Odisha’s bureaucracy should change its mindset to boost the industrial sector
By Srimoy Kar | Published: 14th August 2017 04:00 AM |
Around the time a delegation of Odisha’s Industries Department was visiting Visakhapatnam in July to lure the local business community to invest in the state, the UK-based Anil Agarwal Foundation was made an offer by the Andhra Pradesh government to move the proposed Vedanta University at Puri to the neighbouring state.
Mired in controversy and legal battle for 11 years after it first made the proposal to set up the university along the Puri-Konark Marine Drive, the foundation had recently requested the state government for an alternate site so that the project could get off the ground. That it has not received any response so far could be attributed to the government’s reluctance to revive the project which has turned very touchy over the years.
With the elections closer, backing the Rs 15,000 crore university may provide ammunition to the opposition even though the state administration went the extra mile by challenging the Orissa High Court order quashing land acquisition for the project before the Supreme Court.
If the Anil Agarwal Foundation finds greener pastures in Amaravati, it would mean another opportunity lost by the Naveen Patnaik administration to make a course correction in its half-hearted push for development in which some of the big-ticket projects became casualty over the last decade and a half.
Earlier in April, South Korean steel-maker Posco had returned the 2,700 acre-land acquired at Jagatsinghpur to the state government signalling an end to its struggle for establishing the 12 mn tonne steel mill at an estimated Rs 52,000 crore, once billed as the country’s biggest FDI. Not long ago in 2013, Arcelor Mittal’s mega steel plant in Keonjhar was scrapped because the state had failed to ensure land and mineral linkage for the steel behemoth.
Yet, it appears to have learnt little from the past. All that the state government throws at you is a pile of numbers when its industrialisation is questioned. It has gone to town about receiving 124 proposals worth about Rs 3.6 lakh crore in the last one year through the slew of Make in Odisha meets in Mumbai, Bengaluru and Bhubaneswar. Out of it, the government asserts that 74 proposals estimated at Rs 2.02 lakh crore are “firm commitments”.
How many of these 74 would eventually translate into investment is something to watch out for because the past is replete with instances of fly-by-night operators which wanted to cash in on the steel boom when the Naveen Patnaik government first rolled out its industrialisation drive in the mid-2000s. Most of them wanted a slice of the massive iron ore reserves Odisha is sitting on.
A decade later, Jajpur’s Kalinga Nagar mirrors the ground truth. Hyped as the only approved steel cluster of the country, the Kalinga Nagar Industrial Complex is a testament to the Odisha government’s lopsided policy. Barring Tata Steel, most of the steel projects have fallen into bad times by now. Several have closed shop while some are barely hanging on. The promised mineral links did not happen as the state could not ensure mining lease nor could it extend a steady supply of ore at viable prices.
With the Centre making e-auction mandatory for grant of mining lease in 2015, things only went from bad to worse.
Odisha’s steel rush alone did not slow down, the mega projects envisaged in aluminium and power sectors have faced a similar fate over statutory clearances and land acquisition. The state received proposals from over 90 companies in the last decade but only half went into partial production. Many did not go for capacity optimisation due to raw material constraints, cost escalation and land acquisition issues. The total investment grounded is estimated at about Rs 2.55 lakh crore though the promise was for over Rs 8.5 lakh crore.
Going by the government’s own admission, in the steel sector itself, three out of 49 companies that had inked pacts withdrew. At least 11 did not start work while 35 were in various stages of production.
While sluggish international demand, recession and mining scam added to the woes, the Odisha government barely made any attempt to create a conducive industrial environment.
Despite remaining a favourable investment destination, its bureaucracy emerged as the biggest obstacle for translation of project proposals into implementation. It simply had no connection with the ground while policy reforms remained confined to office files.
The aborted Posco Steel Plant was an example of how the administration tried to push the project without even taking the local community into confidence for land acquisition while Vedanta Alumina Refinery at Lanjigarh was another story of administrative disaster over bauxite mining in Niyamgiri hills that ended in a historic victory for the primitive Dongoria Kondh tribals. In fact, problems for Vedanta University started with a similar story of sanctioning 10,000 acre-land for the project within days.
Despite providing affordable labour, its IT and electronic parks have low-occupancy and software majors are reluctant to expand. Odisha slipped in the Ease of Doing Business rankings from seventh position in 2015 to 11th slot last year. It still fares low in land allotment, single window clearance, construction permits and environmental and labour reforms parameters.
Ever since, it has unveiled a slew of new policies to galvanise the industrial sector and regulatory reforms have been ushered in. It could take heart from the fact that JSW Steel Ltd is pitching in to set up shop at Jagatsinghpur where the Posco Steel Project was planned.
Instead of putting all its eggs in one basket, as it did a decade ago, it has now spread base. Focusing on the MSME sector, apparel, food processing, handicraft, tourism and start-ups is a good beginning. But it must prepare ground for investors and create a favourable industrial eco-system. Its bureaucracy has to change its mindset to bring in these changes. Only then Make In Odisha will happen.
Resident Editor, Odisha