True to the Guru's word and because of the foresight of the Maharaja of Nabha, Partap Singh, Mandi Gobindgarh developed into a major steel town after the 1940s. The two key concessions that the Maharaja had then offered made it possible for this agriculturally fertile area to become a centre for steel. Entrepreneurs were exempted from the application of the Iron and Steel Order, 1941, and also from filing of income tax returns. This had attracted people from Calcutta and Karachi, Lahore and Amritsar to put up units here. Soon, amidst verdant fields and a flourishing anaj mandi, dotted with flour and oil-press mills, ginning factories, there sprouted re-rolling steel mills and induction furnaces that changed the face of the landscape.

Everything changed with the formation of Pepsu in August, 1948. The Iron and Steel Order was restored and income tax was imposed. Over the years, government policies and unforeseen events, like the Bangladesh War or the decade-long phase of terrorism influenced the fortunes here. In the earlier days, recalls Rattan Paul Bhatia, ''The daily rates of iron and steel were determined in India only when Mandi Gobindgarh units announced the day's rates. But slowly, everything changed''.

Bhatia remembers how his ancestors were among the first to set up a unit here and how with the passage of time, this steel town faced many ups and downs and how he had seen many fortunes change hands, overnight. Yet, the resilience of the entrepreneurs enabled them to survive the vicissitudes of time! This despite the fact that, as in the past and even now, 90 per cent of the raw material is imported from far-off places within and outside the country and 75 per cent of the finished rolled products are still marketed outside Punjab. Only some special sections of steel, of late, are now in demand in the state.

As a labour-intensive industry, it has changed the economies and incomes of thousands of families, encouraged ancillary businesses and generated employment. It has has also contributed to the pollution of air and water. There is no labour unrest. The industrial peace and employer-employee relationship has gone a long way in helping the town grow and expand, if not develop the way a townplanner would have liked.

On an average, an unskilled worker earns up to Rs 2,500 per month and a skilled worker nearly Rs 3,500 per month. Apart from some permanent labour employed by the industry, a large number of labour works on contract and its engagement is selective.

A cross-section of workers admitted that despite the closure of units, there was still work around. The scare of large-scale retrenchment did not haunt them. ''Many of our colleagues have found better jobs elsewhere. We send good remittances back home as well''. Working conditions being tough, the presence of women labour is insignificant.

It is because of the large presence of workforce that the town is plastered with posters urging them to get tested for HIV / AIDS. Yet, the town owes its vibrancy to the 20,000-odd labour force. Its economy and lavish lifestyles can be attributed to the huge money minted by the steel re-rolling mills when the controls and quota regime were operative and again when there was complete decontrol. That also proved to be counter-productive. The sharp fluctuations in iron and steel trade affected the town between 1992 and 1995-96.

A recent study of pollution by the PGI has detected a high incidence of chest diseases, tuberculosis, asthma etc, due to air pollution. For controlling water pollution, the industry desires that the Pollution Control Board help the Municipal Council install a ''biological oxidation'' plant based on biotechnology.

Enquiries revealed that those who had shifted outside Punjab made a lot of money. The earnings that they ploughed back into housing and expansion of units back home, helped them make a comfortable living. The town today overflows with nearly 15,000 private cars of all makes, almost every home also has a bar with the choicest brands of whisky.

Earlier, the neo-rich youth would drive off to Chandigarh or Patiala or Ludhiana for a pleasure jaunt, often returning home late at night. However, with two clubs in town that is no longer necessary. "With the proliferation of mobile phones, locating children has become easier. But the present-generation entrepreneurs are still bogged down by corrupt government systems," sighed a businessman father, looking at his son supervising the unloading of scrap.

Lack of technology and modernisation

The dawn of new reforms that lit up the country's economy and opened it to the world in 1990-91, cast a dark shadow over this ''Steel Town''. This triggered off recession and led to a decline because due to policies of liberalisation and privatisation, similar industries had mushroomed elsewhere, close to sources of raw material.

