Uneven distribution of resources and the natural resource curse

Detail

1. Resources are spread unevenly

• Uneven distribution means that resources are not found equally everywhere. Some places have a lot of a resource and others have little or none. This is true across the world and also inside one country.

• NCERT Fig. 1.11 maps world minerals. They sit in clusters, not in an even spread.

• Why the spread is uneven (cause → result):

• Minerals form only under certain rock conditions. Old, hard igneous and metamorphic rocks hold metallic ores, and sedimentary basins hold coal and petroleum. So mineral deposits are found in belts.
• Water depends on rainfall, relief and rivers. Sunshine and wind depend on latitude, cloud cover and open land.

• So each region ends up with its own "basket" of resources.

• What this unevenness shapes:

• Settlement: people gather near water, fertile soil and minerals.
• Trade: a region that has too much of a resource sells it. A region that lacks it buys it.
• International relations and wars: countries compete for oil, minerals and river water.

2. Industry near resources: gains and costs

• Gains: mines and factories near a resource create jobs. Mining towns grow, along with roads, railways and markets.
• Costs:
• Displacement: forest dwellers and farmers lose their land and homes.

• Mining can damage sacred places such as hills, groves and rivers that local communities worship.

• Location + skill = unique products: a local resource combined with local craft skill can make a famous product.

• Example: Wootz steel. It was a high-carbon crucible steel (steel melted in small closed clay pots) made in south India from local iron ore. It was valued abroad for making strong sword blades.

3. Resources do not follow political borders

• A river, a forest or an oil field can cross state or national borders. Sharing it then leads to disputes.

River	Origin and course	Who shares it	Key structure
Kaveri	Rises at Talakaveri in the Brahmagiri hills, Kodagu district, Karnataka. Flows south-east across the plateau into Tamil Nadu and reaches the Bay of Bengal. Main tributaries: Kabini (which drains part of Kerala), Hemavati, Bhavani and Amaravati	Karnataka, Tamil Nadu, Kerala, Puducherry (Karaikal lies in its delta)	Mettur dam, Salem district, Tamil Nadu (NCERT Fig. 1.13)
Brahmaputra	Rises near Lake Mansarovar in Tibet, where it is called the Yarlung Tsangpo. Enters India in Arunachal Pradesh as the Siang/Dihang, flows west through the Assam valley, then enters Bangladesh as the Jamuna	China, India, Bangladesh (NCERT Fig. 1.12)	—

• Upstream users (for example Karnataka, or China on the Brahmaputra) control the flow. Downstream users (Tamil Nadu, Bangladesh) depend on what reaches them. This is the root of most water-sharing quarrels.
• Interstate water disputes are covered in detail in the water-resources-india and india-drainage-rivers notes.

4. India's regional pattern of resources

Region	Rich in	Short of	Planning need
Jharkhand, Chhattisgarh, Madhya Pradesh	Minerals and coal	— (but see the mineral-belt poverty below)	Turn ore into local industry and local welfare
Arunachal Pradesh	Water (large potential for hydropower)	Infrastructure (roads, power lines, industry)	Build infrastructure to use the water
Rajasthan	Solar and wind energy	Water	Water conservation and canal supply; clean-energy parks
Ladakh (a cold desert)	Cultural heritage	Water, infrastructure, minerals	Tourism, careful water use, linking roads

• Resource planning (a planned strategy for using resources wisely) is needed at the national, state, regional and local levels to balance these endowments.
• Having resources is not the same as development:
• Many resource-rich regions are backward, and some resource-poor regions are developed.

• Resources need technology, skilled people and institutions before they turn into wealth.

• Colonial lesson: colonies were rich in resources. Colonisers held better technology, and that technology, not mere availability, let them exploit the colonies. Resources alone did not make the colonies rich.

5. The natural resource curse ("paradox of plenty")

• Definition: the natural resource curse is the pattern in which countries or regions rich in natural resources often grow more slowly and stay poorer than places with fewer resources. It is called a "paradox of plenty" because plenty leads to poverty.
• Main cause given in NCERT:
• The region exports raw materials such as ore, crude oil or logs.
• It does not build value-adding industries (for example, making steel from ore).

• So jobs, skills and profits go to the importing countries.

• Other ways the curse works (beyond NCERT):

• Dutch disease:
  • A resource boom brings in large export earnings. This makes the country's currency stronger.
  • A stronger currency makes the country's other exports, such as factory goods and farm produce, costlier abroad.
  • Workers and money move into the booming resource sector. Manufacturing shrinks. This shrinking of industry is called de-industrialisation.
  • The name comes from the Netherlands. It found large natural gas fields in the North Sea in 1959. The Economist coined the term "Dutch disease" in 1977, after the guilder rose and Dutch manufacturing declined [7].
• Price volatility: commodity prices rise and fall sharply. Government income swings up and down, and so do public budgets.
• Rent-seeking and weak governance:
  • Rent-seeking means trying to grab a share of existing wealth instead of creating new wealth.
  • Big windfalls from resources set off fights over who gets the money. These fights pull effort away from productive work [8].
  • The quality of governance decides whether resource wealth helps growth or harms it [8].
• Conflict: the money from a resource can pay for armed groups and civil wars.
  • Democratic Republic of the Congo: minerals such as coltan, cobalt and gold.
  • Nigeria: oil in the Niger delta.
  • Venezuela: heavy dependence on oil.

