The mining sector’s contribution to the country's gross domestic product (GDP) has been declining in recent years, despite growth in production and value accretion. From 1.93 per cent in 2012-13, the mining sector’s share of GDP (excluding petroleum & natural gas) fell to 1.53 per cent in 2017-18. India's GDP grew from 5 per cent to 7 per cent during the same period.
However, the mining sector's diminishing contribution to GDP seems to belie its vast untapped potential. The value of minerals produced during the period under review was on an upswing — it rose from Rs 1.77 trillion to Rs 1.99 trillion, data from the Indian Bureau of Mines and Central Statistical Office (CSO) reveal.
“The mining sector's growth rate has failed to keep pace with those of other sectors like services. India's GDP growth has also outpaced mining growth. Despite ample mineral deposits, the sector has not grown at the rate befitting its potential,” says an industry source who does not wish to be named.
When compared with other resource-rich nations, India trails significantly in the mining sector’s contribution to economy. In South Africa, mining has a 7.5 per cent share of the GDP. Australia, another major repertoire of bulk minerals, beats India hands down, with mining accounting for 6.9 per cent of its GDP. Even Brazil ranks ahead, with the mining sector’s share of GDP at two per cent in 2017-18.
India's tardy pace of exploration has throttled the growth of the mineral sector. India’s exploration expenditure pales into insignificance when compared with other resource-rich countries like Canada and Australia. Canada accounts for 14 per cent of the global mining exploration expenses, and Australia 13 per cent. India's share is a minuscule two per cent. For each square km of a potential mining lease, Australia spends $5,580 and Canada $5,310. By comparison, India spends only $9 per square km.
Ironically, the country's mineral sector is heavily dependent on imports. In 2017-18, the value of domestic production of all major minerals (excluding coal, lignite and minor minerals) was Rs 58,638 crore, while the import value of vital minerals/metals, at Rs 4.34 trillion — almost seven times higher than domestic production — aggravated the current account deficit.