Top Four Types of Economic Resources available in India: Land Resources, Mineral Resources, Water Resources and Forest Resources

Economic Resource Type # 1. Land Resources:

Land is the most important gift of nature to mankind. Man and other living beings use land for their habitation. Most of the primary productive activities are governed by the land availability. These activities are essential for human existence. Land is not only required for agriculture, but also for industrial development.

Nature of land decides its uses. Important forms of land include agriculture land, culturable waste land pastures and grazing, land area under forests, barren land, follow land etc. Land endowments of a country do not depend merely on the size of its geographical area. The quality of land, particularly fertility of soil, is as much important as the size of the area. However, the level of progress will depend on its optimum utilization.

Need of Land for Development Perspective:

Rapid economic growth is possible if a part of land which is currently used for agricul­tural purposes, or degraded forest land can be made available for building much needed infrastructure, establishing new industrial units, under-taking mining and accommodat­ing the inevitable expansion of urban settlements.


Now we are facing various develop­mental issues with regard to land: how is the land that is needed for these activities to be obtained, how are the existing owners of the land or those dependent on it for their livelihood to be compensated and how are the nation’s interests in preserving food secu­rity to be protected?

These problems have arisen in large part because the legal framework under which land has been acquired is outdate. It is based on the principle of ’eminent domain’ under which the State can forcibly acquire land for a public purpose at prices which do not reflect the market price nor provide any premium to reflect the fact that the acquisition is forcible.

Where the acquisition is of forest land, which is not owned by tribals but on which the tribals have traditional usufructuary rights, the tribal communities have often not been consulted and the displacement of tribal population has not been accompanied by well-planned resettlement and rehabilitation programmes.

Land Use Strategies:


Since the total supply of land is limited, land must be used most efficiently for whatever purpose it is allocated. The State Governments should rationalize the process of choos­ing land for industrialization. They should aim at developing land clusters for industry, taking into account the needs of specific industries so that industries that are synergistic can come up in one cluster with appropriate infrastructure (like auto, pharmaceutical, leather, textile clusters).

Other factors like availability of water, environmental issues, and extent of population displacement need also be taken into account while identifying land for industrial clusters. It is necessary to formulate guidelines for industrial land productivity for various types of industries based on global benchmarks and this should determine the extent of land use by the industry.

There are three important issues with regard to use of land for growing need of industrialization and urbanization:

(i) India is using its urban land very inefficiently for urban needs because it is permit­ting sufficient substitution of capital for land in line with international practice. This is the result of very low FAR and FSI permitted in India (less than 4 in India compared with 10 in the rest of the world).


There is a lingering bias in India against vertical cities and a preference for horizontal spread. Horizontal cities use more land than vertical cities. Moreover urban utilities such as water and sewerage as well as public transport can be more efficiently provided in vertical cities.

(ii) Land use planning for urban development must be done by considering larger areas together so that transport, sewerage, and various facilities required for a good community, viz. schools, hospitals, shopping, and recreational facilities can be suitably provided for. The plot-by-plot method of permission to build and develop results in ‘good building complexes’ within ‘bad cities’ with inadequate public infrastructure, as is happening in the peri-urban areas around the country’s major cities.

(iii) Urban land when it is scarce, as it will be with urban growth, acquires great value. At the same time, with urban growth, the state and local urban bodies are hard pressed to provide the urban infrastructure required. Therefore strategic man­agement of the land assets in and around urban areas is essential for ensuring that governments will have the financial capacities required to provide infrastructure and public services.

Land Management Strategy:


It relates with government policy formulation and its imple­mentation.

It examines the following issues:

(i) Which land should be used for which purpose?

(ii) How should land be acquired for the new purpose (industry/urban)?


(iii) What form and quantum of compensation and rehabilitation should be provided to those whose lands are acquired?

Land Acquisition and Rehabilitation & Resettlement Bill, 2011:

The Government has already placed the Land Acquisition and Rehabilitation & Resettle­ment Bill, 2011 in Lok Sabha for necessary discussion. The reason for combining the two into a single legislation is that land acquisition and resettlement and rehabilitation (R&R) need to be seen necessarily as two sides of the same coin. R&R must always, in each instance, necessarily follow upon significant acquisition of land. Not combining the two within one law, risks neglect of R&R which has been the experience thus so far.

The Bill seeks to balance the need for facilitating land acquisition for various public purposes, including infrastructure development, industrialisation and urbanisation, while at the same time meaningfully addressing the concerns of farmers and those whose livelihoods are dependent on the land being acquired.


The method of fixing the price at which land will be acquires need to be carefully studied to ensure that it is fair to those whose land is acquired while also not being unrealistically high. The R&R package includes provision for families whose livelihood is primarily dependent on the land being acquired, even if they do not own property.

The definition of public purpose for land acquisition includes strategic purposes, such as armed forces and national security; infrastructure and industry, where benefits largely accrue to the general public; land acquired for R&R purposes; village or urban sites for residential purpose for the poor or educational and health schemes; land needs arising from natural calamities, and also land for private companies for public purpose properly defined.

