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Orissa: Miners’ Paradise

By Nachiketa Desai

16 May, 2010

Orissa is experiencing the pangs of an unfolding industrial revolution that seeks to transform this poorest of the states of India into a power house of electricity, steel and aluminum

The slogan - ‘Mining Happiness’ - on the giant-sized bill board greets the alighting passengers at the Biju Patnaik Airport of Bhubaneswar. The same slogan, below the smiling faces of tribal children, runs on the signages posted on the electric poles that stand at regular intervals along the divider of the main four-lane road from the airport to the state secretariat and beyond to the swanky info city.

‘Mining Happiness’ is the catch-line of the recent multi-million-rupee multi-media advertisement campaign of the Vedanta Aluminum Limited, a wholly-owned subsidiary of the London Stock Exchange listed mining giant Vedanta Resources PLC. Vedanta’s advertisement campaign claims the company’s one million ton alumina refinery to be scaled up to five million tons at Lanjigarh in the state’s Kalahandi district, ill-famed for recurring droughts and starvation deaths, will wipe off poverty and bring about all-round development of the region.

Vedanta’s chief operating officer Mukesh Kumar says the refinery at Lanjigarh and the aluminum smelter at Jharsugda together would provide employment to over 20,000 people. Vedanta also plans to set up a university on 6,000 acres of land along the Konarka-Puri sea shore at an investment of Rs.15,000 crore. “We have committed to invest over Rs.60,000 crore in Orissa of which we have so far spent Rs.30,000 crore,” he adds.

The other eye-catching advertisement bill boards in the state capital are those of Tata Steel. These too are on similar lines, carrying the photographs of some tribal boys and girls who, the company says, are the future engineers, doctors and IT professionals, a dream that would be fulfilled once the company’s proposed 6 million ton integrated steel plant comes up in Kalinganagar of Jajpur district, 120 kms North-East of the state capital.

“Global as well as domestic companies started making a beeline to Orissa after 2003, evincing keen interest in setting up heavy industries in the field of steel, aluminum and thermal power all of which need minerals which are found in abundance in the state,” says Priyabrata Patnaik, chairman and managing director of Industrial Investment Development Corporation of Orissa (IDCO).

After the Naveen Patnaik government passed the Orissa Industries Facilitation Act of 2004 which envisaged a single window system for investors wishing to set up industries in the state, there was a rush of companies, both multi-national as well as domestic, for signing memorandum of understanding (MoUs) with the state government.

“Till 2003, there were only small-scale units for making pig iron, sponge iron and steel to the tune of 250,000 tons besides the 50-year-old public sector Rourkela Steel Plant. The new industrial policy brought about a drastic change. Today, as many as 49 companies have expressed their intent of setting up plants in Orissa, envisaging an investment of Rs. 198,149.40 crore to produce 75.66 million tons of steel per year,” says the IDCO CMD.

Korean steel giant POSCO, with a proposed investment of USD 12 billion (Rs 52,000 crore), was among the first major players with plans to construct a world-class, fully integrated steel plant in Orissa with annual production capacity of 12 million tons. Among the domestic players, Tata Steel signed an MoU with the state government in 2004 to set up a 6 MTPA plant.

“By 2015, Orissa would become an industrial power house, producing over 35-40 million tons of steel, 3 million tons of alumina and 1 million tons of aluminum annually while also generating over 30,000 MW of electricity through coal-based thermal power plants,” says Ashok Dalvai, state’s steel and mines secretary. “Of the 49 steel projects for which MoUs have been signed, five are operating fully while 24 have become partially operational,” he adds.

Besides sectors like steel, power, cement and aluminum, investment has also been proposed on ports, universities, hospitals and several SEZs. While Rs.20,000 crore of investment is planned for creating SEZs in 1,077 hectares, Rs. 15,000 is proposed to be invested in setting up the Vedanta university along the Konarka-Puri coast.

Several private ports are proposed to be set up along the state’s 480-km-long coast. The state government has identified as many as 14 sites where ports can be developed. Already, several companies have expressed interest in developing some of these ports. These include Gujarat’s Adani group near the Paradip port, Aditya Birla group’s S.L. Mining at the Chudamani port in Bhadrak district, Navajuga engineering of Hyderabad at Astaranga port in Puri district, Puri Ports Limited at Baliharchandi port also in Puri district and Good earth maritime of Madras at Bahuda muhana in Ganjam district. Already work on three private ports has started. These include the Gopalpur port by the Orissa Stevedores, Dhamra port jointly by TISCO and L&T and Jatadhari port by POSCO.