The reforms lifted the veil from India's economic face and by 1995-96 controls were also abolished and the quota system withdrawn. Without techno-economic feasibility studies, the financial institutions opened their purse strings to advance loans. In that mad rush of making money and expanding the industrial base within and outside Mandi Gobindgarh, the entrepreneurs forgot to modernise their units, bring about automation and improve quality. The iron and steel industry had hit the glass ceiling.

Thus, technological progress bypassed the industry, as it had failed to cash on it to update its operations, modernise working and replace machinery that had become obsolete. Mismanagement creeped in. The real crash came soon after 1995-96, when the industry came face-to-face with stiff market competition from units outside Punjab. It was too late to catch up with new technology!

Nevertheless, now automation and upgradation of technologies and techniques is on the agenda again, says Chanan Singh Matharoo, a self-made man. Since the steel cap has cracked, there is sudden concern.

Mathraoo adds, "As entrepreneurs we did not think of diversification or branching out into ancillary units or manufacturing of engineering goods etc''. He candidly admits that since this never occurred to them in the obtaining circumstances, now ''our children are reluctant to soil their hands or sweat out in the heat, dust and grime that go with this industry. Nevertheless, new enthusiasm is being re-kindled and the presence of the Regional Institute of Engineering Technology here is expected to once again turn the tide to make us technology- savvy''.

Owing to the distortions that have crept into the trade, the town has earned the acronym—''Steal town''. It suffers as much due to a corrupt politico-administrative system, as it does from market forces that have made trade highly competitive and un-remunerative. A high per unit cost of production of steel and overhead charges have added to the liabilities of the industry, paving the way for malpractices that are destroying the trade!

Ironically, though the traders and bureaucracy harbour mutual suspicions, the two have also joined hands in perpetuating corrupt practices. The traders admit to indulging in unscrupulous practices, compelled by unequal market competition, trade compulsions and stifling regulations.

On condition of anonymity, several industrialists and bureaucrats shared many secrets and talked of the ''illegal'' modus operandi of the trade. They said that to compete in the ''grey market'', it was the trade's compulsion to maintain ''duplicate'' books of accounts or kutcha-khata for the purpose of income tax and sales tax. There were also allegations of steel units stealing power, manipulating profit margins through commission agents or ''passers'', who together number around 400.

The trade circles say that for a ''corruption-free'' environment, the government should not ''police'' in order to enforce archaic regulations but instead act as a ''facilitator'' to supervise and suggest alternatives to industrialists' problems and needs. Sources also revealed that it was in the records of the state Home Affairs Department how the police ( read vigilance) harassed the traders and even officials concerned with tax collections. In the process, they also got their share. Complaints against vigilance officers of Mandi Gobindgarh, Muktsar and Moga are pendingwith the Home Department.

The latest grouse of the industry is the introduction of Exim forms form September 1. A strong resentment is brewing against this system. Already, complaints have surfaced of benami filling of Exim forms at the Information Collection Centres (ICC), where these forms are stocked, in an unauthorised manner. The ''fictitious'' entries were made with the connivance of traders and officials, revealed sources in the government. Neither bureaucrats nor businessmen deny corruption or evasion of central excise duty, sales tax or other trade malpractices indulged in during sale and purchase, mostly done underhand.

Asked about this nexus, Amarjit Goyal, Chairman and Managing Director of Modern Steels Ltd, said, ''About 5 per cent to 7 per cent people are guilty of such malpractices in all walks of life. But why harass the rest, the majority? If the genuine demands and needs of the industry are met and their problems resolved and the ICCs are manned by officers known for their honesty and integrity, there will be less hassles. We oppose Exim forms''.

The government, it is learnt, may roll back its decision on Exim forms because of political exigencies and unrest building up in the business and trade circles, say sources.

Analysing the factors stifling the iron and steel industry, spread over a 10 km radius of Mandi Gobindgarh and encompassing Amloh, Sirhind and Rajpura, Goyal said: "The most crippling shock has come from the high power tariff. There should be a consolidated rate of Rs 3 per unit. The industry should be allowed to import power from any source and billed for "wheeling" charges. Power should be affordable and adequate''. He continued, ''The cost of production of one tonne of steel here is much higher than elsewhere because of locational disadvantages, high price of raw material and freight charges from coal pits and mineral fields, oil refineries, sea ports and where sponge iron is available. Octroi is another obnoxious tax''.

