HEAVY BUR­DEN OF RICHES

India Today - - UPFRONT - ANIL AGAR­WAL Anil Agar­wal is chair­man, Vedanta Group

The nat­u­ral re­sources sec­tor in In­dia is go­ing through a chal­leng­ing phase. Blan­ket bans and de­lays in clear­ances have left it in an un­sus­tain­able po­si­tion and we are un­able to cap­i­talise our abun­dant re­serves of min­er­als and hy­dro­car­bons for eco­nomic growth.

Not so very long ago, Aus­tralia, Brazil and other coun­tries in Latin Amer­ica were on a par with In­dia in the util­i­sa­tion of nat­u­ral re­sources. But we stag­nated and they marched far ahead; through sus­tain­able ex­plo­ration they have in­creased their re­serves over three times. This has cost In­dia dear in terms of GDP growth.

In­stead of ex­tract­ing and util­is­ing our nat­u­ral re­sources, we spend bil­lions of dol­lars to im­port them. This makes no sense. In­dia has the world’s fourth largest re­serves of baux­ite, a much sought-af­ter raw ma­te­rial for mak­ing alu­minium, but they re­main un­ex­plored. In­deed, In­dia has not opened a large baux­ite mine in more than 35 years.

Gold and cop­per sec­tors are also frozen de­spite the Supreme Court open­ing them up for in­vest­ment. Same is the case with iron ore. In­dia’s iron ore re­serves are com­pa­ra­ble to those of Aus­tralia and Brazil, yet the dif­fer­ence in pro­duc­tion and out­look is im­mea­sur­able. Aus­tralia’s pro­duc­tion has dou­bled to 600 mil­lion tonne a year as has Brazil’s to 400 mil­lion tonne, but In­dia is strug­gling to main­tain its pro­duc­tion of around 100 mil­lion tonne. Oil and gas sec­tor is no bet­ter. The im­por­tance of en­ergy se­cu­rity can’t be stressed enough, yet In­dia continues to im­port most of its oil re­quire­ment. That too at $100 a bar­rel even though we can pro­duce it for $4 a bar­rel if we tap the large pool of oil and gas we are sit­ting on. To ex­plore the trea­sure will take at least 20 com­pa­nies. So we must en­cour­age In­dian en­trepreneurs to take up this chal­lenge.

The im­port bill for petroleum prod­ucts now stands at $150 bil­lion. And not just oil and gas, the coun­try is also buy­ing large quan­ti­ties of gold, sil­ver, coal and fer­tilis­ers from abroad. The grow­ing im­port bill—the to­tal now comes to $485 bil­lion, or close to 10 per cent of the na­tional Gross Do­mes­tic Prod­uct— is erod­ing na­tional in­come, stunt­ing eco­nomic growth and in­creas­ing un­em­ploy­ment and poverty.

I be­lieve In­dia has the po­ten­tial to pro­duce $400-$500 bil­lion worth of nat­u­ral re­sources, in­clud­ing oil and gas, gold, sil­ver, alu­minium, cop­per, iron ore, coal, cal­cium, rock phos­phate. And more than half the rev­enue gen­er­ated from these re­sources will go to the govern­ment, which it can use to de­velop in­fra­struc­ture and sup­port so­cial wel­fare and de­vel­op­ment pro­grammes. Min­ing and ex­plo­ration of these re­sources and their op­ti­mal util­i­sa­tion will also cre­ate em­ploy­ment op­por­tu­ni­ties for 10-15 crore people by en­abling set­ting up of thou­sands of large, medium and small scale in­dus­tries to process them in a sus­tain­able man­ner. As a re­sult, GDP growth will rise and cur­rent ac­count deficit will come down.

We can leave the re­serves in the ground for an­other 100 years but even­tu­ally, we must tap them for the good of the coun­try, and the mankind. The sen­si­ble thing to do is to auc­tion nat­u­ral re­sources in a trans­par­ent man­ner—the model can be rev­enue shar­ing or who­ever pays higher royalty— un­der sim­ple poli­cies so that they can be used to strengthen and re­ju­ve­nate the econ­omy. To en­cour­age in­vest­ment in the ex­plo­ration of nat­u­ral re­sources, In­dia needs a lib­eral econ­omy where the govern­ment and the in­dus­try are on the same side. It does the na­tion lit­tle good to dis­crim­i­nate be­tween pub­lic and pri­vate sec­tors. Quite the op­po­site. It hurts busi­ness sen­ti­ment when ONGC is al­lowed to ex­plore shale gas while the pri­vate sec­tor is await­ing ap­provals; when de­spite the ban in Goa and Kar­nataka—the lat­ter has opened up par­tially now— NMDC is find­ing it eas­ier to mine iron ore; when Power Grid Cor­po­ra­tion of In­dia is reap­ing the ben­e­fit of be­ing a pub­lic sec­tor firm in the trans­mis­sion busi­ness while pri­vate play­ers are strug­gling. Or when Nalco, rather pe­cu­liarly, is ex­port­ing alu­mina at a much lower rate than is be­ing of­fered by do­mes­tic com­pa­nies, which are strug­gling for want of this raw ma­te­rial.

Both pub­lic and pri­vate sec­tor are in­volved in build­ing na­tional projects, then why this dis­crim­i­na­tion? Isn’t the coun­try more im­por­tant? Most com­pa­nies re­de­ploy their prof­its if in­cen­tivised, as has hap­pened in China and the Amer­ica. In fact, it’s this sim­ple pol­icy of al­low­ing people to make rea­son­able money that has made Amer­ica self-suf­fi­cient.

In­dus­tri­al­i­sa­tion is here to stay. In­dus­tries con­trib­ute greatly to the econ­omy and play a fun­da­men­tal role in build­ing a pro­gres­sive na­tion. Be­sides, their in­creased fo­cus on de­vel­op­ment is help­ing the govern­ment achieve its so­cial agenda. To­gether, the in­dus­try and the govern­ment can make a dif­fer­ence and build a na­tion. In­dia is blessed with a vi­brant democ­racy, a vig­i­lant me­dia and an ex­cel­lent le­gal frame­work. All it needs is one strong de­ci­sion to be­come the planet’s third largest econ­omy; a de­ci­sion to frame poli­cies and com­mit­ments that in­spire global con­fi­dence. The world is watch­ing.

In­stead of ex­tract­ing and util­is­ing our nat­u­ral re­sources, we spend bil­lions of dol­lars to im­port them.

This makes no sense.

Il­lus­tra­tion by SAU­RABH SINGH

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