Rs 2032350000000 crores!!! That is one hell of a lot of money!! If even half the ‘investment intent’ expressed at the first-ever Make in Odisha conclave that ended in Bhubaneswar on Friday actually comes through, that will still be a lot of money. In terms of participation of industry too, it was surely a huge success what with top notch companies like Adani Group, Tata Steel, Essar, ITC and Vedanta in the private sector and public sector giants including SBI, IOCL and NTPC on board. The presence of Union Finance minister Arun Jaitley also added a lot of sheen to the event.
On the face of it, every Odia be over the moon at the prospect of such a huge investment coming the state’s way. Unfortunately, however, past experience has conditioned the people not to be too optimistic about investment pledges.
The less-than-enthusiastic reading of the outcome of the three-day conclave (outside the government circles, that is) can be attributed in no small measure to the failures of three of the most ambitious projects to take off for a variety of reasons. They are the Vedanta aluminium project in Lanjigarh and Jharsuguda, the now shelved Rs 40, 000 Arcelor-Mittal proposal for an integrated steel plant at Patna in Keonjhar district and – last but not the least – the Rs 52, 000 crore integrated, port-based steel plant proposed to be set up at Paradip by Korean major Posco, billed as the single biggest foreign direct investment (FDI) project in India. While the Vedanta project is gasping for bauxite, the Posco plant, ‘frozen’ since last year, shows little prospect of being revived any time soon.
Since the hand-out issued by the state government at the end of the conclave gives only a sector-wise break-up of the ‘investment intent’ expressed, it is not clear how much of it was part of the Rs 90, 490 crore pledge made at the investors’ meet in Bengaluru in August this year. But given the presence of Sajjan Jindal, Chairman of the Jindal South West (JSW) group, which pledged the biggest share (Rs 50, 000 crores) of the investment commitment made in Bengaluru, at both the events, it is a reasonable guess that there is at least some overlapping between the two.
Not surprisingly, the mines and minerals sector accounts for a little less than half the investment promised – Rs 97, 911 crores to be precise – at the meet. Given the abundance of mineral resources that Odisha boasts of, this is going to be the pattern at least for the next few years. But experience suggests that this is also the sector that has been bedeviled by a host of problems – starting from land acquisition to environmental concerns and regulatory clearances.
Though there is a new Land Acquisition Act in place now and the state government is in the process of building a sizeable land bank for industrial purposes, there is no guarantee that land acquisition for the proposed projects would be any easier than it has been in the past. As the Posco case has proved, even acquisition of land is no guarantee that a project would take off if there is no guarantee of raw material supply. With the amendment to the MMDR Act having taken away the government’s discretionary powers in allocating mines and mandating their auction instead, there is little leeway for the state now to promise enough raw materials to prospective investors. Considering that the state government failed to have its way in case of Vedanta and Arcelor-Mittal even when it had all the discretion in the earlier regime, getting mines may well continue to be a big headache for industries. Even assuming that they do get mines, the dynamics of the auction mechanism may well make the whole project unviable if the company has to pay too high a price for raw material.
As for environmental clearances, the NDA government has done a lot in the two and half years it has been in power to make things easier for the industry. But there is still the imponderable of people’s resistance and court cases, which could put paid to the best laid plans of industry and government.
Stung by the relegation of Odisha to 11th place from a reasonable seventh in the index of ‘Ease of Doing Business’ this year, the state government has come up with a slew of policy changes designed to attract investments in sectors like IT &Electronics, Food Processing, tourism, MSME and green energy. But the investment pledged in these sectors at the Make in Odisha conclave is not much to write home about.
Past experience has taught us that there is a lot that can go wrong when it comes to investment plans in our state. But that should not stop us from exercising some cautious optimism about the prospects of industrialization in the days ahead.