The story of the steel industry in India dates back to 1902, when Tatas had set up their first steel plant. The large steel plants with a capacity to produce 20 lakh to 40 lakh tonnes steel, annually. These have big blast furnaces that use iron ore and coal as raw material. There is the mini-blast furnace industry with a capacity of 4 lakh to 5 lakh tonnes, per year, using metallurgical coke, imported from China and Australia. Now it is available in India.

There are 80-odd induction furnaces, operated on electricity that melt scrap, called ''black gold'', for the iron and steel industry, sponge iron etc, converting it into kulfi or iron ingots that are supplied to 250-odd steel re-rolling units here that shape them into ''long or flat'' or patra (strips) or ''rolled'' products.

The finished goods from here are sent as far as the South. Within the state, the supply is limited to manufacture of engineering goods, wire cables, cutting tools, construction works, furniture, pipes, shuttering etc.

Several mini-steel plants came up in the country in 1970s. Punjab had 11 of these plants, out of which seven have closed down in the past 10 years. Of the remaining, three are in Ludhiana and one in Mandi Gobindgarh. These power-intensive plants have electric arc furnaces and use melting scrap, sponge iron and pig iron. There are also about 24 iron foundries and eight ''refractory units''.

So depressing is the scenario that nearly 100 units have closed in Mandi Gobindgarh in the past 10 years or so. More are likely to shut down, if corrective steps are not taken. Several entrepreneurs have disposed of their units and carved out plots, residential and commercial, for sale.

The industry's margin of profit is believed to come from manipulating 16 per cent central excise duty and 2 per cent sales tax, and from the clandestine sale-purchase transactions in a highly competitive market. There are apprehensions of the industry further losing its edge, unless the government takes steely decisions. The cause of the industry should be espoused politically and administratively.

Relief in power tariff and freight equalisation or freight subsidy is the major demand and concern of the industry today. The President of the Mandi Gobindgarh Steel Chamber of Commerce and Industry, J.P.Sharma, while echoing these demands said that despite repeated representations to the authorities concerned, no tangible results were visible yet. Sharma summed up the factors that have blunted the steely edge of the town and suggested possible remedies to revive the industry.

What has crippled the industry is:

• Repeated increase in sales tax on petroleum products.

• Withholding of permission by the Pollution Control Board to allow use of ''pulverised'' coal in the furnaces, instead of furnace oil.

• Financial crunch and market speculation.

• A high freight rates and tax incidence on raw materials.

• Not providing ''test certificate'' of proximate analysis on quality of coal, its calorific value and ash content.

• In the absence of SAIL helping the industry with raw material, billets and blooms, the demand is that the raw material should be supplied by the Punjab small industries and export corporation.

• Another cause of the major setback to the iron and steel industry is the recent package of incentives that the Centre has announced for Himachal Pradesh, J & K, Uttaranchal etc. All units coming up in these states will, henceforth, for 10 years, enjoy a complete tax holiday, including exemption from paying income tax.

Mandi Gobindgarh completed 100 years of its inception, last year. A sprawling town with a population of nearly 1 lakh, it is spread on either side of the Grand Trunk Road as well as the Amritsar-New Delhi railway line.

It has a rich Municipal Council with an administrative block that has centrally air-conditioned offices and rest rooms. The Council has even given loans to other needy councils of the state. It has developed a beautiful rose garden and more parks are being developed. The town has no open drains, gets a 24-hour water supply and is cleaner than many other towns of Punjab.

There is no truck union though trucks number around 4,000. The place needs a truck stand to ease chaos and congestion. There has been delay in commissioning the truck stand, for which 72 bigha land is earmarked, because of slow process of negotiating rates of the land to be acquired for the approach road to the stand.

Traffic is a major road bottleneck, given the heavy vehicular movement, rush of man and bullock-pulled carts, pony-driven rehras and manually hauled push-carts etc. A pressing requirement is also of a railway overbridge and two subways across the Grand Truck Road. The industrial focal point complex, a later starter, needs more civic facilities and infrastructure. The town has good educational institutions.