The Hindu Business Line : Steel tripwire

When the President, Ms Pratibha Patil, conferred the Padma Vibhushan on both L. N. Mittal and Ratan Tata last week, the investiture seemed appropriate to India’s prominent status on the steel map of the world. In another five years, India should become the third largest producer with output doubling from the present capacity of 53 million tonnes. Along with Brazil, Russia and China, it is one of the largest consumers of steel, and why not? With an economic growth o f 8 per cent, its demand for steel products outstrips many developed nations at a robust 12 per cent a year, almost twice as much as world demand in the current year. The Government too seems aware of the need for a helping hand and has planned a massive expansion in capacity.

Yet, the pathway to 2013 is beset with obstacles, the most important being land acquisition and environment clearance. Several State governments that have signed agreements with steel companies for fresh capacity have run up against a problem that should have been anticipated. Given the history of contentious land transfers from the original owners for even public sector projects — the most prominent one being the Sardar Sarovar project — an enabling environment should have been accorded the highest priority in the agenda of reforms.

Yet, the belated amendments to the current law on land transfers languish in Parliament even as States that could have reaped a rich harvest with iron-ore mining leases watch helplessly. In Orissa alone, three major mining blocks — Khandadhar, Malangtoli and Thakurani — are embroiled in litigation with the Mining Act. That’s not all. Environmental clearances now involve the judiciary; in Jharkhand, for instance, mining in forest lands requires Environment Ministry clearance and Supreme Court scrutiny. Assuming a magic wand clears all these glitches, another looms, namely the insistence of mine-rich States that all new steel projects be located within the State. Jharkhand, Orissa and Chhattisgarh refuse mining leases for firms that intend to set up steel plants in neighbouring West Bengal.

The iron-ore States may have a point; they are resource-rich but asset-poor and steel plants are employment-intensive, an advantage they need desperately. But, then, so does West Bengal. Mercifully, the Centre has a solution at hand. The creation of an overarching steel region such as the German Ruhr that encompasses 13 city boroughs and parts of rural districts, could enable economies of scale beneficial to all the eastern States. This is one “special economic zone” that the nation could benefit from immensely.

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