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The Bellary Brothers, politics and India’s mining boom May 11, 2010

Posted by southasiamasala in : India, Stoddart, Brian , trackback

Brian Stoddart

While Australia’s miners are belted by Kevin Rudd’s new supertax proposals, India’s biggest mining barons in the form of the Bellary Boys face perhaps even bigger problems. The Supreme Court had decreed that their Obulapuram Mining Company (OMC) in Ananthapur district of Andhra Pradesh should suspend operations for at least another three months, adding to the six during which no mining and therefore no profits have occurred. In an update, the SC has allowed a resumption of mining but only in “undisputed areas” and not within 150 metres of the Karnataka border, an apparently odd provision.

As is often the case, however, this is just the outer trapping of a much deeper and more complex condition that says much about contemporary India.

An iron ore mine in India – Flikr, Yahoo

Gali Janardhan Reddy, Gali Karunakara Reddy and Somashekhara Reddy are the sons of a police constable who was attached to the Bellary force.They grew up in the local area and dabbled in financial management, media and other ventures before embarking on twinned and interactive careers as politicians and iron ore magnates.

The latter began in the late 90s as the world began experiencing the first touches of the steel storm driven out of China.Very quietly, India has the fourth largest ore holdings in the world, and a very large amount of that occurs in the areas around Bellary in south India.Long renowned as a punishment post for Indian Civil Service officers in the British days the district is dry, dusty, arid and hot.In the breakup of the old Madras Presidency Bellary went to Karnataka, with the ore deposits straddling the border with Andhra Pradesh.

In the early days of the boom the allocation of mining leases and the tracking of them and their production outputs was minimalist.During that period OMC was granted a lease to mine in Anantapur on the Andhra Pradesh side of the border, the lease engineered by Chief Minister Y.S. Rajasekhara Reddy with whom the brothers had a connection.It is said now that of the 35 million tonnes mined annually in the Bellary/Anantapur area, as much as 35% might be done so illegally.

What happened next is essentially the subject of the Supreme Court deliberations.It is argued that because the quality of the ore on the Andhra Pradesh side was significantly inferior to that on the Karnataka side, suggestions soon emerged that the Bellary Boys were physically relocating state boundary markers to make it appear they were still in AP but were, in fact, mining in Karnataka.The state government in Karnataka was approached by other mine owners seeking redress, and after some years a report was lodged that identified serious irregularities in OMC activities.

By now, however, the political dimension had intruded.It is often forgotten now that back in 1999 Congress and Sonia Gandhi, not entirely sure of her being elected to the dynastic seat of Amethi in Uttar Pradesh, sought an insurance seat elsewhere.That was Bellary, then one of the heartland Congress seats.

The BJP reacted dramatically and drafted in Sushma Swaraj, now Leader of the Opposition in the Lok Sabha and, at that point, a former Union Minister and Chief Minister of Delhi.She ran a strong campaign in Bellary, her chief local supporters being the Bellary Boys to whom she has stayed close ever since.Sonia won the seat by a smallish majority but declined to take it, angering many local supporters.The Bellary Boys moved into the void and soon won the seat for the BJP from Congress in the state elections for the first time since 1952, while extended family members moved into seats in neighbouring electorates.

The mining boom was now in full swing with the family on its way to wealth perhaps reaching $A12-15 million – Janardhan is completing a massive mansion in Bellary as are some of his associates, and helipads to accommodate large numbers of helicopters are de rigeur.As reports from different outlets like Outlook, Tehelka, and even from the Salesian ministries active in the area have it, however, the social cost is high.The mining of ore in India creates high margins largely because of the very low labour costs spent on the hundreds of thousands of migrant workers who have flocked to Bellary.One estimate has as many as 200, 000 children working illegally at the mines that have now spread over thousands of hectares.

Then, mining is invasive – it is largely open cut and, where OMC has been said to be operating in Karnataka, that includes forest areas that are supposed to be subject to stringent controls.It is perhaps coincidental that Somasekhara Reddy is Forests Minister as well as Finance Minister in the Karnataka state government.

As if that were not enough, the ore has to be transported across Karnataka to small ports in and just to the south of Goa.Transport regulations might be tight but it is alleged that as many as 10,000 trucks per day make the journey in contravention of licensing, loading and operating rules.The impact on infrastructure is enormous.

The interplay between politics and industry was stepping up for the Bellary Boys.In 2008, using their power base in and around Bellary to create further inroads, they saw B.S. Yeddyurappa become the first BJP Chief Minister in Karnataka.Not the least of their work lay in swinging over to the BJP several independents who were said to have been paid handsomely for their support.The Bellary Boys were now kingmakers.

Yeddyurappa, however, reneged on some promises at which point the Bellary Boys moved to have him ousted.That was avoided only after high powered intervention from BJP national heavyweights like Arun Jaitley, and involved considerable concessions to the Bellary magnates.

That was important, because this was precisely the time when the Karnataka official reports were surfacing about activities in and the impact of the Bellary mines.Given their strength locally and their connections to Sushma Swaraj, the state government moved with all the speed of a sloth to investigate matters.

However, Andhra Chief Minister YSR’s death in a helicopter crash had unforeseen consequences.The Bellary Boys had as a business partner a member of YSR’s family, so they backed his son Jagan Mohan in his attempt to replace his father.As soon as K. Rosaiah saw off Jagan and became Chief Minister, he immediately placed a suspension order on all the Reddys’ mining activities in Andhra Pradesh.That set off a chain reaction.

That was problematic for the brothers, of course, because theoretically all their activity was in AP even if the state boundary marker relocations meant they were operating in Karnataka.CBI investigations began and charges were levelled around conspiracy, cheating, fraud and a range of similarly serious matters.The Reddy brothers appealed and were upheld by the Andhra Pradesh High Court at which point the state government promptly lodged the matter with the Supreme Court.

Their opponents stepped up activities and things turned nasty – one of their principal opponents in the mining industry, a man who had protested their activities for many years, was a few weeks ago beaten up by an armed gang widely believed to be in the employ of the brothers.

The brothers are now being pursued politically, inevitably.In the Lok Sabha a group of politicians are seeking to have the Bellary matter debated.That group is led by former Prime Minister and Karnataka state Chief Minister H.D. Deve Gowda, now leader of the Janata Dal (Secular).He is supported by members of the Telugu Desam Party, the AIADMK and some communist factions, all of whose only common thread is a wish to corrode the BJP’s powers in Karnataka.

It is in that atmosphere that the Reddy brothers, the state governments of Karnataka and Andhra Pradesh, the various political factions, other mining entrepreneurs, and the thousands of impoverished workers await what happens next.The most recent Supreme Court order allows restricted resumption of mining only while the Survey of India further investigates the precise nature of the state boundary and the alleged irregularities.Already, though, this is a potent mixture of local influence, political opportunity, wealth creation, and problems of governance.

As ever with India, there is a humorous slant – one blogger late last year suggested that Manmohan Singh put the Bellary Boys in charge of settling boundary disputes with China and Pakistan, on the grounds that they are the only people in India with the necessary skills!

 

Comments

1. Barbara Nelson - May 14, 2010

I travelled by bus from Hospet to Guntakal Junction in January 2006. It involved changing buses in Bellary – I was intrigued by the place, so very interesting to learn something about the Bellary story. It may also explain why the road was completely trashed and the journey took twice as long as predicted. The train we were connecting with ran precisely on time (thanks to Laloo?) and we boarded with seconds to spare.