Home Spotlight 'At last a sand policy in the offing', Harish Rao

‘At last a sand policy in the offing’, Harish Rao

Sand is one of the most widely used commodity for different purpose with majority in construction activities. It is roughly estimated that the total sand consumption in India is around 700 million tonnes in 2016-17.  In India, the main source of sand is from river plains, in-stream mining, coastal areas and agricultural fields. Among all the sources, river bed is the most common and prevalent source of sand in the country.

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Sand is classified as a minor mineral in the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) and state governments are empowered to make rules for regulating the grant of mineral concessions in respect of minor minerals, including sand. Hence, under the power granted, the state governments have framed their own minor minerals concession rules and policies related to the same.

Recent Court Decisions banning sand mining

Issues in Sand Mining

Despite the different measures taken by the Central government and the state governments, issues of unsustainable mining practices affecting ecology of the rivers, high sand prices and lack of availability remains.

  • Over exploitation of resources: With the increased demand of sand, over exploitation of existing resources is taking place which is leading to a negative impact on the physical characteristic of the stream and cause environmental issues.
  • Non-availability of sand: With unprecedented construction boom, demand for the material has gone up exponentially and the supply has been dwindling continuously over the past few years owing to environmental restrictions imposed by the Centre and other governing institutes. Sand is not available near to some of the major consumption hubs and transportation of sand across long distances tends to be uneconomical. Further, there is no alternative of the river sand which is available in many of the state due to various reasons.
  • Expensive sand: Non-availability of sand in many parts of the country has resulted in the price of the material increasing phenomenally. Since there is no monitoring authority, suppliers keep hiking the price every now and then to maximise their profit.
  • Cartel in sand mining: Although State governments have started allocating the blocks on auction basis to bidders in the states, but to control the supply and to control the prices, bidders often form the cartel to keep their margins high. In absence of any robust mechanism it’s tough to control the cartelization issue till the sales rights are with the state governments.

There is a need for increased regulation and improved monitoring processes in the sand mining. Some of the states have been able to restrict illegal mining or regulating the prices or improving the availability through different policy interventions. Further, some of the states have utilized the IT systems in the value chain of sand mining for improving the sand mining and sales management system.

Pricing Model

Each state has its own set of rules and regulations for sand mining, and an important aspect thereof is the overall business model and allocation method followed by the state. Essentially, there are two types of business models:

Notified or controlled pricing model: In this model, the state governments allocate their sand blocks to their state mining corporations or SHGs (Self Help Groups) or Panchayats on nomination basis. Clearances and approvals are procured by the state only and mining operations are handled either directly by the government agency or by the raising contractors that are hired. Further, the sale of sand is undertaken by the state government and revenue accrued accordingly. Prices are notified by the government under this model.

Market model: In market model, allocation is undertaken using tender or auction process or combination of them. In tender, the price or premium against the bidding parameter is quoted by the bidders and the highest bidder gets the mineral concession. In this model, the state earns a fixed amount quoted by the bidder. On the other hand, in auction, the bidder is aware of the ongoing or highest price or premium quoted by the other bidders and can continuously revise its bid till conclusion of the auction process. The bidder quoting the highest wins the sand block. The realization to the state in this model is high, as the state retains the royalty as well as the auction premium. However, the model also leads to increase in prices for the end consumers.

The tender cum auction is a two stage process similar to the one followed in the case of major minerals auctions, where in the first stage along with the technical bid an initial price offer is also submitted. Subsequently, only a selected number of bidders go to the auction stage.

Recommendations by the Sand Committee

The Sand Committee set up by the Ministry of Mines has studied the policies and the processes governing sand mining in various states. Based on this study, the Committee has prepared a report which presents the findings emanating from the various state visits and also proposes a common set of recommendations for streamlining sand mining policies and processes in states. Some of the recommendations of the Committee are:

  • The mining department of the state should estimate district wise demand and thereupon for the entire state and accordingly come up with the requirement of further allotments. Based on the estimated demand, the mining department should assess the need for further allotment of sand concessions. Even if the demand of a particular district is low, adjacent sand deficit districts can be considered for fulfilling their demand.
  • The mining department needs to obtain the Khasra map of the area and conduct spot inspection and confirm from other departments regarding availability of area to check if the area is not reserved for some other purpose and can be allotted for sand. Further, if the inspector finds that the block is not lying in the restricted zone based on foregoing assessment, and that the area is available for sand extraction, the area should be geo-referenced and pillars should be erected at the corners.
  • A detailed geological report containing details of the area, DGPS survey, infrastructure and environment, geology of the area, drainage and geomorphology, exploration status, geological mapping, laboratory studies of the samples etc. of each sand block should be prepared by the Assistant Geologist/ Geologist of the district in which the block lies, before putting it for auctions/ allotment. The potential areas of the quarry lease should be identified and demarcated using DGPS and topographic and geological maps prepared using Total Station.
  • The lease area to be granted for auction should be capped at 100 Ha (in case of co-operative societies) and 50 Ha (in case of Individual) to avoid concentration of sand supply in a few hands. A smaller area will lead to usage of manual methods, as compared to larger areas where mining is mechanized. Also, the minimum area can be fixed at 5 Ha. In addition, the maximum area a person can hold for sand mining in a district through multiple leases should be restricted to 100 Ha.
  • The responsibility of procuring the clearances and approvals should be given to the department responsible for sand mining in the state. Delay in getting the clearances might impact the financial/economic feasibility of the project for the lessee which then can encourage him to bypass the regulations to be followed. In addition, this also adds up to the cost of the final sand sale price. Hence, the clearances and approvals can be obtained by the state department before allocating or bidding out the block for mining. A specific set of regulations and clearances should be mandated to be prepared in all the states, and the states can be free to mandate any other clearance that might be required depending on the local conditions of the state. A fixed time line should be attached for all the clearances required, and the responsible person should get it done within the specified timeline. Further, the applications for getting the approvals should be made online.
  • The allocation model to be considered by a state depends on the objective of the state. If the state’s objective is revenue maximization then it can follow the market model, however if the state desires to keep the prices and operations under control, then it can follow the notified price model.
  • Irrespective of the allocation model and whoever has the control over operations, sand mining should take place only in accordance with the terms and conditions of the environmental clearance and the lease deed or license, and methods approved in the quarrying plan. Apart from these, mining should be undertaken, as per the regulations laid down in the Sustainable Sand Mining Management Guidelines 2016 by the Ministry of Environment, Forest and Climate Change.
  • A proper regulatory mechanism is required to ensure adequacy in supply of sand and to keep any exorbitant increase in price under check. Amongst others, the entire process of sale and delivery of sand should be made online to bring in more transparency in the entire process and provide for better control over illegal operations.
  • Transportation needs to be regulated to ensure that cartel formation among the transporters does not take place leading to high prices of sand in the state. It is more important in states that are sand deficit and need to transport sand over long distances to reach the consumption hubs. A district committee should be formed in all the districts comprising of members from the transport department, police department and mining department to fix the transportation rate of sand in the state and the committee should meet on a monthly basis to review the implementation of prices.
  • State / State agencies need to create and establish a robust system to monitor and measure the mined-out mineral at each lease location and its transportation in the state. In that regard, a 360 degree monitoring mechanism should be put in place, as follows.

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