Finance ministry plans 3-pronged fight on CAD
The finance ministry is planning a three-pronged strategy to rein in the runaway current account deficit or CAD in the long term, and prevent it from overshooting the budgeted range.
As per the plan, the finance ministry will issue instructions to the ministry of mines to arrange for exports of iron ore lying unused at pitheads, ask the department of fertilisers to enhance fertiliser unit throughput, and initiate measures to ensure coal imports fall, in an effort to save the precious dollar.
A senior finance ministry official told dna: “A large amount of iron ore, which is already mined, is lying at various pitheads. Instructions will be issued to the departments concerned to facilitate their exports to international markets and bring in foreign exchange.”
The ministries concerned will therefore have to approach the Supreme Court to get the ban on iron ore mining in Karnataka and Goa lifted.
The finance ministry is also likely to soon bring railways on board so as to arrange for adequate rakes for the carriage of the mined iron ore to ports.
As per estimates, India, which has been a major iron ore exporter, may end up being a net importer this fiscal. According to data from the ministry of mining, India exported 117.37 million tonne ore in 2009-10. This has come down to 18 million tonne in 2012-13, courtesy the ban on iron ore mining in the key mining states of Goa and Karnataka.
Finance ministry officials claim that at least 8-10 million tonne of iron ore is lying idle in Goa alone, which needs to be mobilised.
India’s mining story has gone for a toss in the last few years. While mining grew 7.9% in 2009-10, it logged a negative growth of -2.3% in 2012-13, as per the Central Statistical Organisation.
“We are unnecessarily importing coal. We are keen on cutting coal imports as well,” said the finance ministry official. “It needs to be worked out with Coal India. Coal imports bill of $16 billion is highly unsustainable.”
The fertiliser sector, meanwhile, is seeking freedom from government control and wants to be market-driven. It remains to be seen how much ground does the government cede to them.
DNA/ Ashutosh Kumar