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Green accounting of exhaustible mineral resources in India: a case-study of bauxite sector

Student name: Ms Shobhna Jha
Guide: Dr Sukanya Das
Year of completion: 2016
Host Organisation: Institute of Economic Growth, New Delhi
Supervisor (Host Organisation): Dr M.N. Murty
Abstract: In India, little effort has been made towards estimating economic depletion of the exhaustible mineral resources and effect of current unsustainable mineral extractions on the welfare of future generations. Given, that natural assets’ base is rapidly declining across the world and especially in India with its high natural resources’ dependability and huge population pressure; fact that there is no account of natural capital loss in the economy’s balance sheet or in the GDP figures is truly grave to be ignored. In this direction, green accounting is found addressing the concerns of ensuring sustainable use of the non-renewable mineral resources.

This thesis tries to explore the dynamics of Green Accounting - its need, feasibility, policy implications; extrapolating it with Inclusive Wealth, Genuine Savings concepts for gaining a broader macroeconomic perspective. A case study analysis of ‘Bauxite’ mineral resource and its green accounting has been undertaken in this regard. Applying the user-cost methodology, green accounts for Bauxite have been calculated at three levels- for all India; for major Indian states producing Bauxite and for three principal bauxite mining companies in India.

Results primarily suggest two main conclusions- firstly, there is unanimously, a huge gap between the “actual” and the ‘true’ or “sustainable” rate of extraction of bauxite-whether at all India, states’ or mining company’s level. Secondly, the broader stock measures of well being, like- Genuine Savings as calculated at All India’s level, reiterate the implication of a grave need of policy discourse on comprehensive macroeconomic parameters, i.e. moving beyond just using GDP.

Broadly, the idea throughout this thesis is to justifiably inform the ‘policy-makers’ about the need to move from flow to stock accounting, in measuring economic growth and thus, development. Results will also serve as a significant value addition to the field of green accounting and valuation studies for exhaustible minerals’ sector as bauxite has not been analyzed in this manner till now through mining companies’ perspective or even at all-India level.

Key Words: GDP, Green Accounting, Mineral depletion, mineral reserves, inter-generational equity, Sustainable Development, Genuine Savings, Inclusive Wealth.