As per 12th Five Year Plan, for every 1% increase in economic growth, the mining sector creates 13 times more employment than agriculture and six times more than manufacturing
By RK Sharma
Mining is a labour-intensive industry and has a huge potential for employment generation; it can play a pivotal role in creating more avenues for job opportunities, particularly in the hinterland and backward areas, which have limited potential for other economic activities. Given the current unemployment crisis, it is believed that employment-intensive growth is the key to utilising India’s demographic dividend and ensuring a remarkable growth story. In addition, it acts as a significant variable towards achieving a sustainable and inclusive growth.
The mining sector has emerged as the third-largest employment-generation sector. Of the eight core sectors of the economy, five—i.e. coal, steel, cement, electricity and fertilisers—are primarily dependent on raw material supplies from mines. Currently, the mining sector is passing through a sluggish growth and is suppressed. Addressing the unemployment issue in such a situation, both in rural and urban India, is a challenge.
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As per the PLFS (Periodic Labour Force Survey) report, unemployment in India during 2017-18 was 6% (7.8% in urban areas and 5.3% rural areas), which makes it a 45-year low for jobs in India. According to a CMIE report, the rural unemployed in May 2019 were nearly 44% higher than their count in May 2018. On the other hand, the country’s working age population, or those above the age of 15, is expanding by 1.3 crore a month. The average urban unemployment rate during the first five months of 2019 was 8%, as compared to 6.1% in the corresponding months of 2018.
On increasing unemployment rate, we have always believed that India is reining under the syndrome of opportunities lost within the country. It is known that creating jobs is not easy for the government sector, and the private sector must play, and has always played, a significant role. The private sector has also supported towards enhancing skill development programmes for the youth to encourage self-employment. The mining sector alone has the potential to absorb such trained manpower, particularly from the rural sector. But this can happen only if the sector itself is on a growing path.
The five sectors dependent on raw material from mining are already under pressure to buy much costlier raw material through imports. Even though India has the required raw materials in abundance, the lack of exploration, non-simplified policies and delayed approvals have resulted in decline in extraction of minerals and this has led to the sluggish growth in mining. Even the sustenance of some of these sectors that are dependent on raw material from mining is being threatened.
The growth in the mining sector has always benefited employment generation in relatively backward states that have low per capita income than national averages. These are Jharkhand, Rajasthan, Odisha, Chhattisgarh and Madhya Pradesh, which constituted about 54% of India’s mining sector’s GDP and about 37% of sectoral employment in 2011-12.
Mining employed about 23 lakh people in 2011-12 across the organised and unorganised sectors. Since the ratio of direct to indirect employment in the mining sector is 1:10, it is estimated that around 2.3 crore people gained employment through the mining sector in 2011-12. This also included employment generated in secondary and ancillary sectors.
The potential and scope of mining towards employment generation is immense. As per the 12th Five Year Plan, for every 1% increase in economic growth, the mining sector creates 13 times more employment than agriculture and six times more than manufacturing.
With the right kind of government support and reforms, by 2025 the mining sector has the potential to provide employment opportunities to about 50 lakh people directly and create overall employment opportunities for about 5 crore people.
India would need significantly higher contribution by the mining sector in the GDP if the country wants to become a $5-trillion economy and achieve 8% GDP growth. But, as of now, the trend in the mining sector is negative; its contribution to GDP is decreasing. The value of mineral production in India increased from Rs 1.77 lakh crore in 2012-13 to Rs 1.99 lakh crore in 2017-18, and the country’s GDP growth also increased from 5% in 2012-13 to 7% in 2017-18. But, on the other side, the mineral sector (excluding petroleum and natural gas) contribution to GDP went down from 1.93% in 2012-13 to 1.53% in 2017-18.
With a view to put the mining sector back on the growth path, it is imperative to facilitate a regulatory regime and build a conducive framework for the ease of doing business. For India to achieve its aim of becoming a $5-trillion economy in the next five years and a $10-trillion economy in 8-10 years, it has to fast-track the growth of the mining and minerals sector.
Economic development generates employment opportunities; thus, all the sectors that have the potential to contribute immensely to economic development must be provided equal opportunities for growth and be assessed eventually.
The author is Secretary general, Federation of Indian Mineral Industries