The natural resource sector has been passing through a challenging phase in India. Blanket bans and clearance delays have brought it to a non-sustainable position today.
Even with an abundance of rich mineral reserves and resources, we are not able to capitalise on it for our economic strength.
The history is evident; not every country has rich mineral resources, and the countries blessed with such natural resources have utilised them for their overall growth, for the development of people, securing employment and their livelihood, eradication of poverty and stabilising their economies.
At one point, countries like Brazil, Canada, Australia and those in Latin America were on par with India when it came to the utilisation of natural resources. Today, these countries have moved far ahead and we have remained stagnant.
In India, the fall of GDP growth can be attributed largely to the sluggish growth of the natural resource sector. On one side, the available resources are not being utilised and on the other side, the tussle of legitimate and illegitimate mining has put blanket bans on mining.
The outcome has crippled the industries, economies of these states and the livelihood of millions of people.
Resource
One of the most sought after global mineral resources, bauxite - a raw material for making aluminium - still remains unexplored and un-utilised in India. Our country is blessed with the fourth-largest bauxite deposits in the world, about 3000 million tonnes, but unfortunately the country has not witnessed the opening of any large bauxite mine in more than 35 years.
Investments in exploration of gold and copper mines are awaiting, in spite of the Supreme Court judgment to open up the sector. Having our own reserves and resources, and then spending billions on their import makes no sense. We can keep these reserves for another 100 years, but ultimately, their sustainable and optimum utilisation is necessary for the country and for the mankind.
Look at the economic condition of a state where manufacturing has seen a blanket ban: the iron ore mining ban in Goa has put the economy in deep economic crisis. In Goa, it is a matter of survival for over one-third of the state's population. The iron ore mining ban has paralysed almost 20,000 trucks. But the biggest loss is to the economy which is now touching over Rs 25,000 crore.
The livelihood of over 100,000 people is at stake. Even if the mining starts today, it would still leave at least 40,000 jobless. Thousands of people are employed in mining operations which include regular and contract employees. All are sitting idle.
It is not just a loss to the miners even thousands of ancillary industries associated with iron ore mining are on the verge of closure. The Goa chief minister too shared his concern that "the economy of the country is in doldrums because import-export balance of the country is disturbed. Restriction on iron ore mining can be attributed as major reason for decline of the economy."
Until mining bans came into force, India produced about 200 million tonnes of iron ore and about 50 per cent was exported, making India the world's third-largest exporter of iron ore. The ban has declined the export from 117 million tonnes in 2008-09 to 18 million tonnes in 2012-13. The condition of exports is further deteriorating, to 14- 15 million tonnes, in the current financial year.
Critical
The exports have been so dented and the loss of revenues has been so massive that, once the mining resumes in Goa, the companies will be required to go full-fledged and increase as much iron ore production to recover as much possible lost ground. The loss of over $6 billion on account of the ban on iron ore export from Goa alone has been one of the major factors responsible for compounding the current rupee crisis.
The situation is so critical that the Goa government has approached the Central government for relief. In a written reply to the Lok Sabha on 6th December 2013, the Mines Minister Dinsha Patel stated that state government of Goa, citing the economic hardships and loss of employment due to the ban on mining in the state of Goa, has requested the Central government for (1) enhanced central financial assistance, (2) special relief package to the cooperative banks so that they do not become sick, and (3) a moratorium on repayment of borrowings from banks, waiver of interest and restructuring of loan packages.
No one advocates for illegitimate mining but legitimate mining must grow. Don't curb legitimate mining. Investments are necessary in exploration and development of natural resources to eradicate poverty and unemployment.
Economics
When a Goa mining delegation met the Prime Minister and asked for help, the PM said: "While environmental concerns should be sincerely addressed, all should remember that poverty is the greatest polluter".
Union Finance Minister P. Chidambaram's statement on iron ore mining "to find a way to export iron ore and restart iron ore mining" also gave solace to people.
Union Minister of Commerce and Industry, Anand Sharma spoke on removing the ban by stating that "we don't want ban to continue and all mining activities are not illegal" and stressed upon iron ore export.
Amidst all this, the entire economy of Goa has shaken up. The entire economic lifecycle has come to a standstill. Paralysis in iron ore mining in Goa is hurting industries and people's sentiments. India enjoys the richness of iron ore reserves like that of Australia and Brazil but the difference in production and outlook is un-measurable.
Where Australia has doubled its production to 500 million tonnes and Brazil has doubled its production to 400 million tonnes, India's production has gone down to less than 50 per cent to 100 million tonnes, and is even struggling to sustain this level, though our country has immense potential to produce much more.
For a developing nation like India, it is only pertinent to capitalise on the available natural resources, in the most sustainable manner, by bringing in large investments and through simplification of policies and procedures.
This is the only sector that has the true potential to make India an economic powerhouse.
The writer is chairman, Vedanta Group
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