The economic survey released a day ahead of budget pointed at contraction in mining activities and deceleration in manufacturing output as the key reasons for poor industrial growth of the country.
Mining sector gross domestic product (GDP) declined by 1.4% in last fiscal mainly due to decreased investment by private corporate sector. Credit flow to mining remained nearly stagnant as it increased by a mere 0.05% during 2013-14.
The report goes on to add that iron ore cargoes recorded negative growth of 13% in 2013-14 mainly due to domestic mining ban on the commodity. While iron ore mining has sharply dropped post mining ban across Karnataka, Goa and Odisha, thermal coal production, too, has remained stagnant due to delay in coal block allocation and road blocks in ramping up domestic production.
The mining ban have been lifted from all three states by the Supreme Court but with caveats and cap on ore production.
Most industry experts DNA spoke to pointed at judicial intervention, several monitoring systems, high export duties as key reasons for sharp fall in mining activity in the country. Basant Poddar, vice president of Federation of Indian Mineral Industries (FIMI) pointed that there was an urgent need for regulator meetings between various stake holders. "There needs to be meeting between mining companies, state governments mining representatives, mining ministry, and various other agencies to discuss issues plaguing the industry," he said.
Apart from this, the coordination between state and central government needs to improve for expediting renewal of mining leases.
"There is an urgent need to remove 30% export duty regime on ore, which has brought ore export to almost a standstill. The multiple monitoring system has adversely impacted the mining industry and needs to go," Rana Som, former NMDC chairman, told dna.
Consolidation of mining industry could also be key to enhance the performance of the sector. "Mining is not a cottage industry. Several mines operating in the three state of Odisha, Karnataka and Goa are sometime as small as one or two million tonne. Scientific mining needs a particular size restriction which could be at least 80-100 million tonne. This way hazards to environment could also be limited," Som said.
Citing an example of environment-friendly iron ore mining, Som said that NMDC's one mine in southern state operate in densely forested area, where the company has developed under ground tunnel for the transport ore which helped them to avoid deforestation for movement of trucks as well as emission of dust. However, he also stressed such underground tunnel is a very expensive affair and could only be afforded by players which are going to mine for a long period and have sufficient capital resources.
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