The Goa Iron Ore Permanent Fund in India: A Bold Precedent
The Alaska Permanent Fund has been an inspiration to many of us because it provides a mechanism, the “stakeholder trust,” to ensure that everyone benefits from common assets, especially natural resources such as water, minerals, forests and the atmosphere.
In Alaska the Fund, operating as an independent, state-chartered trust, holds an equity stake in oil on state lands and therefore reaps a royalty on a portion of the oil extracted. This is deposited in a massive trust fund, worth more than $52 billion, which kicks off revenues in the form of “dividends” for every resident of the state, including children. The sums usually amount to $1,000 to $2,000 per year.
Peter Barnes in his 2006 book Capitalism 3.0 suggested a number of ways in which the permanent fund idea could be applied to other common assets that are now plundered for private gain, such as forests, the atmosphere, the copyright and patent systems, and the financial regulatory apparatus. The State of Vermont has entertained the idea of establishing permanent funds for some of its common assets, but the idea has not moved there. (See the 2008 report, "Valuing Common Assets for Public Finance in Vermont.”)
I was therefore thrilled to learn recently about a fascinating version of the permanent fund that the Supreme Court of India has mandated for the state of Goa. In the course of public-interest litigation, it was discovered that, over the course of an eight-year period, the Goan government had allowed private mining companies to cart away 95% of the value of minerals on public lands, or about US$8.5 billion. This sum is twice the total state revenues for those eight years, or about$5,800 (Rs.3.7 lakhs) for each man, woman and child in Goa. In addition, private mining companies had caused all sorts of environmental destruction.
Rahul Basu, an Indian activist who brought the Goa Iron Ore Permanent Fund to my attention, noted that “since minerals are a part of the commons, i.e., owned by all of us, this loss is effectivelya per-head tax. Everyone loses equally, and a few get richer. This is not trickle-down, it is gush-up. This is a highly regressive redistribution of wealth.” Basu also noted that government privatization of common assets violates principles of equality, and thus runs contrary to Article 17 of the Universal Declaration of Human Rights. “We have found similar issues in iron ore, coal, oil & natural gas elsewhere in India,” writes Basu. “As royalty rates are usually set by trying to attract investment into the sector, countries race to the bottom.”