Steel addl secy blames 'marketing lethargy' for low rural per capital consumption

Rural India, in these COVID-19 times, has come to the rescue of the steel industry and continues to provide solace to the domestic steel segment. Therefore, the time is now right to create an ecosystem whereby the Ministry of Steel (MoS) can interact closely with the ministries of rural development, agriculture, animal husbandry and food processing to arrive at a roadmap for increasing rural steel consumption in the country, Rasika Chaube, Additional Secretary, Ministry of Steel, Government of India, said. She was speaking at a webinar organised on October 20, 2020 on "Aatmanirbhar Bharat: Fostering Steel Usage in Rural Economy - Agriculture, Rural Development, Dairying and Food Processing Sectors", organised by the MoS in association with the Confederation of Indian Industry (CII).

Chaube said that two-third of India's population lives in rural India and 46% of the national income comes from here which means there is immense potential for the steel sector. However, she rued that the rural per capita consumption of steel is currently at 19.6 kg as against the national per capita consumption of 74.7 kg and the world average of 22 kg. "We can blame it on the marketing lethargy, absence of a rural specific product development strategy," she said.

Whatever growth has taken place in domestic steel consumption till date has largely been in the urban areas and their peripheral locations with consumption of steel in rural India relegated to the backstage. However, she said, in the last few years the rural landscape and rural demand has undergone a major shift because of several proactive steps taken by GoI. "These include direct bank transfer, rural development focused Budgets, higher minimum support prices, farm mechanisation initiatives and various other schemes like PMAY, PMGSY, Swachh Bharat Mission, Pradhan Mantri Krishi Sinchai Yojna, to name a few," she said.

Due to such schemes, it is expected that rural farm income will double by 2022 and will continue to grow, and because of which it is expected that the per capita consumption of steel will go up to around 38 kg by 2030-31, she informed.

Chaube referred to a 2019 study that MoS and the Joint Plant Committee (JPC) had commissioned IMRB to carry out, on the consumption of different types of steel items in rural India and track the prospects of future growth. It had revealed that while some states like Goa, Maharashtra etc scored high on per capital rural steel consumption, other states were lower than the national rural average of 19.6 kg. "Since steel usage is a direct reflection of economic growth of any region, state or country, there is thus a need to target some states specifically and all states in general to ensure that the rural per capital steel consumption comes close to the national per capita steel consumption of 74.7 kg," she stressed.

The study had also revealed, Chaube said, that despite the disparity that exists among the states, the product categories which contribute to rural per capita steel consumption are more or less common and include rural housing, community building, infrastructure like rural roads, culverts, farm mechanisation which includes threshers, balers, tractors and vehicles like two- and four-wheelers.

The study also confirmed that because of the initiatives of GoI and the impetus given to the rural economy, consumption of steel in absolute terms will increase from the existing 17 MnT out of the total 109 MnT of steel consumed in India to around 37 MnT by 2030-31. "This is validated by the fact that during the initial COVID period, when most steel majors were actually operating at 50% of their capacity, nearly 70% of their production was being exported and the balance was getting consumed in the rural market," she reasoned.

Chaube said the webinar is aimed at gaining a first-hand insight into the likely steel demand which would arise in the rural sector and share the advantages and versatility of steel and simultaneously provide steel-intensive solutions to the policy makers in the rural sector so that the metal can be considered as an option and be used in areas and products where traditionally it is not used. For instance, modular steel houses, metal roofs, steel doors and windows, steel solutions for rainwater harvesting, sanitation etc.

~Madhumita Mookerji