Problems of core industries

<–2/”>a >The Eight Core industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP) and are as follows:-

Coal
Crude Oil
Natural Gas
Refinery Products
Fertilizers
Steel
Cement
Electricity

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Coal

The reality of India’s Energy sector is that around three-quarters of our power comes from coal powered Plants and this scenario will not change significantly over the coming decades. Thus, it is important that India increases its domestic coal production to provide Energy Security and reduce its dependence on imports. The following steps needs to be undertaken to boost coal production and distribution –

At the institutional level, an independent organisation should be created to develop and maintain the repository of all coal related geological information in the country. The proposal to set up a Coal Regulator for fostering competition in the coal sector apart from advising Central Government on the formulation of the principles and methodologies for determination of price of raw coal and washed coal should be implemented.

Using market mechanisms to open the coal-mining sector for commercial mining. (Discussed later).

Critical role of railways in coal distribution should be leveraged. In 2014, 50 million tons of coal could not be distributed in a timely fashion due to rail limitation. For instance, there is a need to complete the three critical Railway lines namely Tori-Shivpur, Jharsuguda-Barpalli and Mand-Raigarh to significantly augment coal evacuation.

The government should employ more Coal-Handing and Preparation Plants (CHPP) that wash coal before shipping. This process removes ash and debris, thereby increasing the energy content per tonne by 10-20%. Also, steps need to be taken to adopt clean-coal technologies including coal gasification.

Finally, to boost production, the on-going auction process and transfer of mining lease and other related activities of captive mines to the new successful bidders should be expedited. The production from captive blocks has been targeted at 400 MT by 2020; the yearly targets should

be devised and, where required, coalmines should be re-allocated to achieve the above target.

Crude Oil and Natural Gas

India has 0.5% of the oil and gas Resources of the world and 15% of the world’s Population. This makes India heavily dependent on the import of the crude oil and natural gas.

India the third-largest oil consuming nation in the world: India’s oil consumption grew 8.3 per cent yearon-year to 212.7 million tonnes in 2016, as against the global Growth of 1.5 per cent.

India is the fourth-largest Liquefied Natural Gas (LNG) importer after Japan, South Korea and China, and accounts for 5.8 per cent of the total global trade.

Government aims to increase the share of gas in the country’s energy mix to 15 per cent by 2020 from about 6.5 per cent now to curb pollution and carbon emissions.

Draft National Energy Policy target to reduce oil imports by 10% from (2014-15 levels) by 2022

According to the Minister of State for Petroleum and Natural Gas, India’s oil demand is expected to grow at a compound annual growth rate (CAGR) of 3.6 per cent to 458 Million Tonnes of Oil Equivalent (MTOE) by 2040, while demand for energy will more than double by 2040 as economy will grow to more than five times its current size.

EXPLORATION OF COAL BED METHANE (CBM)

The Cabinet Committee on Economic Affairs chaired by the Prime Minister gave its approval for issuing a notification amending Oil Fields (Regulation and Development) Act, 1948 (ORD Act, 1948)

Government had earlier issued a notification in 2015 granting rights to CIL and its subsidiaries for exploration and exploitation of CBM from all coal bearing areas for which they possess mining lease for coal. However, permission was required for Mining Lease (ML) for CBM by Ministry of Petroleum and Natural gas.

Now with new amendment, requirement of permission has been done away with for CIL and its subsidiaries.

Fertilizers

Fertilizers

All plants need certain mineral nutrients to survive. These Minerals occur naturally in the Soil and are taken up from the soil by the roots of the plants. Most soils usually have enough of these minerals to keep plants healthy.
However, some nutrients are gradually used up by the plants, or are washed out of the soil, and need to be replaced to maintain optimal growth and appearance.
The most common mineral nutrients that need replacing are Nitrogen (N), Phosphorus (P) and Potassium (K).
The term “fertilizer material” means a commercial fertilizer containing one or more of the recognized plant nutrients, which is used primarily for its plant nutrient content.
Fertilizers are derived from a wide variety of natural and manufactured materials and are sold in solid, liquid and gaseous form (anhydrous ammonia). These materials are designed for use or claimed to have value in promoting plant growth or increasing plant-available nutrient levels in soils.

