Why Tomorrow Belongs To Kalinga

WHEN William Daley, the US secretary of commerce, announced at the Indo-US business summit in Calcutta last fortnight that Southeast Asia's commercial gateway in the next century will be Bhubaneshwar and not Calcutta, it stunned the Marxists of West Bengal who had started believing that foreigners were just waiting to invest in their version of unspoken capitalism.

Although in the last couple of years, Orissa has been attracting more investment than West Bengal, it did not warrant such a provocative remark from a senior US cabinet member at a public forum unless he wanted to make a point. People in the know say that the Americans are thoroughly fed up with India's Leftists for constantly blocking finance minister Palaniappan Chidambaram's attempts at economic liberalisation. They were also irked by the unfriendly gestures of the 20-year-old Left Front government in West Bengal, like adopting a resolution in the state assembly expressing solidarity with "the Iraqi people's struggle against US imperialism". So Daley made it clear that the Jyoti Basu government's propensity to solicit capitalist clients while keeping its Marxist chastity intact would not be cutting any ice with US investors.

In contrast with Bengal's ambivalence towards liberalisation, Janaki Ballabh Patnaik's Orissa government has welcomed capitalism with open arms, including ushering in privatisation of its power board as recommended by the World Bank. In fact, the bank has been urging other states to follow what it calls "the Orissa model" in their power sectors. But this is only the beginning. While West Bengal, under pressure from the unions (the most major vote bank of the Leftists), has been forced to keep alive terminally sick state sector units at a huge cost, the Orissa government, free of militant unions and political orthodoxy, is in the process of closing down its loss-making enterprises if the private sector is not willing to take them over. The retrenched workers will be paid according to their legal rights, explains Niranjan Patnaik, the affable minister of industry.

Says a confident J.B. Patnaik: "We are giving unqualified support to liberalisation. I am confident that in the next century in terms of the wealth generated per person, Orissa will not only be the number one state in India, but will compete with the Asian tigers." And the private sector has responded to JB's overture. According to the Centre for Monitoring the Indian Economy, 71 per cent of investments in Orissa last year came from the private sector in contrast to the 50:50 public-private sector mix in the country's total investment. Significantly, half the private investment has been made by foreign companies.

In spite of JB's dream of a 'brave new Orissa', its yearly income per person of Rs 4,068 is one of the lowest in the country and considerably less than West Bengal's Rs 5,383. Nearly 45 per cent of Orissa's population lives below the poverty line compared with Bengal's 28 per cent. Orissa's literacy level is abysmally low and starvation still stalks the tribals of Kalahandi, Koraput, Phulboni, Keonjhar and Bolangir. "But things are changing fast," avers Niranjan Patnaik. "Most of the new projects are being located in poverty-stricken but mineral-rich western Orissa. Our government has also declared war on illiteracy." According to him, due to the government's initiative, technical schools and polytechnics are springing up all over the state. The number of engineering colleges has gone up from three to 19. These colleges are run for profit by the private sector but 50 per cent of the seats are reserved for the meritorious poor who either obtain a scholarship or pay a nominal fee, says Niranjan Patnaik.

While he is cock-a-hoop about Orissa attracting investments of Rs 130,078 crore, lifting it to the top of India's investment league in 1996, he concedes that only about 27 per cent of the proposals have been implemented and the rest are still at the MOU stage. This includes proposals to set up steel plants in Gopalpur by Tisco and Larson & Toubro. The progress of these two mega projects underscores the problems of investing in Orissa. While L&T is in no hurry to implement the project because of the depression in the global steel industry, Tisco has been keen to put up its unit but faced stiff resistance from locals who refused to give up their land or have their easygoing lifestyle disrupted.

 J.B. Patnaik says that the land problem has now been solved but others say resistance continues. Also, these projects, as well as Utkal Alumina and L&T Alumina plants, can be viable only if the private sector builds a port in Gopalpur at an estimated cost of Rs 2,000 crore. But since the projects are yet to be finalised, private promoters are shaky about putting up so much money. Niranjan Patnaik, however, is upbeat saying that a global tender has been floated and a private promoter for the port will be identified by February. Dhamara, the other private port, is also hanging fire for similar reasons.

SCEPTICS also point out that Orissa's infrastructure may be inadequate to handle the flood of investment expected in the next few years. J.B. Patnaik boasts that the Paradeep port with deeper drafts than West Bengal's Haldia can handle bigger ships. But shipping circles point to the fact that Paradeep suffers from the lack of direct road and rail links.

Niranjan Patnaik counters this view by pointing out that out of the 13 projects offered to the US delegation, the largest number is infrastructural projects, like power, roads, dry dock and shipyard. He thus feels that industry and infrastructure are in fact developing simultaneously in Orissa: by the time the industries come up, the infrastructure will also be in place.

 In the meantime, the state has also not lost sight of its traditional money-earner: tourism. A 3,200-acre Special Tourism Area has been identified about 10 km from Puri. While land is being acquired by the government, the resort will be developed by a private promoter who will set up all the required infrastructure and amenities essential for a premium tourist resort, says Asit Tripathy, director, tourism.

One of the major reasons for Orissa endearing itself to foreign investors is its acceptance of the World Bank's suggestion to privatise the overmanned and inefficient state electricity board. The board is in the process of being broken up into three segments: generation, transmission and distribution. Each of these will be a private sector company and foreigners can have majority shareholding provided there is an Indian partner, says J.B. Patnaik. The Bank has been encouraged enough by the power sector reforms to extend a loan of $350-million to the state.

Since Bihar, Assam and the Northeastern states are handicapped due to political reasons, the competition to attract investment in eastern India has come down to some sort of a straight fight between Orissa and West Bengal, and the latter may already be agitated with Orissa's success (see So who's the Better Man?). Orissa has already stolen a march by becoming a votary of the current economic philosophy and sending the right signals; West Bengal's better-skilled manpower could give it an edge over Orissa.

West Bengal officials point out that while the state's earlier industrial hub at Durgapur crumbled due to the Union government's apathy and irresponsible trade unionism encouraged by the state government, the township of Haldia (incidentally, close to the Orissa border) could be the fulcrum of attracting massive investments.

The West Bengal government has made the massive Rs 5,100-crore Haldia Petrochemicals project a prestige issue. The project hopes to go onstream in 1999. The electronic complex at Salt Lake City in Calcutta has already attracted Rs 1,500 crore worth of investment and much more is in the pipeline.

But to compete successfully with Orissa for investment, the Marxist rulers have to change their mindset. They have to come to grips with the post-Cold War world where only the efficient will survive and the only way to preserve self-respect is to develop economic muscle as China and the Asian tigers have done. Until this economic strength is gained it is folly to cross swords with the strong, particularly if you need them. Also it has to be economics and not politics which is the current driving force.