Goa's Permanent Fund 

Iris C F Gomes

The idea of the Goenchi Mati Permanent Fund by the Goa Foundation has been based on the premise that natural resources are part of common ownership, hence the public in general is entitled to a share of the profits. Rahul Bose, who volunteers with the Goa Foundation, explains the working of the fund and the reasons involved in putting this proposal forward.

The environmental implications of the mining industry’s relentless and uncontrolled growth can be seen in the devastating effects on agriculture and the health of the people in the affected areas. With muddy waters from the mines flooding fields and leaving them infertile, dust pollution causing respiratory problems, and the emptying of the ground water tables resulting in water scarcity, we can surmise that unrestricted mining has contributed to the death of Goa as we once knew it. Apart from these problems, we have the loss of precious topsoil and forest cover.

Although the Shah Commission banned mining in Goa in 2012, the rumblings of its resurgence are well in progress. The Goa Foundation has been fighting a battle with minimal results towards shutting down mining for good. It is not an easy task with the monumental corruption standing as an obstacle to circumvent all positive reforms.

The fact that mining is an important economic activity in the state cannot be denied and its contribution to both the financial growth and the employment opportunities in Goa is very significant. The Shah Commission found that, based on official reports, there was 577 million tonnes of iron ore left. The environment clearances in Goa were for 66 million tonnes every year. This would result in the depletion of iron ore in only 9 years and nothing would remain for future generations. So the discussion was how this remaining ore could be mined in a controlled, environmentally friendly manner to provide for posterity. The answer was to have ‘intergenerational equity’: to maintain equality between us, our children, and future generations.

An expert committee was put together to expand on this idea and execute the plan. Rahul says, ‘It comes down to a very simple idea; what you inherit, you pass on. So, if we inherit a certain set of assets, opportunities…certain kind of environment, our children have a right to the same.’ As long as each generation has the opportunities and resources, how they profit from them is their own concern. It runs along the same lines as property inheritance within families from one generation to another where you are seen as a custodian of that property rather than an owner.

The State of Goa owns the mineral according to the Constitution, but it holds it in trust for the people of the State; it cannot dispense of the mineral as it wishes.

The example Rahul uses to explain intergenerational equity is that the iron ore is like inherited gold which brings no income. This would prompt one to sell the gold and traditionally buy land for agriculture from which you could derive income. This is something that could be left to future generations, unlike a situation in which a car is purchased with the money obtained from the sale of gold. A car is not a viable legacy since it has limited durability. The concept of Communidade, where generation after generation benefits by way of crops from the land, is a perfect example of intergenerational equity.

We, as members of this State, have inherited the environment and the mineral. The expert committee decided that the mining should extend to spread over at least seven generations, that is, we should be mining for over 200 years for the profits to reach our heirs. However, the environment comes under duress with uncontrolled mining, as seen in 1987 when the mining was 12 million tonnes per year and windowpane oysters nearly became extinct as a result of it. At its peak, the mining industry was dealing with 50 million tonnes per year. The Goa Foundation suggests that mining revert back to the limit of 12 tonnes per year or less and ascertain that the oysters (a good indicator of the health of the environment) can survive it.

Since buying land for everybody with the money obtained from this mining is not feasible, the option, as seen in other countries all over the world, is to invest in a mutual fund or fixed deposit for the people, which will continue to generate income. This income will be shared by everybody, and this is the idea behind the Goenchi Mati Permanent Fund.

Assuming that company A was contracted to extract the iron ore for the people of Goa, we would sell the iron ore for the same price as the company would have. Company A would charge for its services and would make a profit of 20% return after taxation. The rest of the money would come to the people. To calculate the fair amount that would be available to the people, The Goa Foundation surveyed and scaled up the annual reports of company A. Rahul says, ‘We had eight years of [company A's] numbers. I could also see how many tonnes they took out. Then there’s the Goa Mineral Ore Exporters Association, and their numbers are available for the total amount. So we had [company A] how many tonnes and total industry how many tonnes. We could work out the full Goa number.’

The amount that should have come to the people is Rs 51,446 crores after deducting the State royalty of Rs 2,387 crores from Rs 53,833 crores (the sum obtained after deducting expense for extraction). Instead, the people lost that entire amount, that is, each person lost Rs 3.6 lakhs; while the miners made an after tax profit of Rs 32,381 crores (legally).

The first example of a public fund investment (1876), called the Permanent University Fund (PUF), can be seen in Texas. Public land was sold off and the money was invested in university education.The Goa Foundation approached the Supreme Court to establish the permanent fund. The Supreme Court responded saying that in the future a permanent fund has to be set up in Goa with 10% of the value of the iron being invested in this fund. The Supreme Court also declared that all mining conducted after 22th November 2007 was illegal without exception. Nevertheless, mining did not halt until 2012, making the removal of iron ore between 2007 and 2012 amount to theft. In such a case, compensation of equal value is called for. The amount that mining companies owe the public is a minimum of Rs 65,058 crores.

Since the State budget is only Rs 14,694 crores, it cannot cover this cost. In light of this, The Goa Foundation suggested that, in lieu of resuming mining operations as before, there should be only one or two mines operating in the public sector with proper surveillance. This income could be put into the permanent fund. The Supreme Court has said that there are 15 million tonnes of ore worth Rs 2000 crores available to be sold. Some of the ore has already been sold and Rs 713 crores has been acquired. The rest of the money thus obtained could be used to fund the scheme for mining dependents and the work for the bypass on NH 17 from Mapusa to Dharbandora, coming on to Bali. The bypass would create jobs for mining dependents with trucks. Other closed quarries (eg laterite) could be reopened to employ mining dependents. Besides this, there are dumps that have low grade iron ore (150 million tonnes available to be sold) that has a viable market. The cap of 20 million tonnes will limit the sale to cover seven years. All this will provide enough time to plan the development of alternative employment for people previously involved in mining and to lay the foundation of controlled mining that will take place over 200 years.

Despite all these considerations, leases have been renewed according to previous terms which will result in the people now losing Rs 1,44,894 crores (approximately Rs 10 lakhs per person), not to mention the continued damage to the environment. The Goa Foundation seeks to have this information filter down to the common man so that informed decisions can be made and the public will be inspired to make a persuasive bid for the justice they deserve. This pursuit of legitimate rights, more emphatically, should move towards the preservation of our valuable environment aside from the fiscal advantages to the present generation and many more to come.

*This article is based on a lecture given by Rahul Bose at the Friday Balcao in Mapusa