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| Discovering new market for the mother material |
| Kunal Bose / Jul 28, 2009, 00:18 IST |
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What has steel got to do with inclusive growth? Virbhadra Singh who loves to describe steel as “mother material” in building urban and rural infrastructure and closing the enormous housing deficit obviously thinks that the industry he is presiding over should be doing its bit to promote inclusive growth.
Otherwise, why our new steel minister should be reminding us again and again about the role he expects the industry to play in promoting the cause of inclusive growth at a recent seminar in the capital? It cannot be because the sponsors chose “sustainability and inclusive growth” as a catchy seminar title. Let’s look at it this way. Unarguably inclusive growth is what this country needs, it still having nearly 30 per cent of the population living below the poverty line. That is why the inclusive growth slogan caught the fancy of the people during the recent parliamentary elections and proved highly politically rewarding for the United Progressive Alliance.
Singh has got it all right. Though newly appointed in this economic ministry, he seems to be acutely aware that as steel will be needed in increasingly larger quantities in the course of execution of many ambitious infrastructure projects and implementation of programmes under JNURM, Pradhan Mantri Gram Sadak Yojana and Indira Awas Yojana, a big market for the metal is to be discovered in our rural centres. That the penetration of steel in rural India that is Bharat is distressingly low is confirmed by a measly per capita consumption of 2 kg there. It calls for some deep introspection as to why all economic activities in rural areas, including building of houses, have such low steel intensity. No doubt, the lead in this respect will have to be taken by Steel Authority of India (SAIL), being government-owned and leader of our pack of steel producers.
SAIL chairman Sushil Roongta has seen to it that his 2,500 strong dealership chain not only covers every single district of the country, but it also remains a vibrant network. Roongta claims that sales through this network rose 54 per cent during 2008-09. The point, however, remains that the challenge of taking steel to villages has only now begun to be addressed.
Roongta and his peers could not have missed the message that Singh wants them to create steel products relevant for people living in villages. Equally importantly, steel must be available to them at convenient rural locations. Singh says, “Major steel makers should ensure that products of common use are made available at all locations under a transparent price regime.”
Singh knows that such low rural per capita consumption, if anything, is negation of inclusiveness. Objectively speaking, there is hardly any reason for us to celebrate the fact that we have climbed a couple of notches in the world steel pecking order by virtue of our production rising 0.5 per cent during January to May 2009 when global production skid 22.4 per cent.
JSW Steel MD Sajjan Jindal says steel consumption is an important indicator of a country’s economic development. Urban and rural India combined our per capita steel consumption is only 42.4 kg against world average of 198.4 kg. Let us not cite the example of the US where expectedly per head steel use is as high as 363.5 kg. But in China, which alone had a share of 500.5 million kg in the total world crude steel production of 1.33 billion tonnes last year, the per capita use is 311.4 kg. China’s phenomenal growth in steel production from 150.9 million tonnes in 2001 to over 500 million kg last year had got much to do with its focus on creating a world class infrastructure and expanding the manufacturing base at a frenetic pace. Since infrastructure projects and house building have a high degree of steel use intensity, Singh wants his industry to be ready with capacity to meet the emerging demand.
Roongta says we have urban housing shortages of 26 million units. On an average, 4 tonnes of steel are needed to build a house. So one has an idea of the steel needed to clear the housing deficit. At the same time, the government wants steel to be used in building shelters in villages. That is why on assuming office, one of the first things that Singh has done is to put the industry on a “high growth trajectory” so that our steel capacity rises to 124 million tonnes by 2011-12 from the present 65 million tonnes. Much of the proposed brownfield expansion, particularly in PSU domain, should come through. But there remains a big question mark over the fate of promised investment in new steel mills.
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