Complete versus Incomplete Fertilizer

A fertilizer is said to be a complete or mixed fertilizer when it contains nitrogen, phosphorus and potassium (the primary nutrients). Examples of commonly used complete fertilizers are 6-12-12, 10-10-10, 15-15-15 and 20-10-10.
An incomplete fertilizer will be missing one or more of the major components. Examples of incomplete fertilizers are: 34-0-0 (ammonium nitrate), 46-0-0 (urea), 18-46-0 (diammonium phosphate), 0-46-0 (triple super phosphate) and 0-0-60 (muriate of potash).
Incomplete fertilizers are blended to make complete fertilizers. As an example, if 100 pounds of 46-0-0 (urea) were combined with 100 pounds of 0-46-0 (concentrated super phosphate) and 100 pounds of 0-0-60 (muriate of potash), a fertilizer grade of 15-15-20 would result. When these quantities are combined, each quantity is diluted by the other two materials by one-third, provided each fertilizer material contributed equal weight to the blend

Imbalance in use of fertilizers in India

The manufacture, sale, and distribution of fertilizers in the country is regulated by the Ministry of Chemicals and Fertilizers, under the Essential Commodities Act, 1955.
There are three major types of nutrients used as fertilizers: Nitrogen (N), Phosphatic (P), and Potassic (K). Of these, the pricing of urea (containing N fertilizer) is controlled by the government, while P and K fertilizers were decontrolled in 1992, on the recommendation of a Joint Parliamentary Committee.
It has been observed that urea is used more than other fertilizers. While the recommended ratio of use of the NPK fertilizers is 4:2:1, this ratio in India is currently at 6.7:2.4:1. Overuse of urea is especially observed in the states of Punjab, Haryana and Uttar Pradesh.
An imbalanced use of urea may lead to a loss of fertility in the soil over a period of time, affecting productivity.
Urea (N) is the most produced (86%), consumed (74%) and imported (52%) fertilizer in the country. The government determines the quantity of fertilizers to be imported based on their domestic availability.
However, the process of fixing the quantity to be imported and actually receiving the imports takes about 60-70 days, since only three companies are allowed to import urea into the country.
Thus shortages are often caused in the urea market. Since farmers have to ensure that urea is applied to their crops on time, it leads to the growth of black markets selling urea, often at prices above the maximum retail prices.
The level of fertilizer required for a crop depends upon the soil type, level of yield, and water availability, in addition to the type of crop.
Certain crops such as rice, wheat, maize, Cotton and sugarcane require larger quantities of nitrogen as compared to pulses, fruits and vegetables.
Although the ratio of N, P, and K fertilizer usage across crops has increased, the quantity of fertilizers used by India is still lower as compared to other countries.
The Average consumption of fertilizers increased from 106 kg per ha in 2005-06 to 128 kg per ha in 2012-13. In comparison, Pakistan consumes 205 kg per ha and China consumes 396 kg per ha.
To meet the production target of 300 million tonnes of food grains by 2025 which was mentioned earlier, 45 million tonne of fertilizers would be required. Of this, 6-7 million tonnes may be met from organic fertilizers, but the rest would be met by chemical fertilizers (containing N, P and K). The domestic production of fertilizers would have to be increased to meet this demand.

Nutrient based subsidy policy for Fertilizers

The central government launched the nutrient based subsidy policy (NBS) in 2010 for P and K fertilizers. The policy was formulated with the objective of promoting a balanced use of N, P and K fertilizers.
The policy allowed the manufacturers of P and K fertilizers to fix their maximum retail prices (MRPs) at reasonable levels. The subsidy provided would be based on per kilogram of the nutrient.
The policy also provided for an additional subsidy to be paid to indigenous manufacturers of fertilizers.
The Comptroller and Auditor General of India, in its report on the performance of the NBS policy stated that in the five years since its implementation, the policy had not succeeded in bringing about a balanced use of fertilizers. The fertilizer usage ratio of urea increased from 4.3 in 2009-10 to 8.2 in 2012-13.

