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Behind the deadly Tuticorin affair: Centre tweaked rules to help Vedanta avoid public hearing

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8 years ago

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Behind the deadly Tuticorin affair: Centre tweaked rules to help Vedanta avoid public hearing

When local opposition to Vedanta owned Sterlite copper plant in Thoothukudi (earlier ‘Tuticorin’) exploded in an aggressive protest leading to violence and police firing which took 13 lives, Madras High Court stayed the expansion of the plant and ordered it to go for a public hearing. The company claimed it was not a legal requirement.

Some reports after this revealed that this was because the rules had been tweaked by the Centre to favour Vedanta.

While the Tamil Nadu government has been facing the ire for police action and is accused of favouring Vedanta, it is the UPA and then the Modi government which changed laws and tweaked rules for the company. The Modi government went to new lengths – we shall come back to it later here.

To begin with, said a report in The Economic Times (ET), Sterlite Industries was allowed by both the UPA and NDA governments to construct the copper smelter in Tuticorin without carrying out the mandated public hearing process.

The plant was first given the green signal by the environment ministry’s expert appraisal committee in 2008, when the United Progressive Alliance was in power, the ET report said.

In 2008, Vedanta’s Sterlite Industries Limited had sought exemption from public consultation. The 2006 Environment Impact Assessment (EIA) Rules state: “All Category ‘A’ and Category B1 projects or activities shall undertake public consultation, except… all projects or activities located within industrial estates or parks.”

Copper smelter plants fall under category A. However, Sterlite Industries sought for an exemption to this rule in 2008, stating that the smelter was located within an industrial park.

According to the report, the industrial park in question was not granted environmental clearance as the State Industries Promotion Corporation of Tamil Nadu (SIPCOT) industrial park was developed before the notification of the Environmental Impact Assessment rules. As the 2006 Environment Impact Assessment rules do not cover industrial parks which did not receive environmental clearance, officials quoted in the report say that this was the grey area where Sterlite brought forward its plea.

The project got the clearance in 2008, but was held up for five years as the environmental clearance process was challenged in court.

The government changed and Modi government took charge. It ‘resolved’ the issue in December 2014 when the environment ministry stated in a memorandum that an exemption of projects from public consultation “is available to the projects or activities or units located in industrial estates or parks, which were notified prior to September 14, 2006, i.e EIA notification coming into force”.

The memorandum was struck down by the National Green Tribunal (NGT) in 2016, but not before Sterlite secured a five-year extension on its environmental clearance for its expansion project.

This helped plants such as the one at Thoothukudi to be constructed without taking the people of the affected area into confidence.

This move enabling the existing rules to be passed was done through mere orders from ministry which called it a ‘clarification’. In effect, laid down notified regulations under the law were re-interpreted by a mere executive order in the name of providing a ‘clarification’ to the industry.

This allowed Vedanta and other industries who made pleas, to go ahead with their projects without holding discussions with the public, said a report in The Business Standard (BS).

This interpretation by the NDA government came an a bonanza for companies because the environment ministry under UPA government had insisted in May 2014 that projects such as Vedanta’s in Thoothukudi were required by law to first go through public consultations, the BS report said.

The NDA government reversed this position in December 2014 and in March 2015 the environment ministry extended Vedanta’s environmental clearance till December 2018. This it did even while the question of the need for public hearing by projects in different kinds of industrial parks was being contested in the courts. This allowed the company to carry out construction.

In 2016, the National Green Tribunal (NGT) ruled as illegal the December orders of the NDA government, which favoured Vedanta. Ministry officials maintained that annulling the government’s December 2014 orders would severely affect several projects, but the NGT eventually quashed the orders and on its directions, the ministry passed fresh orders expressly stating that projects in industrial parks without environmental clearances needed to hold public hearings.

But by then, Vedanta had already got an extension of the green clearance to its expansion project in Thoothukudi without having a public hearing and construction was on way, the report says. Soon, protests started.  Before the May 22 violence, protests had been on for 100 days.

It is on the basis of the 2016 ruling of the NGT that the court has ordered Vedanta to halt the project and go back to the public to hold consultations.

This brings us the the point mentioned earlier. The background to the Centre-Vedanta involves another aspect: that of political funding by corporate houses, especially foreign funding.

In March 2014, the Delhi High Court had held both the Congress and the BJP guilty of illegally receiving contributions from British mining and energy conglomerate Vedanta.

The Congress and the BJP separately challenged the ruling. After the BJP came to power, it amended a law with retrospective effect, making the alleged illegal foreign funds that the two parties received legal and nullifying the high court order.

The Representation of People’s Act, which lays down the rules for elections, bars political parties from accepting foreign funds. Modi government changed it by bringing in alterations through Finance Bill which cannot be stopped by Rajya Sabha. First, in the Finance Bill 2016, the Modi government amended the Foreign Contribution (Regulation) Act (FCRA) to make it easier for parties to accept foreign funds. In 2018, it amended it further to do away with the scope for scrutiny of political parties’ funding since 1976.

This enables the BJP to get funds from foreign companies such as Vedanta without being subjected to scrutiny or having to reveal the source or the amount.

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Union Budget 2026: What the middle class gains despite no income tax slab changes

Union Budget 2026 retains income tax slabs but offers indirect relief to the middle class through TCS cuts, simpler tax filing, cheaper medicines and higher job-creating expenditure.

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10 hours ago

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February 1, 2026

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Union Budget 2026: what the middle class gains despite no income tax slab changes

Union Budget 2026 may not have delivered direct income tax relief to salaried taxpayers, but the government has introduced several indirect measures aimed at easing financial pressure on middle-class households.

