3 Ways Mining Can Contribute to the Indian Economy
Recently, Anil Agarwal, the founder of Vedanta Resources Limited, came to my podcast, Figuring Out. As a veteran in the business industry, he talked a lot about India and its future opportunities, the public-private dichotomy, among others. What I found most significant about him was his interest in investing in the mining sector. Minerals and other such fields are often referred to as boring sectors. Today most entrepreneurs and VCs want to work with cybersecurity, real estate, e-commerce and AI. So why did Mr. Agarwal go ahead with mining?
He believes that Mother Earth is the source of all nourishment and sustenance. And mining is the source of all industries. India has extensive reserves of iron ore, bauxite, chromium, manganese ore, baryte, rare earth and mineral salts. Very recently, India has emerged as the world’s second-largest producer of crude steel. Naturally, the mining industry is impacting India’s economy in a positive way.
1. Creating job opportunities
One of the most significant contributions of the mining sector to the Indian economy is its ability to generate employment opportunities. The industry provides direct employment to many individuals, such as miners, engineers, technicians, geologists, and administrative staff. Additionally, it creates indirect employment opportunities in related sectors such as manufacturing, transportation, and service industries.
The growth of mining operations leads to the establishment of mining communities, further stimulating local economies. These communities require various goods and services, such as housing, healthcare, education, and retail, creating additional jobs in these sectors. The multiplier effect of mining employment significantly contributes to the overall economic well-being of individuals and regions.
2. Infrastructure development
Mining activities contribute to infrastructure development, a critical economic growth driver. Mines require the development of transportation networks, including roads, railways, and ports, to transport minerals from mining sites to processing facilities and export destinations. The construction and maintenance of these transportation networks create jobs and stimulate economic activity.
Furthermore, mining operations often require power generation, water supply, and other essential infrastructure facilities. The development of power plants, pipelines, and water management systems supports the mining industry and benefits the surrounding communities and industries. Improved infrastructure enhances connectivity, facilitates trade, attracts investments, and fuels economic growth in the region.
3. FDI earnings
Foreign Direct Investments (FDI) are a source of income for the country. And mining brings in the lion’s share of FDI. If we look at the official data of Government of India, the cumulative FDI equity inflow in the Mining Industry is USD 3.43 bn from April 2000 to March 2023.
India already has a vast iron ore reserve, and our coal production is also colossal, which interests foreign companies. This also helps in strengthening the country’s balance of payments position. These earnings are, in turn, utilized to fund various other projects for the country.
The government has also declared various schemes for the ease of the mining industry. In the recent union budget, INR 1911.60 cr has been allocated towards the Ministry of Mines. Mining, power, and coal are one of the strongest and oldest industry sectors that shape a country. More and more investments in these sectors will help uplift our country faster and redefine its status globally.
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