Editor’s note: This report is an output of the research done over two months by Ashwin Nair during his internship in May to June 2025 with Veditum India Foundation, under the guidance of Aishani Goswami and Rhea Lopez. At the time, Ashwin joined us as a public policy student and reviewed Madhya Pradesh State Sand Mining Policy – 2017 and MP Sand (Mining, Transportation, Storage, and Trading) Rules – 2019, using the data available till June 2025.
Key takeaways:
- This report reviews the Madhya Pradesh Sand Mining Policy – 2017 the Madhya Pradesh Sand (Mining, Transportation, Storage, and Trading) Rules – 2019, with the context of heavy unregulated sand mining in the state.
- The inclusion of local governing bodies for operational control of sand mines was emphasized in the 2017 Policy, but replaced in the 2019 Rules by a centralized governance schema (i.e. Madhya Pradesh State Mining Corporation – MPSMC).
- The penalties for illegal mining and transport of sand, described in the 2019 Rules are of financial nature, and there are no punitive measures imposed on repeated offenders to entirely stop illegal mining and transport.
- The 2019 Rules define demarcations of ‘no mining zones’, that take care of infrastructure and public safety, but fail to emphatically provide the protection of biodiversity hotspots, river’s health, riverine species and their habitats from excessive sand mining.
Introduction
With increasing urbanisation, the increase in demand for construction-grade sand has become a worldwide environmental issue. India is one of the top critical hotspots for negative impacts on rivers and coastlines due to sand mining, driven by the booming infrastructure and construction projects (Sreebha & Padmalal, 2011).
At a compound annual growth rate (CAGR) of 6.5% and the sand production volume of almost 1,006 million tons in 2024, the Indian sand production market is projected to reach 1,773.5 million tons by 2034. India also exported $8.28 million worth of sand in 2024, and in the same year imported sand worth $16 million.
This scale of sand production in India has grave social and environmental consequences. A report titled “Sand Mining Violence India: 2019-20” by SANDRP, recorded that just in the period of two years, between January 2019 and November 15, 2020, at least 193 people died in incidents relating to illegal sand mining such as riverbed pit mine collapse and drowning. Other than accidents, gang rivalry and attacks on journalists and environmentalists by sand syndicates were causes of violence and death.
Organized crime syndicates, as research shows, dominate the illicit sand trade, often resorting to brutality to maintain control, adversely affecting the environment and political organization of specific regions. In different parts of the world, mining disputes are further exacerbated by weak governance, institutional distrust, and poor coordination among stakeholders, for example, in Kyrgystan where the risks and costs arising out of these issues threaten the local social-ecological systems and further fragments the society.
These criminal networks, sometimes transnational in nature, wield significant political influence to shape resource extraction policies. This suggests that the industry is not just environmentally destructive but also socially harmful, operating with a disregard for human rights and safety.
The large-scale illegal mining in the state of Madhya Pradesh, India, is evidence enough that its state policies governing sand mining and enforcement processes are weak, ineffective and do nothing to protect its rivers. Political statements to protect rivers of cultural and religious importance gain favour but do nothing to implement enforcement measures. The weakness in governance is not only due to institutional capacity but also due to a lackadaisical policy approach towards resource governance, as we will see in the analysis later.
In 2017, Shivraj Singh the Chief Minister of Madhya Pradesh declared the holy river Narmada as a living entity through an act of the Vidhan Sabha. In 2022, the State Agriculture Minister Kamal Patel threatened to register a case for an attempted murder case against anyone found using heavy duty machines for the purpose of mining sand from the Narmada river. He said, “If anyone uses a Poclain machine to drill sand, it is an attempt to kill the holy river.” Rhetorics like these are a platitude in the state’s politics infected by heavy sand mining activities.
This study is a policy review that examines how Madhya Pradesh State Sand Mining Policy, 2017, and MP Sand (Mining, Transportation, Storage, and Trading) Rules, 2019, regulate resource extraction in the context of environmental and social violence caused by sand mining in the state.
