Reasons For Low GDP Contribution by Mining Sector
The various reasons for the decline in the growth of mining and low contribution to GDP are as follows:
1. Formalities and Legal issues:
The mining sector is subjected to different formalities and clearances that are required to continue operations conveniently. These also include legal obligations that make mining activities unviable and unprofitable.
2. Environmental Concerns:
Various mines have to close down due to failure in meeting environmental compliances. Mining is not permitted in certain areas due to the possibility of adverse effects on the population and environment.
3. Lack of Modern Technology:
The mining sector suffers from the lack of modernized techniques for exploration and extraction. Most of the mines use old and inefficient machinery without making any progress toward the upgrade in technology.
4. Administrative Issues:
The mining sector suffers from the problem of low asset and resource underutilization, especially under the control of public sector units. Moreover, the state governments are generally involved in the auction of mines and there may be ambiguities in political approaches between the center and state.
5. Increase In Cost:
The mining sector has to bear the pressure of taxation that makes the operation less profitable. Also, there is a lack of further investment and involvement of private enterprises in mineral exploration.
6. Displacement of Communities:
Several mining zones are located in areas that are the natural habitat of tribes and rural communities. The displacement of these people is a matter of concern. Due to complexities related to the rehabilitation or compensation of these people, it becomes difficult to start the mining activities. Also, there are security threats in some mining belts from local people and agitators.
Mining Sector In India And Its Challenges
India is a mineral-rich country and mining exploration is one of the major industrial activities in India. India is one of the leading countries where varieties of minerals are collected through mining. The mining sector is expected to contribute to the GDP and economic development of the country. The mining sector also provides an opportunity for employment, infrastructure development, earning of foreign exchange, and supply of materials for green technologies. However, there has been no major improvement in the country’s GDP on account of mining in recent years. India has been facing difficulties utilizing the potential of mineral resources through mining activities. In India, despite large land areas with mineral reserves, mining activities are very limited. This is one of the main reasons for the poor contribution of the mining sector. The other factors responsible for further this decline in the growth of the mining sector are the disruptions and closure of mines in some important states due to legislative regulations and local conflicts involving social and cultural issues.