It also provides for acquisition of land for a private party provided it is for a public purpose. The provisions of the draft Bill will be considered by the Standing Com­mittee which will take into account the representations that may be received to ensure that the Bill enshrines best practice with appropriate balance.

Economic Resource Type # 2. Mineral Resources:

Availability of minerals plays a crucial role in economic development of a country. Pro­duction of iron and steel, aluminium, cement, coal, petroleum and fertilizer industries is totally governed by the availability and optimum utilization of these mineral resources.


These resources create conditions for large-scale industrialization and thus enable a country to reach a high level of development. Coal and petroleum are mining industries and their products are sources of energy. Iron and steel industry also provides the basis for all round industrial growth. Industries based on mineral resources arc generally located at the source of raw materials.

The most important characteristics of minerals are that they are practically lost, once used. They are non-renewable resources. Thus, there is growing need to conserve these resources and to recycle them. The social and economic development of country is largely governed by resources in most economical way. Mineral resources are important natu­ral resources which help in the industrial development and well-being of a country.

India’s mineral resources are sufficiently rich and varied to provide the country with a strong industrial base. The country is particularly rich in the metallic minerals of the ferrous group such as iron ores, manganese, chromate and titanium. It has the world’s largest reserves in mica and bauxite.

The situation is also satisfactory in coal, feldspar, fluorides, limestone, dolomite and gypsum. But the reserves of petroleum and some non- ferrous metallic minerals especially copper, lead, zinc, tin, graphite are inadequate. Country fulfils internal demands for these metallic minerals by importing them from other coun­tries.

Economic Resource Type # 3. Water Resources:

Water resources are divisible into two distinct categories—the surface-water resources & the ground-water resources. Each of these categories is a part of the earth’s water circulatory system, called the hydrologic cycle, and is ultimately derived from precipita­tion, which is rainfall plus snow. They are interdependent and frequently the loss of one is the gain of the other.

Water resources are sources of water that are useful or potentially useful. Uses of water include agricultural, industrial, household, recreational and environmental activities. Virtually all of these human uses require fresh water.


India is rich in water resources, being endowed with a network of great rivers and vast alluvial basins to hold groundwater. Conditions, however, vary widely from region to region. Whereas there are some chronically drought affected areas, there are others which are frequently subject to damage by floods.

Water is essential for agriculture and country’s overall development. Therefore, opti­mum development and efficient utilization of water is of great significance. This has been lately recognised by the government also and thus there is stress on integrated and multi-disciplinary approach to planning, formulation and implementation of projects.

Presently the highest priority has been accorded to drinking water followed by irriga­tion, hydro-power and industrial uses. However, in terms of utilization, irrigation ac­counts for 87 per cent of the water utilization and domestic and industrial uses account for the remaining 13 per cent.

Ninety-seven per cent of the water on the Earth is salt water. Only three percent is fresh water; slightly over two thirds of this is frozen in glaciers and polar ice caps. The remain­ing unfrozen fresh-water is found mainly as groundwater, with only a small fraction present above ground or in the air.

On the whole, under the pressure of rapid population growth, the available resources of water are being developed and depleted at a fast rate. Thus the situation seriously underlines the need for taking up integrated plans for water conservation. There is growing need for better utilization for every agro-ecological area to meet the increasing demands of irrigation, water harvesting, human and livestock consumption, expanding industry, hydro-electric power generation, recreation, navigation and other uses.

Growing Need of Water Management:


Water management includes a wide and diverse range of problems, objectives and means of resolution etc.

Following steps are necessary for effective water management:

(i) Establishment of Pani Panchayats and similar PRI-based institutions.

(ii) Focus on Command Area Development and the rehabilitation and physical modernisation of existing major irrigation systems.

(iii) Extensive rainwater harvesting assisted by space-based maps with active ground- trudging and convergence with other development schemes.

(iv) Comprehensive aquifer mapping and extensive ground water recharge.


(v) Move towards sprinkler and drip irrigation and away from flood irrigation.

(vi) Assuring irrigation to much more land far beyond the present 42.0 per cent of arable land.

(vii) Strengthening of drinking water resources.

(viii) Integration of these activities with existing surface reservoir based canal irriga­tion.

Water Resources during Twelfth Plan (2012-17):

Managing water scarcity in the Twelfth Plan period is in some ways more daunting. India’s available supply of fresh water is the same as it was 5,000 years ago, and the population has grown and so has the GDP, with a concomitant increase in demand for water. Until recently, official estimates showed the available supply of water to be well above total demand, albeit with areas of regional scarcity.


More recent studies indicate that the demand for water at present is roughly equal to supply for the country as a whole and this near balance at a national level hides wide regional variations with acute shortages in many parts. Since growth in GDP implies expanded water use, the water situation can be expected to worsen rapidly. Already, there is evidence of excessive drawal of groundwater in many parts of the country leading to lowering of the water table and increasing salinity, which makes the water less usable for agriculture and harmful for health.

If things are left to business as usual, the situation will worsen steadily. The Twelfth Plan must signal the need for a radically new approach. Since water is largely a state subject, success depends critically on the State Governments. They need to act on both the sup­ply and the demand side.