Fertilizer Subsidy in India

To promote the use of fertilizers by farmers, the central government provides a fertilizer subsidy to the producers of fertilizers.
In 2017-18, Rs 70,000 crore has been allocated for fertilizer subsidy, which is the second biggest expenditure on subsidy after food subsidy.
Allocations for fertilizer subsidy have been increasing at an annual rate of 11.4% between 2000 and 2016. Of the subsidy allocated for 2017-18, Rs 49,768 crore has been allocated for subsidy on urea.
Currently the amount of subsidy to be given is determined based on the cost of production of the fertilizer company. Companies with a higher cost of production receive greater subsidies. This reduces the companies’ incentive to reduce their cost of production.
Although the consumption of urea has been increasing over the past decade, no new domestic production capacity has been added in the past 15 years.
A Committee that examined the role of Food Corporation of India recommended that cash transfers should be made to farmers to replace the current fertilizer subsidy regime. This would allow farmers to choose fertilizers in the combination best suited to their needs, and help them to fix the fertilizer imbalance in soil.
In the Union Budget 2016-17, it was announced that a direct benefit transfer program for fertilizers would be launched on a pilot basis in a few districts across the country. In July 2016, the government announced that it would be conducting pilot studies of direct benefit transfers in 16 districts in 2016-17

Steel

Iron and Steel Industry:

Pig Iron
Pig iron is the intermediate product of smelting of iron Ore with a high-carbon fuel such as coke and charcoal and is the basic raw material in Foundry and Casting Industry for the manufacture of various types of castings required for engineering sector. Pig iron usually has very high carbon content of 3.5% to 4.5%. The main sources of pig iron have traditionally been the integrated steel plants of SAIL besides plants of Tata Steel and Rashtriya Ispat Nigam Ltd. The domestic production of pig iron did not keep pace with the demand. Efforts were, therefore, made to increase pig iron manufacturing facilities in the Secondary Sector
As a result of various policy initiatives taken by the Government, Private Sector did show considerable interest in setting up new pig iron units, specially in the post-liberalised period. Of the total 6.87 million tonnes production in 2012-13, the Private Sector accounted for over 90% of the total production for sale of pig iron in the country.
In 2012-13, 6.87 million tonnes pig iron was produced against 5.37 million tonnes in 2011-12. Location and capacity of principal pig iron units in Private Sector are furnished in Table-2. M/s Usha Martin Industries Ltd, M/s Jindal Steel & Power Ltd have integrated mini-blast furnaces (MBF) for manufacture of steel through Electric Arc Furnace (EAF). M/s Hospet Steel (a joint venture of Kalyani and Mukand) and M/s Southern Iron & Steel Co. Ltd had integrated their MBF with energy optimising furnace to produce steel.
Sponge Iron
Commercial production of sponge iron in India commenced in 1980. Sponge Iron India Ltd was first to set up a plant in 1980 at Palwancha of Khammam district in Andhra Pradesh with a capacity of 0.039 million tonnes/year.
In the last few years, combined use of hot Metal and sponge iron in electric arc furnace have been in practice for production of liquid steel, consequently production of sponge iron too went up substantially to meet the demands. The installed capacity of sponge iron increased from 1.52 million tonnes per annum in 1990-91 to 37.30 million tonnes per annum in 2012-13. The production also increased from 0.9 million tonnes in 1990-91 to 23.01 million tonnes in 2012-13

Industry:

