Research & Commentaries
THE NATURAL RESOURCES ROAD TO RECOVERY
At present, India’s USD 2.9 trillion economy has taken a severe blow, but our hopes remain high and there is a road to recovery present if proper planning and coordinated execution are done. Among the many routes available to become a robust economic power, the best one seems to the one that we often overlook. This relates to the wealth of India which is ours and is at an arm’s length. Natural resources have been bountiful in India and their mining already contributes significantly to the wealth of our nation. In fact, we rank third in the world in the production of coal, fourth for iron ore, fifth for crude steel, and eighth for aluminium. The sector contributes some $8 billion annually in foreign exchange to India’s reserves but even this is a minuscule proportion of the true potential. At only 2.6 percent GDP contribution in 2018-19, the mining and resources sector can, if managed well, add a significant thrust to India’s recovery trajectory in the post COVID era.
The under-utilized mining industry holds promise for India as a whole. Ranging from employment to revenue, to self-sufficiency and self-confidence, a proper boosting up of resources can be a real benefit to every Indian. Mining’s contribution to gross domestic product is 8.2 percent in Australia and 7.3 percent in South Africa, three to four times that of India. Sadly, for us, the tragedy is that, in spite of having so much, we still end up importing over $250 bn of oil, minerals and metals annually. A true double whammy. As the country aims to become a USD 5 trillion economy, it is imperative to focus significantly on the mining sector with concerted efforts to regain its once three percent share in the GDP which was there in 2011 and so move ahead to recovery with strength. To fight the impact of coronavirus, Bloomberg’s economists say at least Rs 2.15 lakh crore (US$30 billion) needs to be spent. How and from where funds of this magnitude will be made available becomes a moot issue if natural resources of the country could be brought into play.
If India needs to show a sharp revival from the ravages of the pandemic induced economic degrowth, natural resources can surely offer one of its biggest opportunities. For a V-shaped recovery to happen, revolutionary steps have to be initiated. Breaking with conventional mores and strait-jacketed wisdom, areas such as liberalising and allowing unfettered mining to the extent possible will be a good remedy. Other steps such as an increase in the participation of the private sector in mineral exploration, a clearer definition of illegal mining, resolution of legal issues, etc. coupled with a considered move to develop a national mineral index in addition to resolving the issues between captive and non-captive mines should prove useful. Today, India has among the largest reserves of natural resources in the world. This includes oil, bauxite, iron ore, fertiliser, rock phosphate, gold, uranium, among others.