Minerals constitute the foundation of economic growth of any nation, developing nations in particular and India has been fortunate to have been endowed with myriad mineral resources in liberal measure. The activity of Mining, which is nothing but the extraction of minerals and metals from the earth's crust, is therefore rightly considered to be one of the core sectors that drive growth in every economy, providing raw materials to a number of primary industries such as steel, power, cement, automobiles, construction, transportation, etc. The importance of the mining sector to a country's growth is sometimes overlooked, as without the mining sector operating smoothly, many industries, especially those in basic manufacturing, can get adversely impacted.
On the flip side, the environmental and social impact of mining carried out in an unsustainable manner can be quite adverse, as this may lead to land erosion, formation of sinkholes, loss of biodiversity, etc. that in turn may have serious negative health effects on mine workers and surrounding communities, with additional risks of respiratory damage through high levels of dust and other chemicals emitted in the environment. Social impact may include community dislocations, loss of traditional livelihoods, etc. So, mining has to always tread cautiously, and strike a fine balance between growth of output to support nation building and adopting sustainable practices to mitigate social and environmental shocks. The challenge does lie in finding this middle path.
We may proudly say that, barring petrochemicals, India is largely self-sufficient in minerals production, producing a total of about 98 types of minerals. Our country is the world's third largest coal producer, third largest steel producer, fourth largest iron-ore producer, sixth largest zinc producer and the list can go on. Mining has also been consistently identified as one of the core sectors by the Indian government, for facilitating the success of downstream manufacturing sectors. Just how significant is the contribution of the mining sector in India will perhaps be clear from some basic statistics : the value of output of mining and quarrying sector in FY17 at current prices stood at Rs 5,645,300 million, and the sector as a whole contributed about 2.5 per cent to India's GVA.
But, with all this persuasive historical data, how are we doing lately in this sector? If we were to leave alone the petroleum sub-sector where due to geological reasons India has been dependent on imports, and look at the other mineral products, we find that the Indian mining industry has not been able to support and sustain even the intrepid growth of domestic downstream sectors in recent times. This is very starkly reflected in the huge growth of mineral imports in 2017-18 over 2016-17; of metaliferous ores and other minerals - 47 per cent, of coal, coke and briquettes - 45 per cent, of semi-precious stones - 44 per cent, of non-ferrous metals - 30 per cent and lastly, of iron and steel - 25 per cent. Clearly, we the stakeholders in the mining sector, including public and private players, regulators, courts, civil society et al, are underperforming, - one can even go to the extent of saying that the sector has collectively failed to keep up with rest of the nation, especially when one considers the opportunities that the sector has been endowed with.
In comparison to major mining nations, India's mining sector contribution to GDP is low. India currently ranks low on both policy potential index and mineral potential, making it unattractive as a mining investment destination. It is ranked 59 out of 96 mining jurisdictions on composite mineral and policy potential, according to a report by LSI Financial Services.
Clearly, we are falling back, and we need to get our act together.