Project bumps slow Patnaik's political juggernaught

Irked by the Centre’s environmental hurdles to investments in Orissa, the savvy CM is now steering a course of confrontation.

In 1991, Biju Patnaik, the then chief minister of Orissa, created a flutter by saying that his state would secede from India if the Centre continued to create hurdles in its economic growth. Of course, in the face of sharp political reaction, he later clarified that what he meant was the Centre should give the state financial autonomy, so that it could realise its potential.

But those were the days of freight equalisation, a policy to ensure that it didn’t matter how far a manufacturing plant was from the raw materials taken from this mineral-rich state. This discouraged value addition within Orissa, which lacked social and physical infrastructure to attract investment.

With liberalisation and discontinuation of the freight equalisation policy, Orissa has emerged as a favoured destination for investors, who now prefer pithead plants to minimise transportation cost on raw materials.

Making the most of this transformation has been the the Biju Janata Dal (BJD) government headed by former chief minister Biju Patnaik’s son Naveen, whose innings at the helm of the state in 2000 coincided with the boom in the metal industry. Orissa has a natural advantage because of its huge reserves of iron ore, manganese, chromite, bauxite and coal.

In the last ten years, the state has signed 88 MoUs with investors in the field of steel, aluminium, cement, ports and power, envisaging a combined investment of over Rs 6 lakh crore. Of this, 35 projects have begun partial production at an investment of Rs 80,000 crore, although this represents only 13.3 per cent of the total amount envisaged.

This gap in actual realisation of investment is mainly because some mega projects like that of Posco (Rs 54,000 crore), ArcelorMittal (Rs 40,000 crore) and Tata Steel (Rs 22,000 crore) have not made any progress on the ground due to problems with land acquisition, grant of mining leases and environment and forest clearances.

In particular, the environment ministry’s recent halting of land acquisition for the Posco project and denying the alumina refinery of Vedanta at Lanjigarh access to bauxite reserves in the Niyamgiri hills have dealt a body blow to the industrialisation push of the Naveen Patnaik administration. At stake is Rs 1 lakh crore in investment by these two companies alone.

“Patnaik never had any problem with the UPA government at the Centre in the last six years as far as the state’s industrialisation is concerned. Though there were local agitations and allegations of impropriety against some big projects, the Centre never interfered. This created an impression that Patnaik had good ties with the Centre. So, the sudden action against two mega projects has been a jolt to the state government, and Patnaik personally,” says Rabi Das, chairperson of Jana Sammilani, an NGO spearheading a campaign against corruption in mining activities in the state.

Though Union Environment Minister Jairam Ramesh has said his decisions were based purely on legal violations by the state government and the companies concerned and had no political angle, the state government is not convinced. “I hope there is no politics behind it,” Patanik said.

His cabinet colleagues are more vocal. “The synchronisation of a visit by the N C Saxena Committee to the Vedanta and Posco areas, withdrawal of forest clearance to Vedanta’s Niyamgiri mining project and the visit by Rahul Gandhi to Lanjigarh, site of Vedanta refinery, to take part in a victory rally by anti-project tribal agitators speaks volumes about the agenda of the Congress. It has been out of power in the state for the last ten years and wants to draw political mileage from the issue and halt industrialisation of the state,” says Surya Narayan Patra, the state revenue minister.

Hence, the ruling BJD has come up with a strategy to counter this, politically. It has raked up the issue of granting environment clearance to the Polavaram project in Andhra Pradesh, which is expected to submerge about 25 tribal villages and a few thousand acres of forest land in south Orissa. “The Centre has double standards. In the Vedanta case, the Centre said it is trying to protect the rights of tribals. But it has jeopardised the lives and land of thousands of tribals by permitting the Polavaram project,” Patra added.

Political analysts point out that Polavaram has been an inter-state issue between Orissa and Andhra Pradesh for over 50 years. They say Orissa has turned aggressive on the issue only as an after-thought to the Posco and Vedanta imbroglio. “What’s wrong with that?” argues state agriculture minister and BJD secretary-general Damodar Rout. “If Rahul Gandhi can play politics by attending the victory rally of anti-Vedanta protesters at Lanjigarh, there is nothing wrong in raking up the Polavaram issue to counter the Congress design to woo tribals,” he added.

Stepping up its Centre-bashing tone, the BJD has decided to hold rallies throughout the state to highlight the Centre’s step-motherly attitude towards the state on the issues of Vedanta, Posco and Polavaram and its impact on the overall development of the state. It has already held rallies at Lanjigarh, Malakanagiri, the district to be worst affected by the Polavaram project, and Jagatsinghpur, where Posco proposes to build its 12-million tonne steel plant.

“For the first time in his political career, Naveen Patnaik is facing some serious challenges. From a jet-setting, suave socialite, who once counted Mick Jagger and Jacqueline Kennedy Onassis among his friends, Patnaik has transformed himself into an astute politician in the last ten years as chief minister,” says S N Mishra, former professor of political science at Utkal University.

“But his image as a corruption-free administrator has been severely dented with the revelation of a multi-million crore scam in the mining sector last year. And now, the NC Saxena committee has come out with specific examples of violations of the Forest Rights Act at the Vedanta and Posco sites in active collusion with government officials. This could be a cause of worry for Patnaik,” Mishra added. This also explains the sudden anti-Centre mood of the state’s ruling party, he pointed out.

But whether this Centre bashing is just a game of political oneupmanship or it is an expression of genuine anguish against the Centre — like Naveen’s father did 20 years back following a halt to big ticket investments that were promoted as vehicles of development in the state — is a question that only the future can answer.