The National Steel Policy was just one among eleven decisions that the Union Cabinet took on 3 May. Even so, it was like that untimely drizzle on a sweltering summer day in the northern plains — just a few drops of water that did not quite signal a Monsoon in full spate — but showed that the rain Gods were hovering around somewhere in the firmament.
The National Steel Policy 2017 (there had been one in 2005 too) demonstrated the National Democratic Alliance government’s commitment to the manufacturing sector at a time when the Indian economy is often assumed to be driven almost entirely by services.
Albeit, services continue to be the fastest growing segment of the Indian economy and contribute to almost 60 per cent of India’s GDP (gross domestic product), compared to less than 30 per cent by manufacturing industries.
The steel industry in India, which has footprints that date way back to the Bengal Iron Works of 1870, contributes to a mere two per cent of the GDP, but employs five lakh people directly and another 20 lakh indirectly — in ancillary industries, for instance.
Unlike the skills-driven services sector, manufacturing industries like steel, have room for skilled, semi-skilled and unskilled manpower. A ballpark estimate is that every million tonne of Greenfield steel- making capacity generates employment for almost 700 people. Existing steel plants on expansion mode, create jobs for almost 400 people.
The National Steel Policy 2017 expects to take India’s steel-making capacity to 300 million tonne by 2030 from roughly 156 million tonne now, when most of the demand for the alloy should be in the home market. The global steel fraternity expects to see India and China lead in steel consumption over the next five years. In India that is inevitable with infrastructure development and a spurt in housing. It is unavoidable as the market for consumer durables like refrigerators and air-conditioners grow.
Sadly, the room for growth in per capita steel consumption in India is vast — sadly, because per capita steel consumption serves as a yardstick for development. The concrete jungles of the developed West, for instance, have a per capita steel consumption ratio close to the world average of 208 kg. Per capita steel consumption in India is at 63 kg, but in the rural countryside, where the only steel in use may be the corrugated sheets used in rooves — per capita steel consumption is at 9.74 per kg.
The National Steel Policy gears up India for the day when that figure will catapult manifold, as metal roads, bridges and highways reach out to India’s vast countryside and a manifold rise in purchasing power creates a market for swanky automobiles and high-end consumer durables there.
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Madhumita Chakraborty is a business journalist with long innings in media. She worked with The Economic Times, The Telegraph and The Financial Express before joining BW Businessworld. She has also been a columnist with Hindustan Dainik, a commentator on economic affairs on Lok Sabha Television (now Sansad TV) and a researcher.
