Bhubaneswar: Odisha has seemingly netted good in the pandemic year. The State has received a higher order of FDI dose despite a string of lockdowns and shutdowns.
As per the Union Ministry of Finance, Odisha had received FDI inflow worth $16.58 million during the period of April- November 2020, when the Covid-19 pandemic was ruling roost in the State.
A more assuring fact for the Naveen-led BJD government is the inflow has been 27 per cent higher than the previous financial year 2019-20.
IS THE FDI SHOW A RUNAWAY HIT?
The 2020 FDI story of Odisha couldn't be termed as a runaway hit because the State had hit the FDI jackpot of a massive $65mn in 2017-18. Moreover, riding the POSCO tide, Odisha had been the numero one FDI state in the country way back in 2009-10.
Moreover, a reality check comparison with the neighbours like West Bengal and Andhra Pradesh tells the whole tale.
When the neighbours were receiving FDI to the tune of $581.26mn and $265.04mn, respectively, during the period of April 2019 to November 2020, Odisha could see a trickling down of a mere $29.63 mn.
ODISHA VS NEIGHBOURS
As per the data provided by Union Finance Ministry today in Lok Sabha in reply to a question by BJD MP Mahesh Sahoo, in the FDI map, Odisha occupies a very small space vis-a-vis the neighbours.
While Andhra Pradesh had seen FDI inflow worth $205.96mn during the year 2019-20, Odisha could net only $13.05mn. In contrast, the FDI inflow to West Bengal was $190.21mn.
In the pandemic year, when Odisha could see FDI fortunes up by 27 per cent, the FDI inflow to West Bengal took a springtide of 105 per cent. Significantly, Andhra Pradesh that was badly hit by the pandemic recorded a massive drop of 71 per cent.
FDI BASKET OF ODISHA
Odisha's FDI fortunes are linked to the metallurgical industries alone. Nearly, 85-87 per cent of FDI inflow to the State had been bagged by the sector alone.
A cursory glance at the details released shows that the FDI inflow to the sectors like power and IT sector. Odisha reached the FDI zenith in 2009-10 due to heavy FDI inflow to metallurgy and thermal power.
The green shoot for Odisha is this year the State had received nearly $2mn (1.86) FDI into the services sector, which experts see as a good beginning.
METALLURGICAL SECTOR A BOON OR BANE FOR FDI?
Odisha's industrial sector dominated by metallurgical industries is not a boon for netting in more FDI.
"Metallurgical sectors (aluminium, steel) don’t have the high potential for FDI inflow as it is mostly dominated by the public sector in Odisha. Also when seen nationally, the services sector has been the largest FDI receiver," explained a senior RBI research officer here.
He further explained why Odisha couldn't see FDI inflow to Odisha unlike Andhra Pradesh and West Bengal.
"Odisha has a very poor footprint in the services sector. Unlike WB and AP, the State has no headquarters of financial, non-financial and business outsourcing institutions here."
EXPERTS FDI RECIPE
"Odisha has the potential to break into the top-5 FDI states, provided it aggressively focuses on IT sector, trading (export-import), infrastructure, telecommunications, hotels, tourism and power (renewable + non-renewable) and automobile." the RBI research officer observed.
He further explained that a State's FDI potential is not linked to natural resources alone, the availability of skilled human resources is also considered a key FDI magnet. For instance, he explained,
"Odisha has great potential in the automobile industry. Haryana and other states are receiving good FDI to the sector. Odisha lags behind because of non-availability of efficient manpower."
THE KEY TAKEAWAY
The task seems to cut out for the State. In order to emerge as a key FDI player in the country, which in turn will churn more job opportunities in the State, there is an urgent need to go for skill-building overdrive - when the recent India Skills Report 2021 has painted a grim skill development scenario here.