Policy Analysis
The Madhya Pradesh Sand Mining Rules, 2019, increased enforcement methods and environmental compliance standards by including comprehensive provisions on quarry allotment, licenses, transportation, and limits, superseded previous regulations in response to complaints about these shortcomings.
This is a review of (i) the Madhya Pradesh Sand Mining Policy 2017*, and (ii) the Madhya Pradesh Sand (Mining, Transportation, Storage, and Trading) Rules, 2019*, developed under the Mines and Minerals (Development and Regulation) Act, 1957, focusing on 4 seeks to reform and govern the sand mining sector.
For this we will be exploring key areas of governance:
- Mining permissions & allocations of Sand Mines
- Transportation and Storage
- Environmental considerations
- Revenue distribution
*For reference, in the report, Madhya Pradesh Sand Mining Policy 2017, is also written as the ‘2017 Policy’ and Madhya Pradesh Sand (Mining, Transport, Storage, and Trading) Rules 2019 is written as ‘2019 Rules’.
1. Mining permissions & Allocations of Sand Mines
Compared to the Madhya Pradesh Sand Mining Policy of 2017, the Madhya Pradesh Sand (Mining, Transportation, Storage and Trading) Rules, 2019, present a more centralized and corporatized governance schema. This difference manifests by replacing direct operation by local bodies with a highly centralized and corporatized system enabled by the Madhya Pradesh State Mining Corporation Limited (MPSMC). This model of allocation and granting permission prioritizes revenue maximization and corporate efficiency over local empowerment and participatory governance.
While the responsibility remains with the Collector in both the 2017 Policy and 2019 Rules for identifying and declaring mines, there is a major difference in the core allocation model prescribed between the 2017 Policy and the 2019 Rules. Under (Sec 3(2), 3(5)) in the 2017 Policy document, direct operation of mine lies with Gram Panchayats / Urban Local Bodies, and contracting is prohibited. While the 2017 Policy gave operational control to local bodies, the 2019 Rules merely adds a formal requirement for local consultation.
In 2019 Rules, specifically under Rule 8 and 9, e-Auction of grouped sand quarries to private contractors for a three-year period is formulated. The 2019 Rules have laid down a process where the Collector identifies and groups sand quarries based on geographical and revenue boundaries. MPSMC is the primary agent for the entire allocation process. A short, impractical window of 15 days is given by the Collector to concerned local bodies for giving their opinion before a quarry is declared.
In this process, the 2019 Rules take away the direct operation of mines from local bodies, therefore, demoting them to mere consultation entities. The centralized nature can be seen in Rule 5(3) & Rule 8, where the Collector must group quarries into larger units instead of auctioning it as individual quarries. This can cause monopoly control of large sand quarries by a single corporate entity, eliminating opportunities for local operators (reference 1 and reference 2). In other parts of the country, resource extraction has increasingly shifted from small-scale quarrying to centralized corporate monopolies, resulting in labor displacement and environmental degradation.
Allocation via e-Tendering (Rule 8) is a key feature of the 2019 document related to mining allocation. The detailed process of tendering in Chapter IV is designed in favour of making sand mining a more efficient process for corporations. One of the key issues the CAG audit report had pointed as a deficiency in the e-Auction process was the lack of rules framed to blacklist successful bidders in e-Auctions who fail to execute agreements. The 2019 Rules alarmingly don’t address this issue as there is no explicit provision for blacklisting defaulters, it only facilitates financial penalties (EMD forfeiture) and contract cancellation.
In the 2017 Policy, one of the important provisions was the role of sand managers. Sand managers would be selected from the retired officers of the state’s administrative services and they were supposed to work as coordinators for quarry inspection, mining plan preparation, obtaining environmental clearances, and pollution-related consents. The 2019 Rules doesn’t include the 2017 Policy’s “Sand Manager” role, which was intended to provide coordinated, on-ground oversight.
