We can transform the country, eradicating poverty and unemployment, if we make the right moves....

The United States of the early to mid- 1900's has some striking parallels with the India of today. It was around this time that America began its journey towards becoming the world’s largest economy.

The biggest factors that propelled the growth and transformation of the US were technology, natural resources, manufacturing and private enterprise; a few men who dreamt big helped create the modern America. Andrew Carnegie, John Rockefeller, Cornelius Vanderbilt, J P Morgan and Henry Ford with their entrepreneurial spirit and innovative approach built businesses that helped make the transition to the modern industrial era. They laid the foundations of the American steel industry, oil and gas, natural resources and mining, manufacturing, finance and infrastructure building including roads, rail and ports.

All the five men were also great philanthropists who donated most of their wealth for the larger benefit of society. These were used to set up large universities, hospitals, museums, art and culture centres, libraries and charities. The universities also contributed as powerful research centres and acted as think tanks in areas of technology, material and space research, liberal arts and political science. Moreover, they helped develop political, business and other leaders. These created large employment opportunities and also spawned entrepreneurship.

From a societal perspective, there were issues similar to India; poverty, environmental challenges, corruption and crime. It took a set of progressive presidents from Roosevelt to Eisenhower to put in place policies that encouraged private entrepreneurship, better governance, government spending and social security. This led to the gradual rise of the American superpower.

America’s growth journey has some lessons for India. Both are large vibrant democracies with abundant natural resources. While America benefited from a large flow of immigrants in search of the American dream, India has a large population in the working age group. More importantly, like the US, India has people with entrepreneurial spirit who can visualize a new India and unleash its potential.

Five drivers – private enterprise, exploration of natural resources, development of manufacturing, tourism and simplification of regulatory and approval processes – can be key to developing India as an all-round superpower.

Our current import bill is $485 billion, most of which is for our consumption needs like gold, oil and gas, fertilizers and defence equipment. We have the potential and capacity to substantially reduce this huge foreign exchange outgo. It could be made mandatory to have 50% of defence equipment manufactured within the country. Similarly, we could stop imports of phosphate-based fertilizers as they can be easily produced domestically.

Gold presents an interesting opportunity. Privatisation of our gold and other assets including large reserves of tailings (which are any way on the verge of closure) through a transparent auction process on revenue-sharing basis would be a good way forward, while ensuring that privatisation does not adversely impact existing employees.

India’s energy security is paramount. We can domestically produce most of our hydrocarbon and coal requirement. The development and production of the assets can be through joint ventures to source the best global technology as well as foreign investments. This could lead to the creation of 10 to 20 large energy companies and ensure that we meet at least 50% of our oil and gas consumption from our own resources. In the process, it would create a win-win situation wherein India would ensure its energy security while foreign companies could deploy their capital and technology and get best returns.

We should, however, be mindful that any auction, sale or divestment process be completely open and transparent. Both public and private sectors should be allowed to bid to ensure competition, a level playing field and the best financial outcome.

The Indian auto industry is a good example of a sector where opening up led to an automobile revolution. This can be replicated in the natural resources sector and in the manufacturing sector, leading to mass employment, eradicating poverty and gainfully utilizing our biggest resource – our population of 1.2 billion.

Tourism continues to be one of India’s most unsold and underrated assets. We attract just six million tourists annually compared to the 60 million who visit China. An all-round effort to develop tourism by building infrastructure and better marketing would lead to large-scale employment and foreign exchange earnings – a welcome addition to our GDP.

We also need to simplify and unify our regulatory and approval process across the board by reducing at least 80% of our processes as well as clearance time. This can be done using technology, automation and simpler policies and rules. A simplified regulatory and approval process could be a good enabler to get the best out of our bureaucracy.

Our taxation framework is already amongst the best in the world, including for attracting foreign capital. Taxes need not be increased if we grow alternate sources of revenues through development of our natural resources.

The world is looking at India as the next destination after China. Some of the biggest advantages that India has are its vibrant democracy, a vigilant media and an excellent legal framework. These are some of the factors that also enabled America to emerge as an economic powerhouse. India can follow suit as long as all stakeholders have the will and commitment.