6. Escaping the curse

Case	Resource	How it avoided the curse
Norway	North Sea oil and gas	Saves its oil income in a sovereign wealth fund (a state-owned investment fund) instead of spending it all at once
Botswana (southern Africa)	Diamonds	It is the world's most diamond-rich country and grew fast for several decades, so it is an exception to the curse [8]. Its Pula Fund invests only in foreign-currency securities. This makes up for diamonds running out and evens out economic swings. The present system has been in place since the mid-1990s [9]. Independent professionals manage the fund, away from political goals [9]
India (as a whole)	Coal, iron ore and other minerals	NCERT (Class 8) says India avoided the curse by building industries such as steel, power and cement

7. The curse inside India: the mineral belt

• The Jharkhand–Odisha–Chhattisgarh mineral belt sits on the Chota Nagpur plateau and its neighbouring uplands. It holds large deposits of coal, iron ore, bauxite and manganese.
• Yet it has high poverty, many tribal people who have lost land to mines, and Left-wing extremism (LWE), meaning Maoist armed violence.
• Policy response 1 – District Mineral Foundations (DMF):
• Legal basis: Section 9B of the MMDR (Mines and Minerals Development and Regulation) Amendment Act, 2015. It sets up a DMF, a non-profit trust, in every district affected by mining, for the benefit of the people and areas affected [4].
• Contribution: miners pay a share of their royalty (the fee paid to the state for each tonne of mineral taken) into the DMF.
  • 30% of royalty for leases granted before 12 January 2015.
  • 10% of royalty for leases granted on or after 12 January 2015, which are given out by auction [4].
• Spread: DMFs have been set up in 644 districts of 23 States/UTs (2023) [3].
• Money (till November 2024): ₹1,02,083 crore collected across India, of which ₹87,357 crore has been spent [2].

• Odisha, the top mining state, had received ₹23,120 crore in DMF funds by 30 June 2023 [6].

• Policy response 2 – Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY):

• DMFs carry out this scheme. It funds development and welfare projects in mining-affected areas [5].
• Priority sectors: drinking water, environment protection and pollution control, health care, education, welfare of women and children, welfare of the aged and people with disabilities, skill development and livelihoods, sanitation, housing, and agriculture and animal husbandry [5].
• Revised PMKKKY guidelines were issued in 2024 [5].
• See the mineral-resources-india note.

Prelims Hooks

• Kaveri is shared by Karnataka, Tamil Nadu, Kerala and Puducherry. It rises in the Brahmagiri hills (Kodagu, Karnataka). Mettur dam is in Tamil Nadu, not Karnataka.
• The Brahmaputra has three names. Tibet: Yarlung Tsangpo → Arunachal Pradesh: Siang/Dihang → Bangladesh: Jamuna.
• Match the region with its endowment: Rajasthan – solar and wind but little water. Arunachal Pradesh – much water but little infrastructure. Ladakh – heritage but lacks water, infrastructure and minerals. Jharkhand/Chhattisgarh/MP – minerals and coal.
• "Paradox of plenty" is another name for the natural resource curse.
• The term Dutch disease was coined by The Economist in 1977. It refers to the Netherlands after its 1959 North Sea gas discovery [7].
• Botswana (diamonds) and Norway (oil) are the standard examples of countries that escaped the curse. Botswana's fund is the Pula Fund [9].
• DMF comes from Section 9B, MMDR Amendment Act 2015. Contribution: 30% of royalty for leases before 12 January 2015, 10% for leases after it [4].
• PMKKKY is carried out by District Mineral Foundations, not directly by the Union Ministry of Mines [5].
• Wootz steel is an example of local resource plus local skill giving a unique product.

Mains Points

• Resource availability is not development (GS-I/III):
• Technology, capital and institutions turn resources into wealth. The colonial experience and the backwardness of mineral-rich states show this.

• So planning must be regional and multi-level: national, state, regional and local.

• The resource curse in the Jharkhand–Odisha–Chhattisgarh belt:

• Raw ore is shipped out, little value is added locally, tribal people are displaced and LWE has grown.

• Remedies:

  • process the ore near the mines;
  • follow PESA (Panchayats Extension to Scheduled Areas Act) and gram sabha consent;
  • use the DMF/PMKKKY funds of ₹1.02 lakh crore collected till November 2024 well [2].

• Lessons from other countries:

• Sovereign wealth funds (Norway, Botswana's Pula Fund) save income from resources that will run out [9].
• Fiscal rules soften price swings.
• Transparent governance limits rent-seeking [8].

• Diversifying into manufacturing guards against Dutch disease [7].

• Shared resources lead to conflict:

• Kaveri (interstate) and Brahmaputra (international) disputes show the need for basin-wide management.
• That means tribunals, data sharing and treaties instead of each state or country acting alone.