The clouds on the horizon


By Tensing Rodrigues*

Though it is not easily perceptible the economic consequences of the stoppage of mining in Goa seem to be going deep. The wearers probably know where the shoe is pinching. This article is for those who have already felt the pinch or can see the crunch coming.  Seeing one’s savings drying up is painful; particularly when one has got used to an easy cash flow. There is little that can be done to stop the tide but if one can be prepared the pain perhaps becomes a little bearable. Being prepared means knowing the reality. We are trying to look at the prospects of mining in Goa, from the point of view of a common investor, whose savings up to now have come directly or indirectly from mining?

Mining dependency is a multilayered truth. It depends upon where in the income chain you are situated. You could be a mine-owner or you could be employed in an enterprise that is engaged directly or indirectly in the activity of extraction and transport of mineral ore or you may be selling your goods and services in a market where the first two constitute a big chunk of consumers. The purpose here is not to make a case for or against resumption of mining. Rather it is to help the ‘affected’ to make a mid-course correction in their investment plans. That you need to make a correction goes without saying. The flow of savings has dried up, worse still the need to draw upon the existing investment is becoming urgent. So a correction is necessary. Notwithstanding the fact that such a correction may not be less than traumatic.

What it least requires is living on false hopes. I agree the hopes of resumption of mining have not totally disappeared. Let us not go into the technicalities. Instead, let us understand the dynamics of the situation, and realise the truth. Resumption of mining activity is no longer a matter of politics or legalities. Stark economic realities have now set in. The initial thrust required to get the operations going, is huge and it will take a lot of time. So it requires a leap of faith into future. And that is what is most lacking. China, for one, has become a big unknown variable. Even without anything else the mining boom was to come to an end; the politics and legalities have been mere scapegoats. So take the hard decision and review your financial plans before it is too late. Opportunities are there but they need to be discerned and taking them is not going to be easy.

The first truth we learned in risk management was the need for foresight. Even while the going is good, to look for points where things can go wrong because once they do, it is already too late. But that is probably a closed chapter now for those who have been affected. But for those for whom the going is still good, this is the time to do some risk assessment. This advice is particularly to those whose financial plans depend on the cash flow from the other twin of mining – the tourism sector. Like mining, tourism too carries under its coat of glitz an irrevocable expiry date. If you have seen the signs very good, if you have not look out for them.

I shall not elaborate on that; rather leave it to you to work out. I shall only quote from a report in Russian Travel Digest released just before this winter season began: “The Indian state of Goa, more than half of the foreign tourist flow to which comes from Russia, is still behind other mass winter destinations by popularity. The prices for the direction for the year increased by 22 per cent however.” For the rest, let me share with you a personal experience, which I find very telling.

We have been very fond of Munnar since the time we first visited it, may be some twenty – twenty five years back.  It was a very small sleepy town then probably for most just a transit halt to the Top Station or the destinations beyond. There was a Forest Bungalow, a church with some rudimentary accommodation for travelers and a little away, the Tata Tea set up.

There were a few shops selling tea powder, cocoa powder and spices; very small, dark and dingy. And a few equally shabby shops selling some brown sweets in plastic packets sealed over a candle, which we realized were chocolates. But at the end of two days sojourn, we realized the stuff – tea, spices, cocoa powder and chocolates was superb and we returned to Munnar with unfailing regularity thereafter to pick our supply. Till last summer. The town had become so glitzy we found it was no holiday.

And the stuff we picked up was crap. And then came the deluge. Even if that was not to happen, Munnar was destined to die, sink in what an expert on tourism has called the ‘mierda’ of its own making.


*The author is an investment consultant. Readers can send their comments and queries to [email protected]