Orissa, one issue that the environment ministry has sidestepped on is the involvement of state and central government officials in granting favours. “The Saxena committee made a number of observations on state officials. I don’t agree with that and believe that they were acting to the best of their ability. There will not be any witch-hunt,”  said Jairam Ramesh the Environment Minister. According to Mr. NC Saxena, whose Report forms the basis of the decision by the government to scrap the project, “I have not given clean certificate to the Union environment officials who too ignored various violations at the site at various times. The report has clearly stated that the State government officials were hand-in-glove with the company in 2005 by ignoring Forest Rights Act,” he told PTI.   Whose responsibility is it now to see that the corruption pointed out by the Saxena Report is dealt with and cleaned up?

This is of course not an issue that is just Indian in nature, it affects countries across the globe, documented in Africa,  in South America.. the term 'natural resource curse' has come up precisely because of this. While more than 40% of the resource rich countries are autocracies, and democracy is preferred to autocracy when it comes to benefiting from resource windfalls, data from Brazil examined by Brollo et alfinds that a 10% windfall in government revenues leads to a 12 percentage point increase in corruption and a 3 percentage point reduction in the probability that politicians have a degree. The chance that an incumbent is reelected raises by over 4 percentage points.They call this the political resource curse. So democracies do provide the necessary checks and balances, compared to autocracies, but there are pitfalls here too.
What about the corporates? As Sudeep Chakravarti says, If the corporation had cared, protests would not have happened. ...,(Perhaps the flaw in the concept of human resource has always been that, it is practised with those under a corporate umbrella, rarely with those adversely affected on account of a company’s activities.) In an earlier column, he writes, Businesses ought typically to be more far sighted, less prone to believing in hype, and more aware of liability.


Here, the problem is compounded because the crucial issue, as Sunita Narain points out,  is that the poorest people in India live on its richest lands. For governments and corporates to rethink the way they manage resources, there has to be a review of growth and development plans, because without understanding and integrating this basic point into our plans for the future, social conflict is inevitable. 

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