“The government, through IDCO has already acquired 121,000 acres of land and is in process of acquiring almost equal acreage more for the setting up of these industrial projects,” says the IDCO CMD. IDCO is the nodal agency for identifying and acquiring land both from the government and private parties at strategic locations. The acquired land is then allotted for setting up industries. IDCO extends help in identification of project site and collection of plan and schedule of land from the revenue authorities.

Despite a single-window system in place for getting clearance from revenue, forest, environment, water and electricity supply departments, and IDCO having been empowered for land acquisition, some of the major industrial projects including the proposed steel plants of the POSCO, the 12 – million-ton greenfield steel plant of Arcelor Mittal and Tata Steel and Vedanta’s existing alumina and aluminum plants and proposed world-class university are facing stiff resistance from the local residents, environmentalists and social activists.

As a result, Posco and Tata Steel have not been able to start work on their integrated steel plants, which together would have produced 18 MTPA. Both these steel giants had signed MoUs in 2004 and planned to start production by 2010. The civil construction of the Rs 5000-crore 1.5 million ton alumina refinery project of Utkal Alumina International Limited (UAIL), a subsidiary of the Aditya Birla Group (ABG), near Kasipur in Rayagada district too is facing opposition from the displaced and affected people of the project.

Though the Orissa government had committed to 8,000 acres in Keonjhar district for the proposed Arcelor Mittal steel plant at the time of signing the MoU in 2006, it has not yet been able to provide any land. The process has been delayed due to agitation by displaced families under the banner of Mittal Pratirodh Manch as most of the land is fertile agricultural land.

Though private companies have the option to negotiate land price directly with the farmers and buy it, the process is not always feasible because in most cases where the industries want to set up their units the land owners belong to the scheduled tribe or scheduled caste from whom land cannot be bought. So, the prospective investor has to be dependent on the state government which acquires land and then gives it out on lease to the industry.

This is in sharp contrast to the process of land acquisition in Gujarat where the prospective investors by land from the farmers directly while the state government’s role is that of only a facilitator. Private industries are also allotted land in the industrial estates already created by the Gujarat Industrial Development Corporation, the equivalent of Orissa’s IDCO.

It is the inability of IDCO to get the acquired land vacated by the occupant farmers which is proving to be the main stumbling block in the way of starting work on the proposed industrial projects. “We have been awaiting possession of the 4004 acres of land for more than five years now without any progress. The government has been telling us that an amicable solution to the impasse created because of people’s refusal to vacate the land would be found out soon. However, till date there is no sign of any solution,” says Simanta Mohanty, general manager, external relations, Posco.

This reason may hold true for the farmers, fisher folk, weavers and other artisans engaged in various kinds of handicraft who perceive heavy industries as being the main cause of deprivation of their means of livelihood. The only industrial activity of the state so far has been related to mining of minerals. The employment in the mining sector, however, has been declining over the years due to mechanization. While there were 52,937 workers employed in the mining sector in 2000-01, their number declined to 49,176 by 2008, points out the State’s Economic Surveys presented to the Orissa Legislative Assembly.

Widening rich-poor divide

However, for the educated urban middle class the process of industrialization in the state has ushered in a new era of prosperity and ever increasing opportunities. The mushrooming of engineering colleges, numbering 53 in the state capital Bhubaneswar, and 50 in other main towns of the state, enrolling 52,000 students every year, is a pointer to the growing aspiration of the educated youth to make it to a comfortable career path. Private business schools and medical colleges, as well as institutions imparting other professional education too have come up in large number.

The schism between the urban rich and the rural poor has widened sharply in Orissa. According the Planning Commission, 46.60% of Orissa’s people lived below the poverty line in 2004-05, much higher than Bihar (32.50%), Madhya Pradesh (32.40%) and Uttar Pradesh (25.50%).
Millions of marginal farmers, landless labourers and craftsmen from the poverty-stricken districts of Ganjam, Bolangir, Koraput and Kalahandi of Western Orissa, bordering Andhra Pradesh and Chhattisgarh migrate as far as to Mumbai, Surat, Ahmedabad, Delhi and Punjab every year in search of employment. Reports of starvation deaths, suicides of weavers and farmers and selling of children as bonded labourers appear at regular intervals in regional and national newspapers.

