Slowdown Blues: Mining sector stares at a slump; lakhs of jobs on the line

India's domestic mining sector may have provided one of the silver linings in the GDP growth figure for the first quarter of fiscal 2020 that was released last Friday but like most other industries, this sector is also staring at a massive slowdown in the near future.

Mining and quarrying was one of the only three segments that expanded in the April-June period of this fiscal over last fiscal, growing at 2.7 per cent against 0.4 per cent even as the overall GDP growth of the economy slowed down to a six year low of 5 per cent during the quarter. Yet the situation on the ground or at the pit head of a mine in this case, is anything but rosy.

According to Federation of Indian Mineral Industries (FIMI), a combination of factors like ban on mining activity in some states due to ecological concerns, lopsided policies, high taxation and poor policy implementation at least 2 lakh people have already lost their jobs in the sector while another 2.64 lakh jobs are in danger.

"India's mining industry is in a chaos. In the past decade, many of the mines have been closed or suspended due to judicial intervention in different mining regions of the country," said R K Sharma, secretary general, FIMI. "As a result of the ineffective regulatory mechanism and subsequent adverse decisions by the Hon'ble Supreme Court in various States, mining sector has been crippled and mines have either shut down as in Goa or working at a reduced level as in Karnataka, Odisha and Jharkhand. Around 2 lakh people directly employed in these mines have lost their livelihood while it has also affected the indirect livelihood of a population 10 times that of the directly employed."

The industry has been plagued by rampant corruption and flouting of norms and the present NDA government in the centre in its first stint sought to bring in transparency in the system of allocation of mines by opting for an open auction process instead of arbitrary allocation by state governments. That change in regulation, however, brought in its own set of challenges and the process of mine allocation has only become tardier.

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During the period 2010-14, 494 mining leases were granted but post auction (2015-2019) none of the mining leases have been executed out of the auctioned 42 greenfield mineral blocks. So far leases have only been executed in case of 4 mineral blocks out of the 14 'C' category mines auctioned in Karnataka having pre-existing environment and forest clearances.

This is expected to become more acute in the first half of next year when hundreds of mines in the country would come up for bidding.    

"We are staring at huge employment loss due to expiry of tenure of 329 non-captive mining leases on 31st March, 2020. Out of 329 non-captive, 48 are working mines. The closure of these mines will hit production of about 50-60 million tonnes of raw material, mainly iron ore and is expected to result in loss of about 2,64,000 jobs, direct and indirect," Sharma added. "The auction is an unnecessary costly way of developing mineral resources and leads to delays in mining. It creates artificial scarcity in the economy and removes the opportunity to create new job opportunity in mining sector as well as in Indian economy. It is a fact that auction mechanism for grant of mineral concessions has not given the desired result during the last four years."

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