Supply Side:

On the supply side, action is necessary on several fronts including building storage dams, investing in watershed management to improve surface water retention and ground water recharge, and forcing industry to treat waste water for reuse. Each of these involves costs and we need to priorities between alternative investments keeping relative costs in mind. Traditionally, most of our resources have been absorbed by large irrigation projects.

These are indeed important and need to be pursued to optimize sto­rage, though their implementation needs to be greatly improved. In terms of prioritization we need to do much more on watershed management projects, which involve one-tenth of the cost per hectare as compared to large irrigation projects, have fewer environmen­tal problems, and generally provide a much higher return on investment.

Demand Side:


Efforts at expanding supply are important but they will not suffice and they will have to be accompanied by efforts on the demand side to improve efficiency of water use. About 80 per cent of India’s water use is for agriculture and it is technically feasible with better agricultural practices, to reduce water use in agriculture by 40 per cent to 50 per cent.

For example, the System of Rice Intensification (SRI) enables rice to be grown with much less water than in traditional flood irrigation. However, while it requires less water, SRI requires water to be given at the right time which calls for comple­mentary investments in land levelling drip irrigation, etc.

Additional costs have to be allowed to pass through into the system in the form of higher food prices. Over the longer term, agricultural research will have to factor in the need to achieve greater water efficiency by evolving crop varieties capable of dealing with water stress. This is particularly important given the likely impact of climate change.

One reason why managing the water crisis is more difficult than the energy crisis is that whereas most people recognise that energy has to be paid for, there is much less accep­tance, or even understanding, of the need to price water. Policies are often enunciated on the principle that water is scarce and we must “conserve every drop”, but if water is under priced, there is no incentive to achieve efficiency.

Pricing of canal water in large irrigation projects is supported to be based on the principle of covering operating and maintenance (O&M) costs, but in most places it is priced at levels which cover only about 15 per cent of O&M costs. This eliminates any incentive to adopt less water intensive cropping patterns in the command area, especially among upper end users.

It also leads to poor maintenance of the canal system, which in effect means that although water is severely under priced, farmers have no assurance that they will get the water they need at a predictable time. Farmers would be much better off paying higher prices for water, if this is accompanied by greater predictability of supply of a certain quantity at a parti­cular time.

The first step in evolving a rational water policy is to make a scientific assessment of the available water resources in each basin in the country and then define basin specific strategies for water management. This mapping exercise should be undertaken on a priority basis, with the involvement of the science departments, and should be com­pleted in the Twelfth Plan.

Rational water pricing is important and must be pursued but pricing by itself may not solve the problem since prices would have to be set at unacceptably high levels to get anywhere close to optimal water use. State Governments would therefore be well advised to combine price rationalization with establishment of statu­tory water regulators to determine water allocation for different uses such as household needs, agriculture and industrial use.

A start has been made in some states, e.g., Maharashtra and Andhra Pradesh using somewhat different approaches, but we have a long way to go and we must learn from different experiments, one way of incentivizing the process is to link central assistance for capital-intensive irrigation projects to the implementation of critical regulatory reforms in this area and to undertake parallel work on completing command area development.

A controversial issue that needs to be faced is whether a system of rational management of the country’s water resources can be achieved without bringing in legislation that would empower the Central Government to act in this area. The Constitution provides that the Central Government can determine rational use of water in interstate rivers, provided Parliament passes a law for this purpose.

Regulating Groundwater:

There is also a case for revisiting the various laws in place to regulate the use of groundwater. The present laws only provide for banning new tube-wells in areas where the water table has fallen too far. This only confers a monopoly on exist­ing tube-wells owners who can pump as much water as they wish and sell it to other farmers.

Free power or very cheap power for agriculture provides a wholly unjustified incentive for such activity. At the very least, State Governments should consider imposing a cess on electricity for agricultural use in all areas where the water level has sunk too low, and earmark the proceeds for ground water recharge.

Economic Resource Type # 4. Forest Resources:

Forests occupy a special place in the life and thought of the people. They form an impor­tant renewable natural resource. Forest ecosystem is dominated by trees, their species- content varying in different parts of the world. Forests contribute essentially to the eco­nomic development of our country by providing goods and services to the people and industry.

They are intimately linked with our culture and civilization. Forests occupy an important place among the natural resources of a country. In India, however, forests are neither abundant nor very rich in their products. Presently forests occupy an area of about 6.8 crore hectares which is 22 per cent of the total reporting area.

The distribution of forests in India is uneven. In the north-western part of the country, barely 11 per cent of the area is under forests. In contract, in the central region about 44 per cent land is covered with forests. The Himalayas, and the Terai regions, contain about 20 per cent of the forests while over 75 per cent of the forests are located in Peninsular India.

The Gangetic Plain has even less than 5 per cent of the forests. This uneven distribution of forests in India is not satisfactory from ecological point of view and planned efforts are required to improve it by growing trees in regions poor in for­ests. Even if we take the country as a whole India’s position looks pitiable compared with that of the U.S.A. where per capita land under forests is 1.8 hectares, as against India’s 0.2 hectares.