December 27, 2018 @ 11:45 am

27 DECEMBER 2018

No lessons learnt

The Meghalaya mining disaster exposes a series of administrative lapses

The disaster that struck a coal mine at Ksan in Meghalaya’s Jaintia Hills district on December 13, trapping at least 13 workers, is a shocking reminder that a fast-growing economy such as India continues to allow Dickensian mining practices. India being home to some of the worst mine disasters, such as Chasnala near Dhanbad in 1975 in which more than 370 people were killed, the full spectrum of mining activity should be tightly regulated. Yet, the Ksan mine, referred to as a rat hole, was allowed to function in violation of not just safety norms but a complete prohibition issued by the National Green Tribunal. Clearly, the administration did not act to stop unscrupulous operators of the illegal mine from exploiting desperate workers, some of them from Assam, who were willing to work the rat hole tunnels because that is the most remunerative employment available to them. Unscientific mining led to a collapse of the chamber and deadly flooding followed. After disaster struck, it was incumbent on the Meghalaya government to launch an immediate rescue effort. But it did not possess the equipment to dewater the stricken mine quickly, and did not show any urgency in requisitioning it from elsewhere, in spite of the involvement of the National Disaster Response Force. The families of the workers are now left hoping for a miracle. Meghalaya has no excuse for not closing down such dangerous mines. What it can and should do now, jointly with the Assam government where needed, is to offer adequate compensation and jobs for the next of kin of the workers without delay.

Official inquiries into flooding disasters at approved mines, including Chasnala, have shown serious shortcomings in safety management. Two years ago, a landslip at an open cast mine in Goda, Jharkhand, killed 23 people, raising questions about the rigour of the technical assessment done prior to expansion of extraction activity. A study on three big flooding accidents published in 2016 by the IIT-Indian School of Mines, Dhanbad, concluded that the official approach of fixing responsibility on human error was flawed, since it did not try to identify the root cause. There is little evidence to show that pre-mining surveys and safety protocols are incorporating such advice. The case of illegal mines falls in a different category. Unapproved work, which appears to have led to the Meghalaya accident, cannot continue, and employment should be provided to those who are displaced. Illegal mining has been highlighted by activists, but they have become targets of violence by those operating the mines. In the glare of national attention, Chief Minister Conrad Sangma has acknowledged that illegal mining does take place. His government has been remiss as it failed to act on the NGT’s directions. It must bear responsibility for what has happened at Ksan, and work to prevent such tragedies.

Winter bear hug

Stocks everywhere show signs of weakness as central banks tighten monetary policy

U.S. President Donald Trump probably did not have his best Christmas this year. American stocks suffered their worst Christmas-eve loss in market history with the Dow Jones Industrial Average losing a massive 650 points on Monday, a drop of almost 3% within a single trading session. Mr. Trump has been keen on projecting the stock market’s performance as a gauge of how well the U.S. economy is doing under his presidency. While U.S. and global stocks performed extremely well in the first year of Mr. Trump’s presidency, they haven’t lived up to his expectations this year. The Dow Jones, now down almost 19% from its peak in early October, is clearly teetering near bear market territory. The index is down about 12% since the beginning of the year. The S&P 500 is already more than 20% down from its intra-day peak during the year, thus meeting the common definition of a bear market. And the Japanese Nikkei index dropped 5% on Christmas day. The Christmas-eve slump in the U.S. came after Treasury Secretary Steven Mnuchin’s statement on Sunday announcing the convening of the President’s Working Group on Financial Markets, colloquially known as the Plunge Protection Team, that last met in 2008 in the midst of the global financial crisis. Investors interpreted the statement as a sign of possible trouble brewing within the financial system, thus contributing to at least some of the panic in the markets on Monday

It is no surprise that stocks in the U.S. and around the world have shown signs of weakness just around the time the Federal Reserve and other major Western central banks have been keen on ending the era of easy money by tightening monetary policy. Many major indices have either broken their short-term uptrend or struggled to go past their most recent highs. Mr. Trump has expectedly been public about his criticism of Federal Reserve Chairman Jerome Powell, who has surprised many by sticking to his plan of gradual rate hikes despite U.S. inflation being comfortably below the Fed’s target rate of 2%. He fears that rising interest rates could derail economic growth that has been quite robust in recent times and affect his popularity. Historically, politicians have generally favoured easy money policies represented by low interest rates while central bankers have insisted on sticking to their primary mandate of controlling price inflation. So the battle between the President and the Federal Reserve Chairman is not completely surprising, except for Mr. Trump’s criticism of the Fed. What is important to observe is how markets, which have now clearly begun to price in the effects of tighter monetary policy around the world, will fare in the era of more normalised interest rates.

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