Vidarbha region is a hub of steel manufacturing... Sorry, it WAS! Once a thriving hub of steel manufacturing, Vidarbha is now witnessing an alarming decline in the sector because of various unfavourable factors. High volatility in raw material prices in international markets and intense competition from neighbouring States have taken a toll on the sector. However, the primary culprit is exorbitant power tariff in Maharashtra, which has forced over 40 mid-sized steel units to shut down in the last two decades. Till 2005-06, there were about 65 units in the steel sector in Vidarbha region. These manufactured structural steel, TMT bars and steel pipes. There were 30,000 to 35,000 employees working in these plants located in various industrial areas of the region including Butibori MIDC, Hingna MIDC, and Kalmeshwar MIDC areas. Units such as B S Metal in Butibori, FACOR Ltd in Hingna MIDC area, Associate Steel in Kalmeshwar MIDC area, B S Ispat in Warora, Chandrapur; Rajuri Steel in Chandrapur, Nandkishore Steel in Butibori, Kamboj Ispat in Butibori, Karamtara Engineering in Butibori, and Sidhbali Ispat in Chandrapur lost economic viability and were shut down.

 

These manufacturers used to cater to the consumers in Western Maharashtra, South India and other regions in the periphery of 500 km. Some manufacturers told ‘The Hitavada’ that till 2005-06 power tariff in Maharashtra was at par with that in the neighbouring States. However, things started changing gradually when the State-run power distribution company -- Maharashtra State Electricity Distribution Company Limited (MSEDCL) -- hiked the cost of power. The following 10-12 years saw the situation deteriorating, leading to closure of over 40 units one after the other, leaving more than 20,000 employees jobless. Approximately 500 employees work in one mid-sized steel manufacturing unit. Surprisingly, there appears to be no one to take cognisance of these many people losing their jobs. They have been reduced only to numbers, statistical detail! But, thousands of people losing their jobs has socio-economic and cultural implications. For, when one man loses a job, the socio-economic of his family of four/five members gets dented seriously. The psycho-social dimension of impact on a family’s status is often ignored in the grander scheme of things. The breadwinner losing a job has adverse impact on education of children, overall nutrition and healthcare of the family, aspirations, and even development of ability to rise above the challenges. Also, the psychological impact builds irritation within the family, disturbing its peace. In some cases, those who lose the jobs migrate elsewhere for another job in another sector for the sake of livelihood. For Nagpur, this means loss of a person skilled in steel sector.

 

The loss of a skilled person is a cultural loss of a place, society. But, the compartmentalised approach does not enable the society and policy-makers to think of such ramifications of the higher power tariff leading to shutting down of units to loss of employment to socio-economic and psychosocial impacts. One of the regional manufacturers explained that steel manufacturing was a power-intensive sector, which consumed about 1,100 units of power to make one tonne of steel products. “Today, the mid-sized steel manufacturers in Maharashtra have to pay an average Rs 12 per unit for power supply. But, their counterparts in Chhattisgarh pay only Rs 9 per unit for the same,” said a manufacturer on the condition of anonymity. This disparity has enabled Chhattisgarh-based manufacturers to dominate the market, selling steel at lower prices and making it challenging for local manufacturers to compete. “Despite numerous pleas to Maharashtra Government for subsidised power rates, the sector continues to suffer as no one has taken cognisance so far. The consequences are far-reaching with entrepreneurs, traders, and employees facing an uncertain future,” said another manufacturer in Nagpur. Local manufacturers argue that the Government’s failure to address their concerns has allowed Chhattisgarh-manufactured steel to occupy a dominating position in the market. With lower production costs, Chhattisgarh-based manufacturers can sell steel at a lower price and Vidarbha-based manufacturers are unable to compete because of higher power tariff here. This has led to a surge in steel imports from Chhattisgarh, further exacerbating the crisis. When an industry closes down or migrates, it leaves the area in an economic crisis, which is not documented by any Government. Industry experts warn that if the Government fails to intervene, the entire sector may collapse, resulting in widespread unemployment and economic devastation.

 

The need for subsidised power rates and a level playing field is urgent, they emphasise. Commenting on the matter, Rajesh Sarda, President of Steel & Hardware Chamber of Vidarbha, said, “As the situation continues to deteriorate, the Government must take immediate action to save Vidarbha’s steel industry. The region’s entrepreneurs, traders, and employees are counting on it.” The prices in international markets are volatile, meaning they may vary. However, for the steel units in the industrially backward Vidarbha region, high power tariff has been a constant thorn in the flesh. Irrespective of the political party in power, the Governments of the day have been making promises of Vidarbha’s industrial development. But, much of their effort has been visible only in the form of events, without much of a follow-up to see the plans and Memorandums of Understanding signed in such events turn into reality. In fact, there has been no study taken up to get to the real reasons for closure or migration of industries out of Vidarbha. If such a study has been done, it has not been made available for the general public to have an informed opinion about the problems. One suspects that this has been done deliberately. Because, if people have an informed opinion about the problems, they will make informed suggestions to find solutions, which, probably, no Government wants to take upon itself. For rhetoric is more convenient than rigorous effort to find a solution. But, this is not the situation only in the steel sector. The crisis is brewing even in the hospitality sector. Though the boom in travel and tourism has led to opening of many hotels, higher power tariff in Maharashtra is preventing hotels in forest-rich Vidarbha region from encashing the full benefits. (To be continued)