Demonetisation has turned out to be a double whammy for the non-coal mining sector. On the one hand, miners are finding it increasingly difficult to pay the daily wagers they employ and on the other, transportation bottlenecks have impacted sales of minerals.
Demonetisation has turned out to be a double whammy for the non-coal mining sector. On the one hand, miners are finding it increasingly difficult to pay the daily wagers they employ and on the other, transportation bottlenecks have impacted sales of minerals. Though production has remained largely steady so far, industry sources said it also stands to be affected if the situation doesn’t improve quickly.
Daily wagers comprise 25% of the total workforce in the sector. With the cash crunch the miners are facing, many have refrained from employing daily wagers, which is hampering loading and unloading to some extent. Mining jobs are essentially done by “permanent” workers and they are paid on a monthly basis as their salary get transferred into their bank accounts.
“The transport system has been hit by demonetisation. As a result, our sales have got impacted. If this situation continues, our production will also get hampered,” said H Noor Ahmed, immediate past president, FIMI. The mining sector employs around 7 lakh people and contributes around 2% to the GDP.
Coal India, the largest producer of the dry fuel, however, said the company is not facing any problem due to demonetisation as most of the daily wagers working in its mines are through contractors whom it pays in cheque.
Non-coal miners are also fearing waning in the demand for finished products like steel and aluminium as with the government’s move aimed at tackling the black money, construction might suffer and the demand from other end-use segments such as automobile and white goods might also take a beating.
“India’s steel demand growth has been tepid so far in the current fiscal and with the demonetisation, retail sales of steel products like corrugated sheets, TMT bars have been impacted,” said a steel industry official.
Corrugated sheets and TMT bars are used for construction, which accounts for over half of the total steel consumption in the country.