Case Study

Fiscal Reforms and Abandonment of Mines: The Case of Underground Copper Mines of Ghatsila, Jharkhand, India.

Tah Ujjwal , Kamath Rajalaxmi
Economic reforms, Socio-economic impact analysis , Mine closures

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Abstract 

This case illustrates the perils of implementing top-down, macro economic reform measures at the local level, in response to curbing national fiscal deficits, without taking into account the local, meso/micro or technical ground level realities in the process of implementation. It details a specific instance of economic reforms during the post-90s economic liberalization of India. This case depicts what went behind one such reform in the mining sector – the closure/abandoning of the copper mines of Hindustan Copper Limited at Ghatsila, East Singhbhum district, Jharkhand. The closure was dictated by an extract in a report of the Government of India’s Committee on the Tax Reforms (Chelliah Committee) recommending the closure of uneconomic mines in the eastern sector, in its push towards lowering import duties on refined copper. Continual low LME (London Metal Exchange) prices of copper precipitated this decision. With the LME prices picking up towards early 2000 and the predictable growth in the demand for copper, a decision was taken to re-open these mines. Since these mines were summarily abandoned and sealed, this process turned out to be extremely difficult and costly. The case gives the points of view of the stakeholders on the ground – the local management at the mines during the time of closing and the mining trade union workers along with technical experts.

Learning Objective

The main objective of this case is to recognize that often, crisis-driven, national policy directives, driven by macro-level goals of fiscal austerity get implemented at the local level in a knee-jerk and myopic manner, without taking into consideration the local stakeholders, the peculiar local conditions or even sectoral experts, leading to non-trivial detrimental consequences for the local economy.

  • Pub Date:
    28 Dec 2018
  • Source:
    IIM-B
  • Discipline:
    Other
  • Product#:
    1303
  • Keywords:
    Economic reforms, Socio-economic impact analysis , Mine closures
  • Length:
    Pdf : 20 page(s) ,

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