"We will not give financial incentives like some other states"

Ashok Meena, Managing Director, Industrial Promotion and Investment of Orissa Ltd, talks to Forbes India about the government’s strategy to avoid another Kalinganagar.

The recent election victory is being taken as a mandate for industrialization. But critics say that the BJD does not have the support of those who will be displaced by big projects. Will this affect the industrialization process?
Since the government has come back with good majority, whatever industry drive was taken earlier, will go forward.  At the same time, a lot of issues like rehabilitation and resettlement, environmental degradation and acceptance of industrialization as beneficial for locals, were raised in the run up to the elections. Government has taken a position that industrialization should be such that the natives are taken into confidence by the big industries.

Do you think that the Kalinganagar incident in 2006, when 14 protesting members from a local tribe were killed in police firing, has anyway influenced the government policy since then?
Even before Kalinganagar, a lot of introspection has happened on the way Jharsguda was industrialized. The place had matured industrially but the local discontent was brewing and it boiled over which resulted in Kalinganagar. The government surely doesn’t want a repeat and is thus careful.

How has the outlook in the state government changed since Kalinagar- 2006?
Only those projects will be cleared that fulfil all the criteria set by the state, including those on rehabilitation, environment and they should also have the confidence of the local people. Government will not force a project that is not welcome. For instance, Vedanta has done a marvellous job in implementation, in the fastest time possible. But at the same time, they didn’t have proper clearance to double their capacity to 5 lakh tons a year. Though we have permitted it further expansion has been stalled as we have asked them to do environmental study. Only once the reports come will we take further action.

There also seems to be a change in the approach of the companies. Tata Steel, Posco and Vedanta Resources are looking to engage people. Do you think there is a turn in the tide in favour of these projects?
It is too early to say where the tide is turning. The Posco management is talking with the locals. The South Korean company has realized that it can’t bulldoze through its project and dialogue is happening. In Kalinganagar, the situation had got out of hand, but the management (of Tata Steel) has come back. The big companies need to ensure that local people is taken into confidence, utilize best available environment mitigation technology and in continuation to the earlier policy, the local reserves should be used for value addition within the state.

Critics say these big projects will not generate enough employment to keep those displaced happy. What is the government thinking?
We realize that and now the government’s tone is to promote small and medium enterprises (SME) and link them to the big industries so that the local economy becomes broader and there is trickle down effect to the lower sections of the society. The SMEs can cater to the big projects and also feed from them. Having big players won’t suffice for acceptance of industrialization. If at least 20% of the produce from big plants is used locally by these SME, we will be happy.

But do you see all these projects, for which agreements were signed, will see the light of the day? And will we get to hear more of these big announcements?
Big announcements will continue to happen. At the same time, some mortality might happen as many people came with big plans but those have not fructified. Plus, a few will go down because of the downturn. We have got stricter also. A project’s deadline will not be extended unless some serious work has happened on the ground.

What is your target, in terms of production, in the next two years?
We have a few targets for the next two years. We plan to increase the output to 20 million tons of steel from the present 5.5 million tons. Industry should generate about 3 lakh jobs, two million tons of capacity in aluminium.

So this is the course that will be taken by the government. In case of the metal companies, preference will be given to the company that is looking to set up procession units here.
We realize that for many products, Orissa may not be the biggest market. So even if value add is not possible, other criteria need to be strictly followed. We realize that (getting local people into confidence) can’t happen overnight but the companies realize that if they do not have local support, their cost of production increases. All the big companies, such as Vedanta, Jindal, Nalco and Bhushan

Steel have agreed to set up value add units within the state.
There is a policy change to promote places where development is yet to take place because there is no industrialization. So if one wants to set up a power plant, instead of locating it near a coal pit head, we will ask the company to set base in an underdeveloped place where coal can be transported cheaply. We need to have regional balance.
 
We might also bring in new guidelines for future projects. We have made it clear that we will not give financial incentives like some other states but the projects should make economic sense. Moreover, we might not give mining leases to all projects but will instead ask them to buy from the market. We need to be more cautious in clearing projects.