Iron and steel is a basic industry and is the backbone of industrial development of any country.
The first unit, which was able to produce pig iron successfully, in the country came up at Kulti in 1874 and was named the Bengal Iron Work Country. Another plant came up at Sakchi (now Jamshedpur) in 1907, set up by the Tatas and called the Tata Iron and Steel Company (TISCO). In 1919, the Indian Iron and Steel Company (IISCO) plant was set up at Burnpur. In 1923, another plant came up, called the Mysore Steel Works (later named the Visveshwaraiya Iron and Steel Limited—VISL)
The plant at Durgapur, in Bardhman district of West Bengal started operating in 1962. It was set up with help from the United Kingdom. The Alloy steel plant at Durgapur produces ingot steel. Iron ore for the Durgapur steel plant comes from Bolani mines in Kendujhar; coal from Jharia, and power is supplied by the DVC. Limestone comes from Sundergarh and manganese from Kendujhar. Durgapur steel plant is situated on the Kolkata- Asansol rail line. This way, it is connected with Kolkata port and the major markets.
The Bokaro steel plant is situated in Hazaribagh district of Jharkhand at the confluence of Bokaro and Damodar rivers. It was established during the Third Plan, but started operating in 1972. It was set up with Soviet help. Iron ore for the plant comes from Kiriburu in Kendujhar district of Orissa and partly from Salem, Mangalore and Ratnagiri by sea route.
Coal comes from Jharia and power is supplied by the DVC. Limestone supplies are drawn from Bhavantpur and Daltonganj in the Palamau district, and dolomite from Bilaspur in Madhya Pradesh. The location of the steel plant is favourable, as it is nearest to the industrial region of southern Uttar Pradesh (Varanasi, Kanpur, Ferozabad, Mugalserai) and also has access to Delhi and Amritsar.
The plant at Salem in Tamil Nadu was planned during the Fourth Plan, but it could come into operation only in 1982. Earlier, due to lack of suitable raw materials in the area for making iron by the conventional blast furnace process, the proposal for a steel plant could not get materialised. Salem area is rich in iron ore and this iron ore is beneficiated to a higher grade concentrate, agglomerated and then smelted in electric furnace. The Salem plant produces stainless steel.
The Visakhapatnam Steel Plant, which came into operation in 1992, is the first plant in the shore region. It is also the most sophisticated modern integrated steel plant in the country. A number of modern technological features have been incorporated in the plant. Being located at a port site, the plant has the flexibility to opt for imported coking coal, thereby relieving the pressure on Indian coal mines.
Also, its products can be easily exported. Visakhapatnam is well connected with the coalfields of Damodar Valley. The iron ore deposits are obtained from Bailadila in Chhattisgarh. Fluxes like limestone, refractories and ferroalloys can be obtained from the adjacent areas.
Neelachal Ispat Nigam Ltd. and government agencies have set up Orissa’s second integrated iron and steel plant at Kalinganagar, in Jajpur district

v Mini Steel Plants:

Apart from the integrated steel plants, steel is also produced by electric arc furnace units which are popularly known as mini steel plants, from steel scrap/sponge iron. The integrated steel plants mainly produce mild steel and alloy steel, including stainless steel. These plants are located in areas away from the integrated steel plants to meet the demand there. Their period of construction and gestation is short and they offer greater flexibility in operation.

Cement

Cement, an important Infrastructure-2/”>INFRASTRUCTURE core industry, is one of the most advanced industries in the country. The country was deficient in cement and it had to resort to imports to fill the gaps in supplies until the complete decontrol of price and distribution on March 1, 1989 and introduction of other policy reforms; since then, the cement industry has made rapid strides.
Cement is made mainly from limestone and clay. Other raw materials include shale, coal and gypsum. Thus, cement factories are located near limestone deposits. Since coal and gypsum are brought generally from long distances and cement has to be dispatched to far-off consuming centres, the cement plants are located close to rail routes. Sludge from fertiliser plants, blast furnace slag and sea-shells are used instead of limestone in some cement plants.
For instance, the cement plants at Bhadravati (Karnataka) and Chaibasa (Jharkhand) use slag and the plant at Sindri uses sludge. Limestone is available at a number of places in most of the states of India, but basalt covered areas of Maharashtra and Chhattisgarh, and the northern alluvial plains are without limestone based cement manufacturing plants. At Dalmia Dadri in Haryana, there is a cement plant based on kanker (limestone nodules).
The major producer states of cement and major cement producing centres are given below.
Tamil Nadu:
TiruneFveli, Ramanathpuram, Tiruchchirappalli, Salem and Coimbatore.
Chhattisgarh:
Durg and Raipur.
Madhya Pradesh:
Jabalpur and Gwalior.
Gujarat:
Ahmedabad, Sikka, Sewree, Dwarka, Porbandar, Sewalia and Ankaleshwar.
Jharkhand:
Sindri, Ranchi, Palamau, Japla and Chaibasa.
Bihar:
Dalmianagar
Rajasthan:
Bundi, Sawai Madhopur, Chittor- garh, Udaipur.
Andhra Pradesh:
Karimnagar, Kurnool, Vijaywada, Krishna, Sullurpet and Anantpur.
Karnataka:
Shahbad, Wadi, Kurkunta, Bagalkot, Bhadravati and Tumkur.
The Indian cement industry not only ranks high in the production of cement in the world but also produces quality cement to meet global standards. The induction of advanced technology has helped the industry immensely to conserve energy and fuel and to save materials substantially. Apart from meeting the entire domestic demand, the industry is also exporting cement and clinker.
The working group on cement industry for the formulation of Tenth Five Year Plan and other studies on global competitiveness of the Indian cement industry highlighted constraints such as high cost of power, high freight cost, inadequate infrastructure and poor quality of coal. Additional capacity creation is hampered by the lack of long- term coal linkages.

