Don’t let Sterlite go scot-free but cease knee-jerk reactions too

Controversy and Sterlite Copper go hand in hand. The smelter project came to Tamil Nadu more than two decades back, after two states -- Maharashtra and Goa -- refused permission. Successive governments, both in the state and at the Centre, facilitated continuous running of the plant despite complaints of environmental pollution, until the erstwhile AIADMK government shut it down after the death of protesters who were opposing the plant's expansion plan. The company has challenged the closure, and the matter is before the Supreme Court.

Was a more calibrated approach available to the Tamil Nadu government rather than the extreme step of plant closure? Orders for closing the plant were not in response to the charges of it being heavily polluting; it was the firing incident the forced the government’s hand. While it is nobody’s case to treat Sterlite's pollution charges lightly, the costly ramifications of the plant’s closure can also not be brushed aside.

The dependence of a large economy on copper cannot be overstated. Copper is used in electric wiring, which means every household, factory and office is affected when production volumes swing sharply. As a result of the Sterlite plant closure, copper production in the country dropped from 830,000 tons in 2017-18 to 410,000 tons in 2019-20, Union minister for mines, coal and parliamentary affairs Pralhad Joshi informed the Lok Sabha in March 2021. India’s imports of refined copper more than trebled. Exports slumped over 90%. From a net exporter of 334,310 tons in 2017-18, India became a net importer of 44,373 tons in 2019-20.

Episodes of knee-jerk state reactions to controversies involving allegations of violations by corporations go beyond standard complaints of ease – rather unease- of doing business in India. They go to the heart of state-capital relations in India. The most unfortunate of such cases was in West Bengal involving chief minister Mamata Banerjee, who, when in the Opposition, drove Tata Motors' Nano project out of the state. In Andhra Pradesh, after election victory, chief minister Jagan Reddy cancelled the contracts his predecessor had awarded for building a new capital city.

The Indian state, both at the central and federal levels, does not cover itself in glory when required to balance conflicting objectives. It ends up creating loss-loss conditions where the environment and worker interests as well as the economy suffer.

Yes; India needs zero tolerance for companies demonstrating scant regard for employees and the environment. All the same, abrupt plant closures sour business sentiment when there’s already a severe crisis of industrial jobs that are not keeping pace with the labour force growth. Stiff penalties and strictures can make polluting industries follow rules on environment, sustainability and labour. But if the corporate sector has to become more sensitive to the environment and workers, the state too has to be mindful to make sure officials don’t recreate the inspector raj, increasing crony capitalism and corruption.

In the case of Sterlite Copper, its geographical location raises strategic and security concerns as well. Sumathi’s statement, whether or not based on substantial facts, hands an opportunity to the Stalin government to approach the controversy afresh and repair Tamil Nadu’s industrial environment.