Farmers of Jharsuguda, Bolangir, Angul, Dhenkanal and Kendrapada districts have been carrying on prolonged agitations against the state government’s decision to prioritize allocation of water to industries from major irrigation dams on the rivers Mahanadi and Brahmani.

“The Hirakud dam over river Mahanadi, one of independent India’s early multipurpose river valley projects, used to prevent floods in the coastal areas, provide electricity to factories and homes and supplied ample water in the canals to grow a second crop every year. Not anymore,” says Professor Rajkishor Meher of Nabakrushna Choudhury Centre for Development Studies in Bhubaneswar. “The dam has almost lost its principal objective of irrigation promotion and agricultural development in the region,” Meher says.

Quoting government records, he points out that as many as 3,509 farmers committed suicide in Orissa in the last 11 years. The opposition Congress and Bharatiya Janata Party have alleged that at least 53 farmers committed suicide in the state in the past one year. “The multipurpose dam now hardly generates 30 per cent of its installed hydro power capacity because of lack of adequate storage of water in the reservoir, obsolete technology and worn out machinery,” he adds.

Due to silting of the reservoir and canals the tail end areas do not get adequate irrigation water for the second crop. The area deprived of a second crop is almost one-third of the created irrigated potential in the command area. Availability of water for agriculture shall be reduced in future, as the area surrounding the reservoir is now witnessing fast industrial growth and mining of coal. Meher points out that before 1997 the total allocation of water to the industries of the region from the reservoir was 3,191,200 gallons per year. This has increased by 27 times in the past nine years and this is obviously at the cost of water for irrigation.

While farmers of villages in the command area of the Hirakud dam are facing acute shortage of water, in Bhubaneswar and elsewhere in the state, consumption of liquor and ganja (hemp) has increased manifold. State’s excise department figures reveal a three-fold jump in revenue from the sale Indian Made Foreign Liquor and country liquor between 2001-02 (Rs. 197.35 crore) and 2007-08 (Rs.524.83 crore). There were 1021 IMFL shops, 13 clubs and 37 beer bars and 152 shops selling country liquor in 2008.

In a situation reminiscent of the popular anti-liquor movement of the 1990s in Andhra Pradesh, women in several villages of Orissa have launched agitation against the opening of liquor shops in their area. The left-extremist Maoists too have made liquor shops their target in the pre-dominantly tribal districts of Kandhamal, Gajapati and Koraput, Balangir, and Kalahandi.

Drug and illegal mining

Along with increase in the consumption of liquor, the state has also witnessed an alarming rise in the cultivation of illegal ganja (hemp). In raids conducted by the excise department in 13 districts of Orissa during 2007-08, 3.12 million hemp plants worth over Rs. 312 crore were detected and destroyed.

A commission of inquiring headed by Justice P K Mohanty found the involvement of Maoists in the multi-crore-rupee ganja cultivation in Orissa specially in the hilly and inaccessible areas of the state. In March this year, Dambaru Bagha, the district president of the youth wing of the ruling Biju Janata Dal (BJD) of Maoist-bastion Malkangiri, was arrested from Lucknow with 3,000 kg of ganja in a truck. This was just the tip of the illegal drugs ice-berg.

Equally nefarious racket, which came to light recently, is that of illegal mining of iron, chromite and manganese ores running into over Rs.14,000 crore. The racket came to light following sinking of an iron-ore laden ship from Mongolia named ‘Black Rose’ off the Paradip port. It was laden with 23,847 tons of iron ore. The ship had forged documents of another ship named ‘Toros Pearl’. The owner of the ship operated two ships under the name of ‘Black Rose’ for shipping out iron ore from Orissa illegally.

Investigations by the state vigilance department and documents brought under the RTI Act showed that over last 6-7 years more than half a dozen leading mining and steel companies dug out iron, chromite and manganese ores than the amount they were allowed thanks to lax supervision of officials of the Orissa Pollution Control Board, Indian Bureau of Mines, state mines department, forest department, district collector and Ministry of Environment and Forests.

