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Badal Sanyal

Kolkata , May 3

MCKINSEY & Company has suggested that India should aspire to expand its key minerals value chains by three to four times over 10 to 12 years in order to leverage its natural resources for faster economic development. At the same time, the consultancy major has cautioned that there will be adverse repercussions if action is not taken to unlock the potential of the mineral sector.

In a recently published report, McKinsey has stated that India should target a production of about 305 million tonnes (mt) of iron ore by 2015 against the current 120 mt, 900 mt of coal against the existing 350 mt, and 14.5 mt of alumina against about 2.7 mt now.

According to the study, this level of aspiration would result in the minerals sector accounting for 4.5 per cent share of India's GDP by 2015, significantly higher than 2-3 per cent share it was responsible for in 2003. Besides, direct employment in this sector would double from a little under one million in 2003 to almost two million in 2015.

As far as the eastern States are concerned (they have a 70 per cent share of the country's mineral reserves), Chhattisgarh, Jharkhand and Orissa, together should aspire to produce 130-200 mt of iron ore, 500-670 mt of coal and 6-8.5 mt of alumina by 2015.

Further, West Bengal should produce 80-100 mt of coal.

As far as economic growth is concerned, the minerals and metals sector could significantly alter the State Domestic Product (SDP) growth scenario of the eastern states. For instance, Chhattisgarh has the scope to achieve a 5.5 per cent growth rate over the next 10-12 years compared to 4.3 per cent during the last five years. Jharkhand could see an economic growth rate of 5.9 per cent, while the steepest change in growth trajectory could be witnessed by Orissa, touching 7.1 per cent over the next 10-12 years, compared to a mere 3 per cent during the last five years.

The McKinsey report has particularly urged the Union Government to transform the eastern states into a "power hub" for the nation because over 75 per cent of the country's coal reserves are located in these states.

The report has suggested that the Government should deregulate the coal sector for allowing unrestricted private participation.

All virgin coal blocks, outside the reserved list for Coal India Ltd (CIL), should be opened for allocation to private players.

It has suggested that a regulatory body be formed to monitor the coal industry after deregulation, while strict compliance of world class norms for labour, environment and resource welfare has to be enforced.

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