Instead the 2019 Rules rely heavily on self-regulation by contractors through the submission of Annual Working Plan, Annual Action Plan and monthly returns (Rule 13). The successful tenderer must submit quarterly extraction limits and confirm compliance with permitted extraction limits. Also contractors themselves must ensure that monthly dispatches align with the total permissible quantity for the year. This system is inherently vulnerable to underreporting and misrepresentation, with no dedicated independent official to verify claims on site.
While both the sand mining 2017 Policy and 2019 Rules describe mapping and use of data, such as geofencing information, real-time extraction data, and GPS logs of transportation vehicles, there is no provision in either to have such crucial data publicly available for social audits of leased mines allocated to contractors. This opacity discourages transparency for citizens, researchers, and NGOs, making it impossible to independently verify compliance with environmental norms and permitted extraction limits.
2. Transportation and Storage
The 2019 Rules mandate an electronic transit pass (e-TP) for all sand transportation, containing details of quantity, vehicle, and destination. In contrast, the 2017 Policy does not mention transit passes, rather emphasises transport vehicles to have a GPS equipment and proposes that a software will be developed through PPP model to track vehicles entering/exiting sand mines and transporting sand. Interestingly, the 2019 Rules clearly state that without a well-equipped and vigilant on-ground administration to check vehicles and verify e-TPs, the robust implementation of the software portal, e-TP system, and GPS tracking will be rendered ineffective.
In spite of the digital tracking process described in the rules, weak on-ground monitoring can enable illegal mining and transport of sand. Despite a ban on mining in Bhind district (in July, 2025), sand was being mined and smuggled in large quantities to Uttar Pradesh at night through trucks and tractors. With proper state vigilance, illegal cases can be monitored as seen in a raid carried out by the Enforcement Directorate uncovering fake e-TPs being made and used to transport sand illegally in Madhya Pradesh and Maharashtra.
A sophisticated penalty regime was introduced in the 2019 Rules for illegal transportation as shown in the image below. The compounding penalty is supposed to encourage voluntary compliance, through which the violator pays a pre-defined fee to avoid formal prosecution. These fines are lower than if a penalty is imposed, to incentivise the violator to settle and dispose of the case by paying a fee.
However, there have been bad faith cases of the violator bribing the concerned authorities to reduce fines in Harda district. A key feature of the prescribed penalties is its financial nature; there are no punitive measures imposed on repeated offenders to entirely stop illegal mining and transport for e.g., imprisonment due to violation (barring Rule 14(1) cancellation of contract for excess mining). This raises the questions about the effectiveness of penalties acting as a deterrent to illegal sand mining.
3. Environmental considerations
Environmental governance is one of the weakest areas of governance when sand mining policy formulation and implementation is considered. The lack of focus on environmental consideration in both the 2017 Policy and 2019 Rules is symbolic of state apathy.
Sand mining was banned in the submerged areas of the Narmada river, and stricter enforcement was ordered in a 2017 NGT judgement. Due to the cultural importance of the Narmada River, state politicians have particularly given statements for the protection of the river; and similarly, the protection of the river’s ecological system is one of the key objectives of the 2017 document. A special clause (Clause 21) in the 2017 Policy, was formulated to ban the use of machines to mine river sand from Narmada, and yet incidents after incidents have reported deteriorating state of the Narmada river because of large-scale sand mining that uses machines.
Unfortunately, the 2017 Policy does not grant special protection to the other rivers in Madhya Pradesh from mechanised mining. The extent to which the 2019 Rules use Sustainable Sand Mining Management Guidelines – 2016, to define no mining zone is limited to delineating buffer zones around critical infrastructure like bridges, water supply schemes, canals, reservoirs and culturally significant sites. While these demarcations help to provide infrastructure and public safety, the 2019 Rules do not include any provisions for protection of biodiversity hotspots, river’s health, riverine species and their habitats from excessive sand mining.
The 2019 Rules, however, provide an exception for areas banned for mining for environmental reasons. It states that these areas can be accessed for sand mining after obtaining an NOC/consent from the concerned authority, hence facilitating unsustainable practices.