Documents obtained from the Orissa Pollution Control Board show that the biggest violator could be one of the country’s leading industrial group. The company mined 206 lakh tons of iron ore in excess of its permitted limit of 25.86 lakh ton from two mines (Kasia and Jiling-Longalata) of Keonjhar district between 2001-02 and 2005-06. By conservative estimates, the total market value of the excess iron ore mined was Rs 4269 crores. The permissible limit for mining of minerals in a year varies from mine to mine, based on the reserves it has, and is fixed by the Indian Bureau of Mines.

“Illegal mining is rampant in Orissa. Of the 595 mining lease issued by the state government, only 245 are valid, the rest 351 are continuing to carry out mining even after their lease period has expired. They are doing so in collusion with the concerned officials,” alleges Rabi Das, president of Orissa Jana Sammilani (Orissa People’s Conference), who has filed a public interest petition in the Supreme Court demanding a CBI probe into the illegal mining scam. “The delay in renewing the mining leases by the state officials is the standard tactic adopted by them to extract grease money from the lessee companies,” alleges Das.

City of neo rich

The staggering amount of slush money in the hands of government officials, politicians and touts collected from private miners is getting reflected in their ostentatious spending on such luxury goods as jewelry, real estate and automobiles. Jewelry shops are doing roaring business in Bhubaneswar and Cuttack. Imported luxury cars on the roads are a common sight in the state capital.

The state capital, which did not even have a three-star hotel a decade ago, today boasts of five five-star hotels and over a dozen four-star hotels. The city also has a 9-hole golf course spread across 33 acres of land leased out to the club by IDCO. “The golf club has over 500 members of which about 80 participate in the game regularly”, says Srimoy Kar, an active golfer.

“The land prices in Bhubaneswar have sky rocketed in the last ten years, competing with the prices of prime property in metros like Delhi, Mumbai, Hyderabad and Bangalore. I had sold an apartment in Bhubaneswar at Rs. 1.50 lakh when I started my business here 20 years ago. Recently, I concluded a deal of a luxury apartment at Rs. 1.15 crore at Rs4,000 a square feet,” says Subhash Bhura, the Orissa chapter president of the Confederation of Real Estate Developers’ Associations of India (CREDAI), who is the managing director of Utkal Builders.

Most land in Bhubaneswar belong to the government as the city was planned and developed as the capital city of Orissa only after the formation of the state in 1948. “The government’s near total monopoly over the land and absence of any town planning has resulted in scarcity of land for the middle class and the poor. Nearly one-fourth of the city’s population lives in 108 slums,” points out Bhura.

With new building bylaws enacted a few months ago, the skyline of the city is expected to change within a few years as several multi-storeyed buildings have been proposed. Real estate developers from outside Orissa such as DLF, Cosmopolis and Vipul have proposed mega housing projects in the state capital.

Recent times have seen large scale retail chains such as Reliance, Vishal Mega Mart, Big Bazaar, Pantaloon, Spencer's opening their outlets in Bhubaneswar. Large corporations like DLF Universal and Reliance Industries have entered the real estate market in the city. DLF Limited is developing an Infopark spread over an area of 54 acres in the city. Expanding its business portfolio, the Kolkata-based Saraf Group, promoters of Forum Mart shopping malls is constructing another Shopping mall named Forum Lifestyle mall on a 550,000-sq ft plot of land in Bhubaneswar with 1,200 car parks.

IT and education hub

Bhubaneswar is home to several educational and research institutions of state and national importance including the Utkal University , Xavier Institute of Management, Bhubaneswar, the Institute of Physics, Indian Institute of Technology, National Institute of Science Education and Research (NISER), Institute of Mathematics and Applications (IMA), as well as over 30 other private colleges geared towards engineering, biotechnology, information technology and management.

Mining major Vedanta too has proposed to set up a ‘world-class’ University on a staggering 6,000 acres of land along the Konarka-Puri sea shore. The university got mired in controversy after the Lok Ayukta ordered an inquiry into the legality of allotment of a part of the land belonging to the Jagannath temple trust. People of neighbouring villages too have been protesting against the proposed university.

Bhubaneswar is emerging as a national education hub that is also being promoted as an Information Technology Investment Region (ITIR) by the government. A total of 40 square kilometer of land has been allocated for the purpose, out of which about 60% will be devoted to research and development. Two institutions of national importance, the IIT and NISER, Bhubaneswar will be located within this investment region.

