Mining sector's GDP share sees decline due to disruptions in Goa, Karnataka

Closure of mines and disruptions due to changes in legislations has thrown the sector out of gear, curtailing production and endangering jobs

The contribution of mining sector to the country's GDP has been on a steady decline primarily on intermittent disruptions in operative mines in the key producing states of Odisha, Karnataka and Goa.

From a share of 1.93 per cent in FY13, the mining sector's contribution to the GDP has substantively declined to 1.63 per cent in FY19. The share of mining sector to India's GDP is woeful compared with South Africa (7.5 per cent) and Australia (6.99 per cent).

Closure of mines and disruptions due to changes in legislations has thrown the sector out of gear, curtailing production and endangering jobs. An analysis by the Federation of Indian Mineral Industries (Fimi) reveals that despite its immense employment potential, the mining sector has witnessed massive job losses. The combined job losses both direct and indirect, as a fallout of mining bans in Karnataka and Goa is pegged at 1.28 million. In 2011, 166 mines in Karnataka concentrated in Bellary, Chitradurga and Tumkur, had faced shutdown. Goa has faced a total closure in mining operations since March 15, 2018 after a sweeping order of the Supreme Court declared operations of 88 mines working under the 'deemed extension' clause illegal. Likewise, in Odisha, scores of mines found it profoundly difficult to sustain operations after the apex court ordered payment of hefty compensation worked out by the SC-appointed central empowered committee (CEC). Mine leaseholders in Odisha were asked to pay up Rs 17576 crore for overproduction beyond the approved statutory limits.

Mining sector boasts of the highest employment elasticity after construction (1.13 per cent) and real estate (0.66 per cent). With an employment elasticity of 0.52 per cent, mining has the potential to create 13 times the jobs created by agriculture and six times over manufacturing for every one per cent growth in GDP.

Another appalling trend is the escalating imports of minerals since 2014-15. At the end of 2017-18, imports of minerals and metals excluding coal and gold were valued at Rs 4.91 trillion, four times over the domestic production worth Rs 1.12 trillion.

India is a net importer of an array of minerals - copper ores and concentrates, platinum alloys, nickel ores, diamond, gold, tungsten ores & concentrates, asbestos, flourspar, cadmium, silver, molybdenum, rutile, coal, graphite and others. The country has 100 per cent import dependence on copper ores and concentrates, platinum alloys, nickel ores, diamond, gold and tungsten ores & concentrates.

Despite being endowed with a repository of minerals, India has not been able to tap the potential wealth. India ranks among the least explored countries compared to other leading resource rich nations and mining jurisdictions. Only 10 per cent of the country's Obvious Geological Potential (OGP) has been explored of which a measly 1.5 per cent is mined.

In terms of exploration spending too, India occupies the lowest rungs in the pecking order dominated by Chile, Australia, Canada, United States, China and Brazil. Data by Fimi shows that in FY16, FY17 and FY18, India incurred Rs 13 crore, Rs 15 crore and Rs 17 crore respectively on mineral exploration.