Saturday, November 04, 2006

Tribe of nay-sayers
Baijayant Panda
Posted online: Wednesday, November 01, 2006 at 0000 hrs
Orissa’s industrial plans are drawing activist flak. Activists are missing the point
Baijayant Panda
For decades, the mineral bearing areas of our country got a raw deal — not by accident, but by the deliberate policy of the Union government. States like Orissa, West Bengal, Jharkhand and Chhattisgarh were deprived of thousands of crores of investment by the cynical undermining of their competitive advantage.
Policies like freight equalisation — which subsidised transport costs — neutralised these states’ natural advantage for attracting investment in those sectors, that is, steel, power, aluminium and the like. Instead, those investments were artificially incentivised to go to more politically convenient destinations, rather than to where economic logic dictated. These poor states were forcibly made to subsidise the industrialisation of those with more clout.
Those who claim that coalition governments conduct poor economics should remember that such policies happened in an era when coalitions were unheard of. It’s simple, really: in those days of single-party governments, even the ruling party MPs of these states were powerless to resist the diktat of their all-knowing, national high command. Things are different now.
The rise of regional parties has led to the blossoming of the underlying federal character of our Constitution. And that has led to a far more level playing field for many states. For a decade now, the leaders and representatives of these states have been increasingly vocal and assertive about their rights. Thus Chandrababu Naidu’s and the TDP’s reputation as the tail that wagged the NDA dog. The same goes for other regional parties like the DMK in today’s UPA government. And then there are those, like Orissa’s Naveen Patnaik and the BJD, who have used this new leverage to turn around their states, but unobtrusively and without much fanfare.
Orissa took the lead in revamping its industrial policy and implemented the principle of value addition in minerals, that is, linking the grant of mining leases to downstream investments in the state for the processing of those minerals. This simple step has turned the tables completely. From being a non-starter in the investments race, it has surged to the country’s top spot in a few short years. Yes, this frantic scramble to invest in Orissa has been helped by buoyant international markets, but it has also been made possible by dramatic improvements in the state’s governance. No one today seriously questions the fact that Orissa has seen a transformation in its functioning, that its administration is much more transparent, and that a ‘case by case’ culture has given way to a ‘same rules for all’ approach.
And no one can credibly dispute that the turnaround is real. Witness the GDP growth rate. Orissa had been a perennial laggard (no wonder, considering that its economic raison d’etre had been politically neutered for decades). Even in the late nineties, when India was already beginning to benefit from economic liberalisation, Orissa continued to trail behind. But last year, while the world cheered India’s GDP growth rate of 8 per cent, Orissa —possibly for the first time since the Mauryan empire — shot past the national average, registering a state GDP growth rate of 8.4 per cent.
It is in the midst of this that we are faced with the objections of those who oppose the ongoing rapid industrialisation of Orissa, primarily centered on the issue of land acquisition. This is an important issue and deserves serious examination. Orissa has rarely faced such objections before, for it has rarely had much development to object to. But with the influx of investors with a gold-rush mentality, there has been a matching influx of activists to stand in their way. Perhaps, as one commentator told me, this is a sign that Orissa is finally and truly coming on to the development map.
There are those who oppose industrialisation per se, holding aloft the ideal of a pastoral existence for the very, very poor people, often tribals, who would have to be re-settled from their land. This view neither deserves — nor, fortunately, gets — much sympathy, for that pastoral ideal is a sham which ignores the desperate poverty and exploitation of those people. The more substantive opposition comes from those activists who insist on a fair deal for the oustees. And rightly so. There is a real risk of poor people being dispossessed of their land for a pittance and, without the necessary education and skills, sinking even deeper into despair. Indeed, one of the reasons for cynicism is the poor track record of past land acquisitions.
In Orissa, for instance, the people of Sundergarh district displaced in the fifties to make way for the Rourkela Steel Plant were treated extremely shoddily. Large numbers of their descendants are still attempting to secure their compensation. Ironically, although that and other re-settlements were botched by the Central government of that era, today the state is battling the stigma associated with rehabilitation and resettlement (R&R) efforts. But the reality today is that Orissa’s R&R policy — rejigged and improved after the Kalinganagar tragedy where 12 tribals were killed by police firing after a constable was hacked to death during a demonstration — is arguably the best in the country. To any rational sceptic, I would only urge that they take the time to read it before passing judgment. Do check out
The key features of Orissa’s updated R&R policy, which had inputs from UNIDO and DFID, include much larger cash compensation (far more than the pre-notification market prices), job guarantees along with skills training and even alternate land. Of course, the crux of the issue is not just good policy, but proper implementation. This is where the difference is already perceptible. Some of the investors in Orissa, both domestic and foreign companies, have already started shouldering R&R responsibilities as required and monitored by the state. What is touching a chord with the public is that, this time around, it is happening long before construction has started for their plants.
Of course, none of this will make any difference to some activists. But it should matter to the rest of us.The writer is a Biju Janata Dal MP

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