The table below enlists the environmental compliance process of statutory permissions and clearances that a tenderer needs to take before mining can be commenced, as mentioned in the 2019 Rules.
The 2017 Policy placed responsibility of monitoring environmental violations on local bodies; it lacks any explicit details of penalties for violations. Rule 12 of the 2019 document states that if contractors violate permitted limits or in cases of unauthorized mining, then 100% of the market value of illegally mined sand in addition to the compensation for environmental damage is supposed to be recovered from the contractor.
The 2019 Rules do not define how the compensation is to be calculated. And while Rule 12 brings into effect the “Polluter Pay’s Principle”, it is plagued by a larger systematic undervaluation of ecological costs. The Madhya Pradesh Sand (Mining, Transportation, Storage, and Trading) Rules, 2019, do not explicitly incorporate the cost of environmental restoration as mandated by the Supreme Court’s directive where the apex court stated that “the cost of restoration of environment as well as the cost of ecological services should be part of the compensation”.
On the point of setting a base upset price of ₹125/cu.m (rule 7), the state accounts for its revenue collection from the mined sand. But this base price does not cover the environmental costs caused by mining sand to the river and the ecosystem it supports. Hence, when the environmental costs are not accounted for, no remedial measures exist for restoration of the excessively mined area and the nearby region.
4. Revenue distribution
The revenue distribution mechanism in 2019 Rules and the 2017 Policy documents are envisioned for two different operational models. In the 2017 policy the primary revenue is a fixed royalty of ₹100 per cubic meter. (Implied by the 50/50 split of ₹100 in Clause 3(9)). For 2019 Rules variable tender premium/contract amount becomes the primary revenue, determined by the market through e-auction, plus a fixed royalty component (Rules 8, 10).
In the 2019 Rules for gram panchayats, if annual revenue from sand exceeds ₹25 lakhs then surplus fund is transferred to DMF under Rule 21(5), with an exception to Nagar Palika/Nagar Nigam (urban local bodies).
The 2017 Policy and the 2019 Rules have differences in the collection and distribution of revenue from sand mining. Through the Policy and the Rules, there have been amendments and evolution to how the state governs mining of the minor mineral. But there are reports of systemic and persistent failures in the regulation, monitoring, and revenue collection from sand mining operations in Madhya Pradesh.
The Report of the Comptroller and Auditor General (CAG) of India on Revenue Sector for the year ended 31 March 2018 (Government of Madhya Pradesh) identified substantial amounts of unrecovered revenue from sand mining operations in four District Mining Offices (Anuppur, Guna, Indore, and Narsinghpur). The report recorded a shortfall of ₹2.27 crore, as six trade quarry contractors paid only ₹0.95 crore against the recoverable contract money of ₹3.22 crore.
Similarly, the Compliance Audit Report No. 2 of 2023 for Madhya Pradesh highlighted a deficit of ₹16.52 crore in royalties (from Chhindwara, Dindori, Gwalior, Khargone, Ujjain, Umaria and Vidisha). Out of the ₹15.33 crore recovered amount, ₹8.83 crore was kept in the Civil Deposit Head instead of being deposited in the Mining Head, leading to blockage of government revenue.
The report also pointed out how poor enforcement and monitoring affected state revenue collection, including DMOs failing to enforce rules and penalties in cases where lessees failed to pay required amounts of dead rent and interest, mining inspectors’ failure to conduct required inspections, critical records, such as the khatouni (Demand and Collection Register), not being maintained and updated, making it impossible to accurately track demand, collection, and arrears. This reveals significant lapses in royalty recovery and financial monitoring in Madhya Pradesh, particularly concerning minor minerals like sand.
To stop revenue leakage in the sand mining industry, monitoring, accountability, and procedural compliance must be strengthened. State intent to act and reduce illegality on all aspects of sand mining plays a major role in implementing the rules on ground even if they are robust on paper.
