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Leveraging Mineral Potential

Mains-GS-3-Economic Development

Government is planning to increase the  contribution of the mineral mining sector from 1.75% currently to 2.5% of GDP.

Importance of mineral mining

1. The sector sustains a livelihood of about 55 million people.

2. In terms of generating employment, the sector is second to agriculture.

Status of the sector

1. Over 17% of the nation’s land area has mineral reserves whereas mining is being carried out only on 0.25% of the area.

2. The sector had also underperformed in attracting investments.

3. While mineral production stands at ₹1.25 lakh crore annually, its import is at a significant  ₹2.5 lakh crore.

Key Reforms

1. The Ministry of Mines aims to increase  the mineral production output by 200% over the next 7 years.

2.  The Mines and Minerals (Development and Regulation) Amendment Act, 2021 is a step towards achieving this.

Restarting the blocked mines

1. Most of the mines are blocked because of the legacy cases and they don’t contribute to the production.

2. Amendments were made to reallocate such mineral blocks through a transparent auction mechanism. 

3. Auctioned mines not made operational within 3 years will be returned to states concerned for reallocation through auction.

4. Also greenfield mines allocated to public sector units that are not brought into production after a review will also be sent for reallocation.


1. Government has enabled transferability of all valid rights, approvals, clearances and licenses to the new lessee. It will be valid until the mineral reserves last. 

2. This would facilitate lessees to transfer the mine to another entity, thus bringing in fresh investment and entrepreneurship to operate the mine.

Standards for exploration

1. Standard of exploration required for auctioning of partially explored mineral blocks for prospecting licence-cum-mining lease is redefined.

2. This will boost seamless transition from exploration to production and encourage the participation of private players. 

3. The amended provisions in the Act also ensure better clarity on “Mining without Lawful Authority” to save lease-holders from unjustified penalties under other litigations.

Reforms in DMS

1. local Members of Parliament were made members of the District Mineral Foundation (DMF).

2. Arrangements have also been made to keep a check on misuse of DMF funds.

Other reforms

1. The distinction between captive and non-captive mines was removed bringing a level playing field.

2. Existing captive mines have also been allowed to sell minerals over and above their requirements. 

3. A 50% rebate in the revenue share, for the quantity of minerals produced and dispatched earlier than scheduled date of production, has also been provided.

Effects of reforms

1. 143 mineral blocks have been handed over to various states.

2. These blocks are auction-ready, but so far, states have only auctioned seven blocks.

3. Certain provisions were amended such that the Union government can conduct auctions in consultation where states face challenges or fail to conduct auctions.


1. There are several other changes in the MMDR Act that will boost the ease of doing business in the mineral mining sector.

2. It will also make it more competitive, pave the way for creation of employment opportunities, and have a multiplier effect on several other sectors.

3. These reforms will help realize India's dream of attaining 5$ trillion economy.

Source : Hindusthan Times