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Experts have warned that the mining and quarrying segment is likely to suffer further after a contraction by 2.8 per cent in the first quarter of the fiscal, if the issues plaguing the sector are not resolved immediately.
While iron ore mining approvals issue can be expedited, coal production could be ramped up to boost not only the mining sector but also to help the investment cycle, they said.
"We are assuming a negative growth figure in the mining sector in the current fiscal. However, we are also watching statements coming out from government regarding restarting mining in some regions, which may turn things towards a positive growth territory," Crisil Chief Economist D K Joshi told PTI.
He also said that the mining sector is a binding constraint to the growth of the economy for now, degrowth of which is also posing a risk to the current account deficit numbers.
GDP growth has slipped to 4.4 per cent in the first quarter of the current financial year with mining and quarrying witnessing a degrowth of 2.8 per cent during this period.
The mining sector has shown a paltry growth of 0.4 per cent during Q1 of last fiscal.
"Unless approvals are expedited to open iron ore mines in Karnataka along with steps to restart operations in Goa, the sector will contract further," Federation of Indian Mineral Industries (Fimi) vice-president Basant Poddar said.
As per Fimi officials, despite the Supreme Court approval to open iron ore mines in Karnataka, only 14 mines have reopened till date out of over 100 mines in the state.
On this matter, an official from the Goa Mineral Ore Exporters Association said the low GDP figure in the first quarter indicates the urgency of resolving mining issues.
"The Q1 GDP figure shows the need for urgent resolution of issues plaguing the industry. If immediate steps are not taken, contraction may worsen further," Goa Mineral Ore Exporters Association secretary Glenn Kalavampara said.
An official from Icra also said there is uncertainty in the mining sector as of now, which makes it difficult to predict the direction.
"It is very difficult to predict a near-term trend in the mining sector given the many uncertainties surrounding regulatory issues. However, quick approval for opening iron ore mines and ramping up coal production will definitely help in boosting the sector over the medium to long-term," senior vice-president and co-head of corporate sector ratings at Icra Jayanta Roy said.
