By Nageshwar Patnaik in Bhubaneswar, March 14, 2017 : The share of mining in Odisha’s Gross State Domestic Product [GSDP] is on a decline for the past five years. In 2016-17, mining contributed only 7.36% to GSDP compared to 12.2% in 2011-12 which clearly indicates a declining trend.

The deceleration of share of mining in GSDP is mainly attributed to fall in prices of minerals. Iron ore and coal with highest share of 53 per cent and 26 per cent respectively have mainly contributed to the growth of mining sector, according to Odisha government’s Economic Survey for the year 2016-17.

The exports of minerals and ores from the state also show a declining trend from 2011-12 to 2014-15. The impact of global slow down on value of exports from Odisha has been quite severe. In 2015-16, the mineral export from the state has increased substantially so far as the quantity is concerned and iron ore dominated the export basket of all the minerals as its share was an overwhelming 96 per cent in 2015-16.

In 2014-15, Odisha exported only 59.77 metric ton [MT] of iron ore and its value was pegged at Rs 3092 crore. Compare this to the figures of iron ore export in 2015-16, when the iron ore export from the state was 808.66 MT valued at a lowly Rs 165.53 crore.

Surprisingly, the state has lost out much on account of mineral revenue collection with the state collecting Rs 5797.79 crore in 2015-16, highest in five years.

Production, Dispatch and Collection of Mineral Revenue 2011-12 to 2015-16

(Production & dispatched in MT and Revenue collection Rs in crore)

However, the state government faces a huge shortfall in mining revenue in this fiscal despite a significant rise in production and dispatch of minerals.

The government will fall much short of its target of generating Rs 7,000 crore from the mining sector as the earnings till the end of February is likely to be in the region of Rs 3,715 crore, steel and mines minister, Prafulla Mallick said in a written reply to the state assembly last month.

Officials admit that the mining revenue collection could be lesser than the Rs 5,797 crore achieved in 2015-16. Iron ore production and dispatch from different mines is estimated to be 107 million tonne (MT) by February-end against 80 MT last year. So far, coal dispatch has been estimated to be around 125 MT against 121 MT dispatched in the corresponding period of the previous fiscal.

Prices of low-grade iron ore have been slashed by almost 50 per cent. These are being sold at Rs 500 to 600 per tonne, according to an iron ore exporter

Mining activities had come to a grinding halt in the state in the wake of the multi-million rupee mining scam in 2009-10. However, with the new Mines and Minerals Development and Regulation Act, 2015, coming into force, the mining activities got kicked off.

The new mining law has put an end to preferential allocation and introduced e-auction for allocation of mining blocks. The state government has started auctioning the mining leases but at a slow pace due to delay in obtaining statutory clearances from different Government departments in time.

Meanwhile, the State Government has auctioned only three mining blocks, one iron ore, one limestone and one manganese block.