By Anil Agarwal I
Vedanta fully endorses the vision of Hon’ble Prime
Minister of India Shri Narendra Modi Ji on utilization of immense human capital
clubbed with natural resources of India for creation of millions of employment
opportunities in India and making India a USD 5 trillion economy in the next
few years. A recent Morgan Stanley report also stated that with
government policies and massive disruptive workforce Indian economy is well
placed to reach USD 5 trillion mark by 2025.
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.
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.
India
is a country with one of the largest reserves of
natural resources in the world, the transformational potential of India’s
resources sector is immense. Over $1-Trillion treasure is waiting
to be explored in India. An open and simple exploration policy for extraction
of natural resources will make India an economic powerhouse that will have the
potential to create millions of employment and eradicate poverty.
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 green-field exploration, whereas
India spends less than $50 million.
The scope is
immense since Indian almost imports 100% oil, gold, fertilizers and even
electronics.
What
surprises is the bauxite mining in India, a raw material used to make
aluminium. In spite of rich reserves of over 3.5 billion tonnes, that can make
India the top 5 aluminium producers in the world, India is not able to mine
bauxite for the last over 35 years. India has
failed to tap the large aluminium market, widely known as a green metal, and
lost out to countries like China that fully imports 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 less than 2 million tonnes
of aluminium. In contrast, China that has no reserves of bauxite but 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 over 100 million tonnes on
yearly basis that also stands drastically reduced due to cap on production.
Narendra
Modi Ji transparency can prove to be a milestone in the history of job creation
through utilization of natural resources as this is a sector that has the
potential to create employment not just in urban sector but also in rural part
of the country. This is a sector that needs young engineers, chartered
accountants, management graduates, geologists, community service professionals,
and also unskilled manpower that is sourced almost 100% from nearby villages.
What
is needed is a simple policy that auctions natural resources in the most
sustainable and transparent manner, on revenue sharing basis or highest
royalty. It will also encourage young start-ups who are keen to develop
ancillary industries to utilize the metals using best of global technology. The key to this simple revolution lies in a simpler
regulatory framework, based on transparent policies and processes, emphasising
self-declaration and strong deterrents and penalties for non-compliance.
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.
As a suggestion, to strengthen the country’s
economy form a single large ministry to deal with development of all natural
resources, bring oil & gas, mines, coal and steel under single umbrella and
under a strong visionary leader. This new Ministry of Natural Resource would
look into the optimum development of natural resources.
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.
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.
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