By Mr. Anil Agarwal, Chairman, Vedanta Group
Article published in Times of India on 10th January 2013


MR. ANIL AGARWAL - Chairman, Vedanta Group with 
Mr. Shekhar Gupta on NDTV 24x7

Please find below the link of Chairman's interaction with Mr. Shekhar Gupta on Walk the Talk on NDTV 24x7 please -  


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Head - Corporate Communication
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Vedanta : Exploration Must to Eradicate Poverty in India

By Anil Agarwal, Chairman - Vedanta Group

For a country with one of the largest reserves of natural resources in the world, the transformational potential of India’s resources sector is immense. The sector has the potential to add $1 trillion to the Indian economy that can substantially contribute towards much-needed investments in education, health and nutrition. India’s economic rise since 1991 has resulted in a sharp rise in resource needs, from petroleum products to power and infrastructure. This, in turn, has led to a burgeoning import bill that stands at $485 billion. Oil and petroleum products is the single-largest contributor with $150 billion. This is close to 10% of the country’s GDP. Gold, silver, coal and fertilizer are the other main items that are adding to this bill. If this continues, vulnerability of the Indian economy to external shocks will become higher. It is, therefore, imperative to take corrective actions immediately.

India is blessed with significant reserves of natural resources and we can produce all the key imported resources indigenously at 15-20% of the import cost. Thus, we can save $300 billion on yearly basis and, within 3-4 years, we can add $1 trillion to the economy.

India’s current underutilization of resources tells almost an unbelievable story. Despite having a similar geology to North America, Latin America, Australia and South Africa, we produce only 20% of our natural resource requirements. The mineral exploration industry in countries such as Canada spends over $2 billion per annum in greenfield exploration, whereas India spends less than $50 million.

What is worse is that despite having access to key resources like bauxite, India has been unable to tap into the large aluminium market, widely known as a green metal, and lost out to countries like China that have to fully import the raw material. Even with 3.5 billion tonnes of bauxite, which is the third largest reserve of bauxite in the world, India only manages an annual production of 1.5 million tonnes of aluminium. In contrast, China that has no reserves of bauxite, produces about 20 million tonnes of aluminium annually.

The story is similar in the case of iron ore. Given our reserve level, we are in a position to produce quantities matching Brazil’s and Australia’s, which produce in the range of 600 million tonnes per annum. Against this, we have so far been producing a modest quantity of 125 million tonnes on yearly basis that also stands drastically reduced.

India’s power and infrastructure needs continue to be unmet and under served due to lack of an open and simple exploration policy that will allow exploration of resources in a sustainable manner. The fear that such a move will lead to rampant environmental degradation is also unfounded. With scientific mining and latest technology in mine development and production, these concerns can be fully addressed. A self-declaration policy will allow the companies to take responsibility for their actions, while enabling the government to impose heavy penalties in case of violations.

It is in the industry’s interest to increase mineral reserves through exploration to provide value to the stakeholders in a sustainable manner. A nearly seven-fold increase in zinc output by Hindustan Zinc Ltd after disinvestment is a case in point. This has been possible only due to scientific production and systematic exploration.

India’s need of the hour is greenfield exploration. One such exploration was the discovery of oil in Rajasthan by Cairn India, which was the country’s largest onshore discovery in India in 20 years. Today, Cairn India produces 25% of the country’s total crude oil production. India only has a handful of oil and gas companies. It is imperative to have 15-20 players that will bring in the technology and explore sources that will lead to the development of the exploration and production value chain and also act as an employment multiplier. Similarly, in case of coal and other minerals, many more players need to be brought in for exploration.

The exchequer, both at the Centre and the state level, also stands to gain immensely from a simple exploration policy. Auctioning of blocks and moving to a revenue-sharing model from the current profit-sharing model will allow the government to rake in more royalty and taxes. A recent Pricewaterhouse Coopers report noted that Rajasthan transitioned from a revenue deficit state into a revenue-surplus one in 2010-11 on the strength of Cairn’s Barmer oil fields that started commercial output in late 2009. India needs to aggressively take steps for utilization of its natural resource and resultant downstream manufacturing activities. The Indian corporate community and entrepreneurs are capable of bringing in world-class technology and big investments to support these efforts. State-owned Geological Survey of India (GSI) and Mineral Exploration Corporation (MECL) are also extremely capable of providing guidance for exploration and for development of natural resource sector. Together, we can recreate the transformational change that IT and the telecom sectors have done for the country.

Exploration of domestic natural resource reserves and, thereby, developing manufacturing sectors will not only unlock India’s true potential as an economic powerhouse, it will also help us create better infrastructure, generate employment and bring in latest technology. It can generate significant additional revenues to the government that can be used for the social sector, and investment in education, health and nutrition. India’s growth needs and the aspirations of 1.2 billion people should not be compromised. Unearthing the hidden treasure though scientific exploration and bringing new mines on the mineral map of India with the latest technology alone can empower the people of India.

Article published in Economic Times on 17th December 2012