The Info City was conceived as a five star park, under the Export Promotion Industrial Parks (EPIP) Scheme to create high quality infrastructure facilities for setting up Information Technology related industries. Infosys and Satyam Computer Services Ltd. have been present in Bhubaneswar since 1996-97. Its current head count stands at around 6000.

Infosys is a planning a second IT park near Khandagiri which will accommodate another 5000 IT professionals. Wipro's software development centre started operation in the city during February 2008. The Finland telecommunication company, Nethawk, has its India R&D center at Bhubaneswar. The Canadian giant, Gennum Corporation too has its India development centre at Bhubaneswar.

The new STP, christened as JSS software Technology park is located at Infocity to provide incubation and infrastructure facilities to new and young entrepreneurs in the MSME sector. The intelligent building of the JSS STP is spread across three acres and houses state-of-art technology to fulfill the growing demands of IT professionals. Infocity is considered as the biggest IT park in eastern India spread over an area of 350 acres.

Critique’s views

Leading academics, economists, environmentalists, wildlife experts, social activists and leaders of political parties – the opposition as well as a few dissidents of the ruling Biju Janata Dal – have expressed grave concern at what they describe as ‘lopsided’ and ‘skewed’ development of the poverty-stricken Orissa.

“Orissa’s mineral reserves may exhaust too soon due to fast exploitation. Orissa is exploiting bauxite at a much faster rate than it should be doing. The focus of policy makers has been on maximizing the revenues in the short run than maximizing the present value of all expected future revenues,” avers Banikant Mishra, professor of finance at the Xavier’s Institute of Management, Bhubaneswar.

“The widening gap between the urban rich and the rural poor, lack of development activities in poverty-stricken regions of Western and Northern Orissa leading to large-scale migration of marginal farmers and farm labourers to other states, starvation deaths, displacement of tribals from their homestead and land on account of land acquisition for heavy industries and depriving them of their means of livelihood, state violence against people protesting peacefully against their displacement are all contributing to the rising influence of left-extremist Maoists in the state,” Mishra warns.

“Inspite of abundant stock of natural and human resources, the state portrays a hopeless image of stark poverty - child sale and starvation deaths hitting the national headlines regularly. This is mainly because of the state’s lopsided policies. Though there has been a growth in the number of factories operating in the state, employment had registered a steady decline,” points out Biswajit Mohanty, a chartered accountant who heads the Wildlife Society of Orissa.

“Orissa has missed the opportunity of taking advantage of its rich mineral resources. Instead of giving out mining leases indiscriminately, the state should have first come out with a mining policy. The government should have constituted an expert committee comprising geologists, metallurgists, industry experts and elected representatives of people of the mineral rich areas which would have recommended a judicious strategy for the exploitation of minerals,” says former Union Steel and Mines minister Brajkishore Tripathy.

“I won’t be surprised if the industrial houses which have signed MoUs over the last 10 years to set up industries in the state start legal proceedings against the state government for not having been able to fulfill its promise of land, water and power to them,” he said, pointing out that the total requirement of power and water for these industries far exceeds the supply.

“The Naveen Patnaik government has traded with the industries, ignoring the law of the land and ignoring the problems of the people. Even in a single-window system, the government should have ensured that the proposed projects get all the required statutory clearances from the revenue, forest, environment, water supply and electricity departments,” says Bhakta Charan Das, the Congress Member of Parliament from the Kalahandi Lok Sabha constituency.

“The government should have also made mandatory for the investor companies to give guarantee for the inclusive growth of the region in which they set up their industries. Since the government has allowed heavy industries to draw water and electricity at the cost of the needs of the local population, people are up in arms against industrialization,” he says.

Labour pains

“These are just the normal pangs of industrialization which is yet to take off fully. The fruits of industrialization are yet to bear. Let the heavy industries in the areas of steel, aluminum and electricity be established first, downstream industries would follow automatically. Only then will the people of Orissa start benefitting from an industrially sound economy,” says Ashok Dalvai, the steel and mine secretary.

True, Orissa is witnessing the pangs of industrialization. For the first time after Independence, the poorest of the country’s state is experiencing the trials and tribulations of an agrarian economy moving on the fast track of industrial growth.