Editorial – December 2021
The union finance budget is just round the corner and newspapers have already started publishing the expert views and also the expectations from different industries and groups. What does steel industry want from the government ? What are its expectations from this budget ?
As we all know, the steel demand lies outside the steel industry and we have to depend on other customer industry sectors such as infra, construction, auto, engineering, consumer durables etc. for the steel consumption. Out of this infrastructure itself consumes more than 70 % of steel in the country and obviously it is the biggest factor influencing steel demand in the country. Thus anything which facilitates and promotes infrastructure activities and projects should be helpful to steel industry as well. To be more specific, mega infra projects floated by the central and the state governments would consume lot of steel and thus need to be pushed hard. This includes roads (including the corridor projects) dams, air and sea ports, rails / metros and other such projects with huge steel consumption potential. One of the major hurdles in these is land acquisition. Unless we have a simple, fair and easy to execute law in place, these infra projects will keep on getting delayed attracting the time and cost escalations. This will naturally lower the steel demand growth rate. If we can overcome this hurdle, it will be a boon to not only steel industry but to the national economy as well.
The steel demand is a function of the overall state of the economy of the country. The last two years were badly affected by the covid pandemic and naturally the economies of most of the regions and the countries suffered a lot. Do we all remember that even before the pandemic erupted Feb 2020, Indian economy was not in the good shape and struggling to maintain a decent growth rate, which was falling by every passing quarter ? In fact, in my opinion, pandemic has given us an opportunity to relook and restructure our economy to some extent. With good growth rate predictions by expert agencies, the world has a better perception of Indian economy, which should result in more FDI in coming years. May be some small changes in export incentives and import duties would be welcome but I must confess that such measures would make a limited impact on the fortune of iron & steel industry in the country.
I remember Dr J J Irani (then MD of Tata Steel) once said,’Steel industry does not want anything from the government as long as it keeps funding big infra projects.’ How true, isn’t it ?