In order to utilise the excess production capacity available with the cement industry, the government has identified the following thrust areas for increasing demand:

Further push to housing development programmes;
Promotion of concrete highways and roads;
Use of ready-mix concrete in large infrastructure projects; and
Construction of concrete roads in rural areas under Prime Minister’s Gram Sadak Yojana.

Core industries are the foundation of a country’s economy. They provide the essential goods and Services that other industries rely on, and they play a vital role in creating jobs and stimulating economic growth. However, core industries also face a number of challenges, including infrastructure problems, excessive regulation, foreign competition, technological change, skills shortages, environmental impact, political instability, and natural disasters.

Infrastructure problems can make it difficult for core industries to operate efficiently. For example, a lack of adequate roads and railways can make it difficult to transport goods and materials, while a lack of reliable power supplies can disrupt production. In addition, poor infrastructure can make it difficult to attract and retain skilled workers.

Excessive regulation can stifle innovation and Investment in core industries. For example, regulations that require businesses to obtain expensive permits or licenses can make it difficult for new businesses to enter the market. In addition, regulations that restrict the use of certain technologies can make it difficult for businesses to keep up with the latest innovations.

Foreign competition can put pressure on domestic core industries, leading to job losses and plant closures. For example, if a foreign company is able to produce goods more cheaply than a domestic company, the domestic company may be forced to lay off workers or close its plants. In addition, foreign competition can lead to a decline in the quality of goods and services produced by domestic companies.

The rapid pace of technological change can make it difficult for core industries to keep up, leading to a loss of competitiveness. For example, if a new technology makes it possible to produce goods more efficiently, businesses that do not adopt the new technology may be at a competitive disadvantage. In addition, technological change can lead to job losses, as workers who are not able to adapt to new technologies may be replaced by machines.

A shortage of skilled workers can make it difficult for core industries to find the workers they need, leading to delays and production problems. For example, if a company is unable to find enough skilled workers to operate its machines, it may have to reduce production or even close its plants. In addition, a shortage of skilled workers can lead to higher wages, as businesses compete for the limited pool of available workers.

Core industries can have a significant environmental impact, which can lead to protests and government regulation. For example, a factory that emits pollutants into the air may be the target of protests from environmental groups. In addition, the government may impose regulations on the factory in an effort to reduce its environmental impact.

Political instability can make it difficult for core industries to plan for the future, as they may be subject to sudden changes in policy or Taxation. For example, if a new government comes to power and changes the Tax Laws, it may make it more difficult for businesses to operate. In addition, political instability can lead to social unrest, which can disrupt production and damage infrastructure.

Natural disasters can damage or destroy core industries, leading to production disruptions and job losses. For example, a hurricane that damages a factory may force the factory to close for an extended period of time. In addition, a natural disaster can damage infrastructure, making it difficult for businesses to transport goods and materials.

The challenges facing core industries are complex and interrelated. There is no easy solution to these challenges, but it is important to understand them in order to develop effective policies to address them.

