THE latest Economic Survey (1991-92) presents a very interesting
set of statistics. It shows that, out of all types of commercial
undertakings of state departments, only those based on forests
and mining have maintained a steady profit margin between 1985
and 1992, while all the others -- industrial firms, dairies,
irrigation and power projects -- have suffered losses. This is
when many minerals and forest resources are sold cheaply and
their prices do not include the costs of social dislocation or
ecological rehabilitation. It is obvious that inefficient state
governments depend heavily on the exploitation of the "natural
capital" to make good the losses incurred by other types of
enterprises and also cover shortfalls in revenue.
Huge profits are being earned from forests and mines.
Employment of cheap labour and application of simple and outdated
technology keep the cost of forestry and mining low. "One great
advantage of these sectors is that high value resources can be
produced at low labour cost and with simple technology," says
Hiranya Mukherjee, an economist at the National Institute of
Public Finance (NIPF) in New Delhi.
Royalty and cess from mining form a major source of income
for the states. But the Economic Survey shows that the amount of
profit in mining is comparatively lower than that in the forestry
sector. Minerals like coal and other core industrial raw
materials, which attract huge amounts of plan investments, are
sold at controlled prices and have a low rate of profits. But
several other minerals like limestone have a ready and profitable
market. Yet the sheer indifference to the resource base is
evident from the fact that, despite the promising gains from
these resources, very little is invested in ecological
Largely, northeastern states and other states rich in forest
and mineral resources like Madhya Pradesh, Orissa, Karnataka,
Maharashtra, Himachal Pradesh and Jammu and Kashmir are
extracting large revenues from these resources. The share of
forestry and logging in the NSDP is very high in some states. It
is more than 10 per cent in Arunachal Pradesh, for instance. "The
only way out of this is to diversify the economy," says Sudipto
Mundle of the NIPF.
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