The District Mineral Foundation (DMF) is a statutory body established under the Mines and Minerals (Development and Regulation) Amendment Act, 2015 (MMDR Act). Its role is to work for the welfare of mining-affected communities and areas. The CAG report (year ended 31st March 2021) revealed a unutilised DMF funds of ₹1,189.88 crore for 22 districts and a loss of ₹206.21 crore in the funds under DMF irregularities for nine districts including less contribution to the fund by lessees, non-utilisation of funds, non-recovery on interest on delayed payments, and non-recovery of unutilised amount from work executing agencies.
As far as revenue is a matter of discussion, the 2019 Rules introduced a more dynamic financial architecture centered on competitive bidding. Through the e-tendering system (Rule 8), the rules replaced fixed royalties with market-determined contract values that incorporated annual escalations of 10% in subsequent years. As mentioned in Rule 10 this shift from a flat-rate to a variable pricing mechanism allows revenue to reflect market conditions.
The introduction of performance linked incentives could make the Mining Corporation prioritize securing maximum revenue generation and assign less importance to environmental clearances. In the face of a lack of robust mechanisms to assess the technical, financial, or operational quality of private bidders signing up for the tendering process, the Mining Corporation might overlook quality checks in return for securing higher tender premiums.
Penalties also form one of the major sources of revenue. Penalties from illegal activities (Rule 20) are deposited into the state treasury (Rule 20(1)). Under 2019 Rules penalties become more of a revenue generation tool rather than as a deterrent for illegal mining and are not even enforced strictly.
Weak enforcement of penalties and lack of action taken by local authorities overpowers the provisions of penalty laid out in the 2019 Rules. This was seen in the case of the District Mining Officer’s aversion to take up the investigation of illegal sand mining and storage in Khargone district because of possible political repercussions, as the godown used for storing sand belonged to a company owned by a BJP Yuva Morcha President. The nexus of local political leaders who emerge out of the network of illegal sand extraction and bureaucracy renders the penalty system obsolete.
Conclusion
What do both the 2017 Policy document and the 2019 Rules represent? The approach as we can infer is of sidelining environmental concerns as compliance hurdles that need to be cleared. Environment is not at the core of what the Policy directs the State nor is it what the Rules try to govern. Environmental protection is secondary to revenue generation mechanisms. The rules lack robust monitoring mechanisms and environmental damage compensation is undefined.
As sand mining brings in revenue for the corporation and state government, strict monitoring for ecological stability is lacking in the present scenario. Therefore, one can argue that the violence to rivers and communities is not accidental but is enabled, and even incentivized, by the policy scaffolding present in the 2019 Rules and 2017 Policy.
Critical gaps that needs to be addressed are:
- The absence of mandatory environmental audits and the local community’s role in it.
- Undefined ecological compensation and pricing model that ignores ecological sensitivity.
- Lack of an integrated understanding of social and ecological damage caused by mining.
The current rules leave the system focused on punishment but are weak on prevention, scientific monitoring, and void on ecological restoration. The state’s intent to reduce illegalities and violations in sand mining plays a crucial role in strengthening its monitoring and accountability functions.
One of the glaring gaps is also the silence on protection of workers involved in sand mining. Sand mining is known for its exploitation of workers, the rules fail to acknowledge the social reality of labour involved in mining. Environmental stewardship, therefore, should go beyond compliance and punishment and concern itself with ecology and precarious labour.
Notes:
Ashwin is a recent Public Policy postgraduate from Christ (Deemed to be University), Bangalore. His research interests involve understanding the dynamics of capitalist development, its impact on rural livelihoods, and environmental conflicts.
India Sand Watch is an environmental accountability project by Veditum India Foundation. At the heart of the project is an open-data platform, enabling collection, annotation & archiving of data related to sand mining in India’s rivers.
The project aims to introduce accountability to the unregulated, unsustainable, and environmentally damaging sand mining sector – to protect India’s rivers from destructive sand mining.
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