Global Economics

India: The Battle for Orissa


The state's mineral reserves are attracting the world's largest metals companies, but local tribes won't give up the rights without a fight

I just returned from Orissa, that eastern coastal Indian state that has been mostly forgotten in India's mad gallop for growth. Those who forget Orissa, however, do so at their risk. For though the state has been known for decades for hunger and poverty, cyclones, and droughts, Orissa is now renowned for its mineral wealth: It has the majority of India's iron ore, chrome ore, coal, and bauxite reserves. And all of this is required to fuel the country's manufacturing revolution.

That's why the world's largest steel and metals conglomerates are sitting on Orissa's shores, awaiting clearances from the government so they can get to work on the mineral ores there. Between Posco , Arcelor-Mittal, Tata Steel, Jindal Steel, and a few others, there is $45 billion in investment waiting to get into Orissa.

So Orissa is waking up to its new importance and central place in the Indian economy. Bhubaneswar, once a sleepy capital familiar to tourists visiting the famous temples at Puri and Konarak, now has wide roads and many nice hotels. There are large billboards advertising cell-phone service, personal insurance, and consumer goods for sale. There are even malls: tiny, homegrown ones, but malls nonetheless. There's a surplus of power, a plentiful commodity in a country where power supplies are often under strain.

Adjusting to Its New Status

A growing presence in Orissa, but one that is discreetly kept under wraps, is that of the steel companies. The biggest names are the state-owned Steel Authority of India, Tata Steel, Jindal Stainless, Posco, and Arcelor-Mittal. They are not on billboards, but inside fine new glass and granite office complexes like Fortune Tower that house the offices of these companies. Posco alone has prepared to invest $12 billion to build a fully integrated steel plant with a port; Arcelor-Mittal's plan is for a $20 billion project. Tata Steel also has a multibillion-dollar plan.

But they are all on hold. Like much of India in transition, Orissa is taking a long time to adjust to its new status. Much of the area on which (or under) the state's mineral wealth sits is tribal, forested land that cannot be cleared and reassigned to companies without due process. Tribals, or the indigenous people of the region, represent 25% of Orissa's population. They are among India's poorest citizens, but are the closest to the land. They are the keepers of knowledge about Orissa's abundant biodiversity, animal life, and other natural endowments.

They are the biggest losers in the transition, and there are very few to plead their case. Especially not the politicians, who in their desire to put Orissa on par with the rest of India, are doing whatever it takes to speed up development in the state, even at the cost of the environment and its people. That has become the basis of a major battle in the courts, in the Orissa legislature, and on the land itself.

Tata's Half-Finished Wall

The results are mixed. In January, 2006, when Tata Steel was trying to build a boundary wall for its 1,000-plus-acre property in Kalinganagar, the heart of the state's iron ore belt, the tribals refused to vacate. The police were brought in, shots were fired, and more than a dozen locals died. The locals blocked the main road to Kalinganagar for more than a month after.

Tata's wall has remained half-finished. All around the proposed Tata site, companies like Mesco and Jindal have built their operations and land continues to change hands. But Tata's site stays pristine, untouched, undeveloped, even though Tata, the oldest commodity company to do business in Orissa, has been mining ore in the state for nearly 100 years.

The last time I was in Orissa was a decade ago to cover the story of U.S. power company AES (AES), which had been trying to set up a power operation in the state. The World Bank was working with Orissa's state electricity board to trifurcate the power operations into generation, distribution, and transmission, instead of having the board do everything. The story was about Enron in Bombay and AES in Orissa.

The Environmental and Social Costs of Mining

Neither company was successful in its endeavor, but India benefited greatly. Indians, which had for decades relied on badly managed state power boards that provided power when they could and sometimes on whim, learned about their power rights, their power needs, and that quaint unit called the megawatt, and how much it cost to produce and sell.

Now Orissa's tribals, and their fellow Indian citizens, are witness to a bitter battle over the nature of India's mineral wealth and its true cost to both industry and society. Like the power story, this one too will take many, many years to play itself out. If all goes well, India will learn about the price of each ton of steel, not just its cost in monetary terms, but also its environmental and social costs. Luckily, Orissa's resources are so plentiful that it will take 50 years before they begin to be depleted. Hopefully, the right battles will have been fought and won by then, and the right lessons learned.

And here's a charming story on Orissa that few know. The former longtime chief minister of Orissa was a giant of a man, a personality, and a force of nature called Biju Patnaik. He dominated Orissa politics for decades. But he also had other interests, and one of them was flying. During World War II, he helped evacuate British families from Rangoon when the Japanese invaded, and he also helped Indonesian rebel leaders fight for their independence from the Dutch, and flew them, under gravely dangerous circumstances, to Delhi to meet former Indian Prime Minister Jawaharlal Nehru.

A Daughter of Orissa

For his trouble, Patnaik was later awarded the highest civilian honor in Indonesia, and Indonesian President Sukarno gave him the honor of naming Sukarno's newborn daughter. Patnaik, the romantic hero, called her Megawati, or "Goddess of the Clouds." Megawati went on to become president of Indonesia from 2001 to 2004. So longstanding was her gratitude to India that Megawati named her own daughter Orissaputri, or "Daughter of Orissa."

Hopefully Orissa's fortunes will blossom and its troubles soon will be behind it, so more daughters are called Orissa, the daughters of fortune.


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