Mining scams in India

Mining is a crucial aspect of GDP in India. The total contribution of the sector is estimated to be around 10 to 11%. However, the activity of mining also leads to numerous scams whereby mining firms of powerful people illegally encroach and mine without permission and legal standing, leading to unnecessary litigation and hampering revenue. This article provides a brief account of problems plaguing the mining industry.

Fri Jul 01 2022 | Civil Litigation and Others | Comments (0)


Gone are the days when scams would happen and die down in the midst of darkness and lack of accountability. These days, be it an individual or be it the government, everyone is liable for their actions. Thanks to the awareness spread by media and other such instruments.

Mining is  crucial  for our country's economy.  In the recent past, it has been one of the most scandalous topics. With major scams happening, and the bans post that, there is a major need to take steps that can help revive the mining industry.

The Mining industry of India is a chief fiscal activity, which contributes appreciably to the economy of the country. Though, the GDP contribution of the mining industry varies from 2.2% to 2.5% only but going by the GDP of the total industrial sector, it contributes around 10% to 11%.

Mining industry has many issues attached to it. From the workers safety and health hazards, environmental damages to illegal mining, the list is never ending.

Mining scam in India (commonly known as Indian mining scam) is a sequence of extensive scams in diverse ore-rich states of India, which amounts to encroachment of forest areas, underpayment of government royalties, and variance with tribes regarding land-rights etc.

Lately, the scam that has been in the limelight is the Coal Mining Scam in which Government has had a presumable conformist loss of Rs 1.86 trillion (short scale), due to the delayed execution of competitive bidding process for allotment of coal blocks, according to the CAG.


  1. The iron ore in Bellary region, Karnataka is alleged to have been illegally mined after paying an infinitesimal fee to the government. It involves mines in Bellary, including those of Obulapuram Mining Company.
  2. Illegal mining activity reported in the Aravali Range.
  3. Bauxite mining in tribal areas of Orissa has led to conflicts in land rights. The Supreme Court on 18.04.2013, ruled that the Vedanta Group's bauxite mining project in the Niyamgiri Hills of Orissa will have to get the gram sabha's clearance on whether it affects the cultural and religious rights of the tribals and forest dwellers living in Rayagada and Kalahandi districts.
  4. On 14 November 2011, Rajendra Dixit registered a complaint at Madhya Pradesh Lokayukta Office against Indian National Congress MLA Sanjay Pathak's mining firms, demanding a Lokayukta probe against an alleged iron ore mining scam worth Rs 50 billion allegedly committed at Sihora, Jabalpur.
  5. The Shah Commission report on mining in Goa accused both the state and the Union Ministry of Environment and Forests (MoEF) of allowing illegal mining in the state, putting the region's environment and ecology at risk.
  6. Illegal mining in the Ganges river bed for stones and sand for construction work has been a long problem in Haridwar district, Uttarakhand, where it touches the plains for the first time. This is despite the fact that quarrying has been banned in Kumbh Mela area zone covering 140 kms in Haridwar.

Formation of Inter-Ministerial Group (IMG)

By the end of June 2012, coal ministry decided to form an Inter-Ministerial Group (IMG), to decide on forfeiting the Bank Guarantees of the companies that did not develop allotted coal blocks. Zohra Chatterji, additional secretary, coal ministry was named as Chairman of the IMG. Other IMG members included representatives from power, steel, departments of economic affairs, industrial policy and promotion, and law and justice.

As of 26 September 2012, the IMG had reviewed 31 coal blocks. Out of those, it had recommended de-allocation of 13 coal blocks and encashment of bank guarantees of 14 allottees.


India is not a signatory to the Extractive Industries Transparency Initiative [EITI], a globally developed standard for extraction of natural resources to promote revenue transparency at the local level. But, we do have legal and constitutional framework to administer the sector.

The policy level guidelines for mineral sector are given by National Mineral Policy, 2008.

The mining operations are regulated in terms of Mines and Minerals (Development and Regulation) [MMDR] Act 1957 enacted by the Parliament.

The State Governments, as owners of minerals, grant mineral concessions and collect royalty, dead rent and fees as per the provisions of MMDR Act 1957. Lately, the Supreme Court has said that Ownership of minerals should be vested with the owner of the land and not with the government.

The royalty and dead rent revenues collected by the State Government accrue to the Consolidated Fund of State Government concerned and are then appropriated for public spending through a budgetary process, which has to be approved by the Legislative House of the State Government concerned.

Mining is a vital part of our country's economy, but, the government must take into account how much the financial system suffers due to the lack of accountability of the illegalities of the work. Hence, there must be proper policies and amendments from time to time that ascertain that there is no compromise made by the authorities when it comes to mining activities in the country.

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