If we produce even half the oil and gold we import, we would be a country with a current account surplus
By Anil Agarwal
The return of the National Democratic Alliance to power in the 2019 Lok Sabha polls showed the pro-incumbency mood of the nation and reflected the voters’ deep-rooted trust in prime minister Modi’s numerous policies that have benefitted each strata of society since 2014. In fact, the Modi juggernaut defied all expectations and won a second term with an even bigger mandate. It is evident that, at the moment, the average Indian believes that it’s only the NDA government that can provide lasting solutions to the problems facing the country–from the dipping GDP growth to waning consumption demand and from lack of adequate jobs to water scarcity exacerbating the agrarian crisis.
Yet, not all is hunky-dory as NDA-II embarks on its governance journey after a historic win at the hustings. Even as new ministers took charge of their respective ministries on Friday, the jubilation in the government was somewhat tempered by the sharp dip in GDP growth for the last quarter of financial year 2018-19. India’s economic growth rate slipped to a five-year low of 5.8% in January-March, while joblessness stood at 6.1% of total labour force during 2017-18, the highest in 45 years.
Clearly, the dipping GDP growth and the economy’s inability to create sufficient jobs at a time when India needs to encash its demographic dividends are the biggest challenges facing the Narendra Modi government at the start of its second term. While the task is certainly herculean, the government also has the people’s vote of confidence to undertake bold reforms, announce tough measures and unleash the nation’s true potential to kick start the economy. The government also has the advantage of benign inflation to slash interest rates and ensure ample credit availability to the economy.
The combination of reforms in areas like agriculture, labour and land, coupled with the creation of a conducive investment environment, backed by the easing of tax laws, will surely re-ignite the economy’s growth engines. While Modi’s mission of ‘Make in India’ can be taken to the next level with progressive reforms for domestic industries, it is about time we had a mining revolution along the same lines as the Green Revolution and the White Revolution. Given the country’s rich and diverse ecology, India should further open up key sectors like mining and oil & gas for copious FDI flows that will not only curb needless imports but also generate millions of jobs at the direct level as well as in ancillary industries.
Thus, ‘Make in India’ must be supplemented with ‘Find in India,’ where the world’s top mining companies with state-of-the-art technology start mining a wide range of metals and minerals, like coal, iron ore, bauxite, oil and gold, in India on a sustainable basis, with utmost care for the environment. Given the wealth of India’s untapped resources, if we produce even half the oil and gold we import, we would be a country with a current account surplus. It is on the basis of this enormous potential that we got 41 hydrocarbon blocks in OALP-I and have bid for another 30 blocks in OALP-II and III. We are currently producing around 200,000 barrels of oil per day and intend to double it in two years, aspiring, eventually, to take it up to one million barrels per day, once new blocks start production. At the same time, it is important to strengthen India’s position in global trade, while protecting domestic industry from dumping, so that companies are not averse to stepping up investments.
The National Mineral Policy 2019, approved by the Cabinet in March this year, aims to increase the production of major minerals by 200% in seven years. The target is achievable if the policy is kept absolutely simple and transparent, without a circuitous string of approvals. Further, the policy could be production, and not revenue based, because the entrepreneur or the businessman, who risks their investment, must earn a decent return from the project. The government may focus on the long-term and aim for steady returns, rather than pursuing revenue and profits that force prospective investors to stay away.
Besides tapping into India’s natural resources, where the sector’s share in GDP can easily go from 2% to 10%, the government may also look to make public sector companies independent. PSUs are our backbone and giving them autonomy will help raise both production and revenues, and create huge employment. We need not privatise them, letting them operate, instead, like an ITC or an L&T, where decisions are taken in the interest of the company, its business and its stakeholders. Lack of independence in PSU functioning has taken away these firms’ ability to think on their feet and take strong decisions when required. Today, Indians are running multi-billion dollar corporations across the world, so why can’t we do it in India? The government may only provide an enabling environment and, as stated by the PM, the government has no business to be in business. Further, this decentralisation must travel to the grass root level, where our district collectors are empowered to quicken decision making in vital areas like land, environment and sports. If each district develops, the nation will prosper on its own.
The 2019 mandate is one of hope and faith. Given the vision and mission mode of prime minister Narendra Modi, I am confident that he will take the nation’s growth and prosperity to a new level, and that India will emerge as an economic and spiritual hub on the global platform. It is crucial that the nation of 1.3 billion people realises that this is the land of endless possibilities. We must stop India from being only the dumping ground of the world. It is time to ‘Find in India’, ‘Make in India’, and sell, both in India and globally!
The author is Chairman, Vedanta Group