While tax slabs remain unchanged, the Budget outlines steps to simplify compliance, reduce taxes on overseas spending, lower the cost of essential medicines, and support job creation through higher public spending.

Income tax status quo continues

The government has retained the existing income tax framework for individuals. Annual income up to Rs 12 lakh continues to remain tax-free, and with the Rs 75,000 standard deduction, effective tax-free income rises to Rs 12.75 lakh.

No changes have been announced in income tax slabs, signalling policy continuity rather than immediate relief for salaried taxpayers.

Compliance relief and tax rationalisation measures

A key focus of Budget 2026 is reducing compliance burdens and improving the taxpayer experience.

The government has proposed a reduction in Tax Collected at Source (TCS) on overseas tour programme packages to 2%, down from the earlier rates of 5% and 20%. TCS under the Liberalised Remittance Scheme (LRS) for education and medical expenses has also been cut to 2% from 5%, providing relief to families sending money abroad for essential purposes.

To ease return filing pressure, timelines have been staggered. Individual taxpayers filing ITR-1 and ITR-2 can continue to file returns till July 31, while non-audit businesses and trusts will now get time till August 31.

Protection for small investors

The Budget proposes taxing all share buybacks as capital gains instead of dividends, a move aimed at protecting minority retail investors.

In another relief measure, interest awarded by Motor Accident Claims Tribunal (MACT) to individuals will be exempt from income tax, and the applicable TDS will be removed.

A single-window system will also be introduced for submitting Form 15G and Form 15H through depositories for TDS on dividends and interest, simplifying compliance for senior citizens and small savers.

Cheaper medicines and essential products

Healthcare costs may ease slightly as the government has announced duty exemptions on about 17 cancer medicines. Personal imports of medicines for seven rare diseases will also be allowed duty-free.

In addition, customs duty relief has been extended to critical components used in the manufacture of microwave ovens, television equipment, leather goods and footwear, which could help moderate consumer prices.

Job creation through higher spending

The government has raised capital expenditure to over Rs 12 lakh crore, with allocations for railways, tourism, logistics and technology sectors. These investments are expected to support employment generation and long-term economic activity, indirectly benefiting middle-class households.

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Budget 2026 balances high capex and growth, says PM Modi

Prime Minister Narendra Modi said Union Budget 2026 strikes a balance between high capital expenditure and strong growth while reinforcing reforms and fiscal discipline.

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10 hours ago

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February 1, 2026

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Prime Minister Narendra Modi on Saturday said the Union Budget 2026 strikes a fine balance between high capital expenditure and sustained economic growth, calling it a roadmap for long-term national development.

Speaking after Finance Minister Nirmala Sitharaman presented her ninth consecutive Budget, the prime minister said the proposals reflect a vision of trust-based governance and a human-centric economic framework. He added that India is not just focused on being the fastest-growing economy but is working towards becoming the world’s third-largest economy.

PM Modi said the Budget also reinforces India’s strong global standing and will provide fresh momentum to the country’s reform agenda. According to him, the measures announced will energise what he described as India’s “reform express”.

The prime minister highlighted the Budget’s focus on promoting tourism in the northeastern region, noting that it would create new opportunities and support regional development.

On fiscal management, the finance minister retained the states’ share in the divisible pool of central taxes at 41 per cent. She announced that Rs 1.4 lakh crore has been provided to states as Finance Commission grants for 2026–27, in line with the recommendations of the commission.

The Finance Commission, chaired by Arvind Panagariya, had submitted its report to the President in November 2025 after consultations with states and Union Territories, several of which had sought a higher share.

Sitharaman pegged the fiscal deficit for 2026–27 at 4.3 per cent of GDP, lower than the revised estimate of 4.4 per cent for 2025–26. She also said the debt-to-GDP ratio is projected to decline to 55.6 per cent in 2026–27 from 56.1 per cent in the previous fiscal.

A gradual reduction in the debt burden will help free up resources for priority sectors by lowering interest outgo, the finance minister said.

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India to build seven high-speed rail corridors, Finance Minister announces

Union Budget 2026-27 unveiled seven high-speed rail corridors and a dedicated east-west freight corridor to boost sustainable transport and economic growth.

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13 hours ago

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February 1, 2026

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India to build seven high-speed rail corridors, Finance Minister announces

Finance Minister Nirmala Sitharaman, presenting the Union Budget 2026-27 in Parliament on Sunday, announced that India will develop seven high-speed rail corridors connecting key cities across the country.

These corridors, described as ‘growth connectors’, aim to promote environmentally sustainable passenger transport systems. The proposed high-speed rail links will connect:

  • Mumbai and Pune
  • Hyderabad and Pune
  • Hyderabad and Bengaluru
  • Hyderabad and Chennai
  • Chennai and Bengaluru
  • Delhi and Varanasi
  • Varanasi and Siliguri

In addition to passenger rail, Sitharaman announced a dedicated east-west freight corridor connecting Dankuni in the east with Surat in the west. This initiative, along with the operationalisation of 22 new national waterways over the next five years, is intended to enhance multimodal transport and reduce logistics costs.

“These initiatives will strengthen freight movement and support sustainable cargo transportation,” the Finance Minister said.

The Budget also emphasizes infrastructure development in cities with populations over five lakh (Tier II and Tier III), which have emerged as key growth centres. Sitharaman further proposed a public capital expenditure of Rs 12.2 lakh crore for the financial year 2026-27.

She outlined that the Union Budget is guided by three core responsibilities—accelerating economic growth, fulfilling aspirations, and ensuring equitable access to resources for families, communities, and regions.

Describing the plans as part of a broader reform agenda, she added, “The ‘Reform Express’ is on its way.”

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