India needs a paradigm shift from the crisis management mode to a holistic approach in key sectors of the economy where it can be a world leader. Nature has blessed India with huge deposits of coal, iron ore, bauxite and all kind of minerals. These core minerals contribute more than 25% of the manufacturing GDP of the country. Despite being a low infrastructure nation and a developing economy, India is a major manufacturing economy in terms of value addition. A systemic holistic approach in these sectors not only adds to the GDP growth, but also generate a large number of jobs for India’s young population.
The recent ordinance amending the MMDR Act, 2015 promulgated by the government is a welcome move, but is a knee-jerk reaction to a crisis. The government must take a relook at the entire gamut of laws governing the sector and come up with comprehensive policies that address all the ills plaguing the sector.
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Power, steel and aluminum are key inputs to the industry. The government will have to ensure low cost of these key inputs to create a robust infrastructure and develop a globally competitive manufacturing sector. India has acquired the skills to do quality manufacturing, competitive technologies and the discipline to become a global manufacturing hub. A comprehensive, credible and consistent policy framework will encourage more investment in manufacturing and research.
The auction of mines is getting a good response from the manufacturers who wants assured supply of minerals. But the challenge is that the SMEs that produce around 50% of steel in India must get the raw material at affordable prices. There is a case for earmarking some small mines for a consortium of SMEs to be mined by professionals. The court judgments have resulted in the sudden closure of mines and the levy of penalties, resulting in policy uncertainties and ad hoc reactions. On similar lines, India should not impose import duties on what we don’t have domestically.
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A holistic policy will ensure that mining is done in an environment-friendly way using modern technologies. A study by TERI has stated that enhancement of steel making will emit 600MT of polluting gases, and this needs to be addressed by introducing modern technology. A robust mining sector will facilitate growth in the economy by strengthening manufacturing capabilities of the economy. The holistic approach will prevent disruptions due to lack of sufficient information in public domain.
The paradigm shift to a holistic policy making in steel — from survey to production — will bring in convergence of efforts towards a comprehensive, credible and consistent approach.
Dr Aruna Sharma is a New Delhi-based development economist. She is a 1982-batch Indian Administrative Service officer. She retired as steel secretary in 2018.