KOLKATA (miningweekly.com) - India must make a detailed assessment of the country’s mineral resources before mines were put on the auction block in an effort to increase revenue, the Finance Ministry's 'Economic Survey 2012-13' stated.

The survey was placed before the Indian Parliament on Wednesday.

"In order to meet the objective of revenue maximisation in an open, transparent and competitive manner, this should be preceded by detailed geological mapping of the mineral wealth of the country," the survey said.

The Indian government recently introduced new mining legislation to allow for competitive bidding for mineral resources to ensure greater private sector investments in mining.

The new law aimed to provide a simple and transparent mechanism for granting mining leases or prospecting licences through competitive bidding in areas of known mineral reserves, while in cases of unknown reserves, licences would be awarded on a first-in-time basis.

The survey said that there should also be a transparent policy for the use of natural resources.

"Furthermore, any policy prescription regarding the use of natural resources must ensure that the process of selection is fair, reasonable, nondiscriminatory, transparent and aimed at promoting healthy competition and equitable treatment," it said.

The observations of the Ministry's yearly survey assumed significance against the backdrop of recent controversies faced by the Indian government in allocating access to natural resources like coal and spectrum for telecom services, drawing criticisms from the national auditors, the Comptroller and Auditor General (CAG), and the Supreme Court, for losses to the national exchequer owing to arbitrary and allegedly illegal procedures in allocating natural resources to private investors.

The survey’s observations were also viewed against the backdrop of the Supreme Court’s observations that revenue maximisation need not always be the only objective when allocating natural resources, but at the same time it added that the courts had not made a comparative study of various methods of allocation.

The court's observations, however, backed the government’s doubts around whether all natural resources could be mandatorily allocated through auction with revenue maximisation the over-rding goal, a Mines Ministry official said.

The survey laid down long-term objectives for the allocation of natural resources, which would see government perform a base valuation on the mineral resource to be put on the block in cases where auction had been decided as the best course. Such an assessment would, to a large extent, eliminate discretionary determination of reserve price ahead of the auction, the official said.