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Indian economy lost Rs 50,000 crore on iron ore mining ban |
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NEW DELHI: The Indian economy lost $8 billion (around Rs 50,000 crore) in the last two years due to ban on mining iron ore, while mineral-rich Goa alone lost Rs 3,000 crore — the state's estimate in its new mining lease policy.
The ban was lifted in April, but miners are pessimistic as they do not see a quick upturn as the international market conditions are not favourable. Also, Indian customers in the global market have turned to other suppliers, who would not easily let their customers go, industry officials said. Goa's Grant of Mining Leases Policy, 2014, says stoppage of mining also had a cascading impact on other sectors. It said the exposure of financial institutions was more than Rs 850 crore as loan/advance on mining sector to trucks, barges, machinery and small time operators.
"This has also affected...more particularly small co-operative banks, which had advanced loans... In fact, non-payment of the installments has adversely affected the financial state of the smaller co-operative banks and societies," the policy adds.
It said the impact of the ban was "vicious". "Indeed, it is a matter of record that the country on account of stoppage of mining operations, has suffered a loss of nearly $8 billion. Stoppage of the mining operations has a cascading effect of a vicious nature. Not only those who are directly involved in mining such as the mining companies, truck operators, barge transporters, mining machinery owners, but small time business / industry such as tea stalls, automobile workshop, petrol pump, consumer goods vendor, road side tyre service provider etc. have all suffered," says the new policy.
Almost a fourth of Goa's revenues come from mining, with about 1,50,000 people — 10% of the state's population — depending on the sector. The policy estimates loss of Rs 3,000 crore due to the 2012 ban on iron ore mining in the state, making the state lose out on exports of low grade iron ore, a space now occupied by Australian and Brazilian suppliers. Meanwhile, industry associations don't see any immediate pick up in mining operations even though the ban was revoked in April this year.
S Sridhar of Goa Mineral Ore Exporters Association says although mining leases are being renewed, operations will not be able to pick up immediately. "It is difficult to say when operations can finally be restarted. It can't happen before next year," Sridhar told ET over phone.
Members of an expert team associated with the government of Goa, said even though the state was quickly renewing mining leases, the glory days of 2007-08 are not going to be back soon as the current export market will not be as lucrative as it once was. "The Chinese market for iron ore has shrunk in the last couple of years and Indian supplies will no longer fetch the prices they once fetched. Further, the market has been vacated to some extent to players from other countries. Also, the market in India is not receptive to Goan ore. The party would have ended anyway. It just ended a couple of years earlier for Goa," said one of the members requesting anonymity.
According to economists, lower GDP growth in the last two years has a lot to do with mining slowdown and the activity may not pick up immediately "Manufacturing and industrial growth have been weakest in 2013-14 in the last two decades, with mining having a visible impact. Now there seems to be a flurry of activity in the sector but the effects will take time to reflect on the overall economy," said CRISIL chief economist DK Joshi.
Mining of iron ore was banned in Goa in September 2012 after findings of the justice MB Shah commission report estimated loss of Rs 35,000 crore to the exchequer due to alleged illegal mining over 12 years.
The new policy also states that the 'critical situation' arising out of the stoppage of mining operations needs to be remedied at the earliest "in order to avoid any chaos, disorder and the situation going out of control".
Source : economictimes.indiatimes.com
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