What are the problems of core industries?

Core industries are the industries that are essential to the functioning of an economy. They include industries such as energy, transportation, and manufacturing. These industries are often large and complex, and they can be difficult to manage.

Some of the problems that core industries face include:

Competition from foreign companies: Core industries are often subject to competition from foreign companies. This can be due to lower labor costs in other countries, or to government subsidies that give foreign companies an advantage.
Regulation: Core industries are often subject to a great deal of regulation. This can make it difficult for these industries to innovate and compete.
Infrastructure: Core industries often rely on infrastructure, such as roads, bridges, and power grids. This infrastructure can be in need of repair or replacement, which can impact the performance of these industries.
Labor shortages: Core industries often face labor shortages. This can be due to a number of factors, such as an aging workforce or a lack of skilled workers.
Environmental impact: Core industries can have a significant environmental impact. This can be due to emissions from factories, or from the extraction of Natural Resources.

What are the solutions to the problems of core industries?

There are a number of solutions to the problems of core industries. Some of these solutions include:

Investing in research and development: Core industries need to invest in research and development in order to stay competitive. This investment can help these industries to develop new technologies and products.
Improving infrastructure: Core industries need to have access to reliable infrastructure. This infrastructure can be improved by investing in maintenance and repairs.
Attracting and retaining workers: Core industries need to attract and retain workers. This can be done by offering competitive wages and benefits, and by providing Training and Development opportunities.
Reducing environmental impact: Core industries need to reduce their environmental impact. This can be done by investing in new technologies, and by adopting more sustainable practices.

What are the benefits of solving the problems of core industries?

Solving the problems of core industries can have a number of benefits. Some of these benefits include:

Increased economic growth: Core industries are essential to the functioning of an economy. By solving the problems of these industries, we can help to boost economic growth.
Improved living standards: Solving the problems of core industries can help to improve living standards. This is because these industries provide jobs and contribute to economic growth.
A cleaner Environment: Solving the problems of core industries can help to improve the environment. This is because these industries can reduce their environmental impact.
A more secure future: Solving the problems of core industries can help to create a more secure future. This is because these industries are essential to the functioning of an economy.

Which of the following is not a core industry?
(A) Iron and steel
(B) Automobile
(C) Software
(D) Power generation
Which of the following is not a problem faced by core industries in India?
(A) Lack of investment
(B) Outdated technology
(C) Low productivity
(D) High demand
Which of the following is a measure taken by the government to address the problems faced by core industries?
(A) Providing subsidies
(B) Offering tax breaks
(C) Investing in research and development
(D) All of the above
Which of the following is a positive impact of core industries on the economy?
(A) They generate EMPLOYMENT
(B) They contribute to exports
(C) They provide raw materials to other industries
(D) All of the above
Which of the following is a negative impact of core industries on the environment?
(A) They emit pollutants
(B) They consume natural resources
(C) They generate waste
(D) All of the above
Which of the following is a measure taken by the government to address the environmental impact of core industries?
(A) Imposing emission standards
(B) Promoting RENEWABLE ENERGY
(C) Investing in pollution control
(D) All of the above
Which of the following is a goal of the government’s policy towards core industries?
(A) To make them globally competitive
(B) To reduce their environmental impact
(C) To ensure their long-term sustainability
(D) All of the above
Which of the following is a challenge faced by the government in achieving its policy goals for core industries?
(A) Lack of resources
(B) Bureaucratic red tape
(C) Political interference
(D) All of the above
Which of the following is a way in which the government can overcome the challenges faced in achieving its policy goals for core industries?
(A) By improving coordination between different government departments
(B) By making the process of obtaining approvals more efficient
(C) By reducing political interference
(D) All of the above
Which of the following is the most important factor in the success of the government’s policy towards core industries?
(A) The commitment of the government
(B) The availability of resources
(C) The cooperation of industry
(D) The support of the public

The correct answers are:
1. (C)
2. (D)
3. (D)
4. (D)
5. (D)
6. (D)
7. (D)
8. (D)
9. (D)
10. (A)