By Nageshwar Patnaik in Bhubaneswar, October 30, 2017: Can Odisha become a developed state in the country by 2025? Going by the structure of the state’s economy, its financial development, and its mmanufacturing prowess, a developed Odisha will remain a distant dream.

Chief minister Naveen Patnaik while addressing party workers during the launch of Jana Sampark Yatra on October 2, 2017 at Bhubaneswar went a step further by saying, “Our aim is to make Odisha No.1 state in the country”.

 

For instance, developed states usually have a high component of gross state domestic product (GSDP) comprising the industrial and services sectors. Odisha does have a predominant services sector, but much of it is not in what might be termed the “modern” segment of the economy. Besides, the manufacturing sector is still lagging much behind the developed states.

Odisha’s economy has witnessed several structural changes during the last four three and half decades or so, many of which seem unusual. It is true that with economic development, share of agriculture and allied sectors in both GSDP and workforce, progressively decline.

“But the Odisha economy has not benefitted due to this positive change, as around 62% of the workers of the state still continue to depend on the sector for their livelihood”, says The Odisha Economic Survey- 2016-17.

Consequently, farmers are, by and large, a distressed lot. Agriculture is still reeling under the subsistence nature of operation, relatively small size of landholdings, high incidence of indebtedness, inadequate and poor irrigation infrastructure, limited access to credit, weak market linkage and natural disasters.

If we look at Odisha’s production figures, it has hovered around 85 lakh MT (median figure) since 2003-04 till now. Agriculture production has fluctuated from year to year, and many years have seen negative growth. Paddy accounts for 92% of all agricultural produce in the state.

Farmers in Odisha are relatively poor discouraging them to grow capital intensive commercial crops like cotton, sugarcane or soybean. A large majority of them don’t even own farm land. They till others’ land as sharecroppers. Without access to formal credit from banks, even for growing paddy, they have to borrow from moneylenders at extortionate interest rate as high as 40%. Absence of Tenancy Act increases manifold their vulnerability since even if they suffer crop loss due to natural calamities, they are compelled to pay to the land owners a verbally pre-agreed share of crops or its monetized value. Compulsion to sell paddy at rates far below input cost compounds their misery.

Debts keep on mounting and the cumulative distress, when it becomes unbearable, compels them to take their lives. As per National Crime Records Bureau (NCRB), over 5,000 farmers have lost their lives due to agrarian distress since 2000. The number may appear small in comparison to some other states like Madhya Pradesh or Maharashtra but it should still cause serious concern to any government.

The transformation of an agrarian economy takes place first into an industrialised economy and thereafter into a service dominated one. However, in case of Odisha – the state’s development process seems to have bypassed the industrial sector. The share of industry sector in the state’s net state domestic product [NSDP] has been 28.4 per cent and that of manufacturing a dismal 8.6% during 2001-12.

However, there has been a paradigm shift and the industry led economy of Odisha is quite visible with manufacturing and mining sectors contributing sizeable 18.27 per cent and 7.36 percent share to GSDP in 2016-17. The state appears to be in an enviable position to step up industrialisation with an enabling policy frame work coupled with the necessary institutional arrangements, liberalised policy, single window system and so on.

Despite the failure or two mega steel projects by ArcelorMittal and Posco to take off, the Odisha government has received investment commitments worth more than Rs 2 lakh crore from 74 companies in various sectors, including electronics, food processing, metals and minerals.

Even on the troubled question of infrastructure, the state’s progress has been at a snail’e pave. The Indian government will shortly come out with ranking of states on logistics (which covers trade infrastructure, international shipments, timeliness, customs, etc), which will help the potential investors.

More than the economic structures and systems, the question of income levels and social indicators is key to categorise the state as developed one. “A record 8 million people have been moved out of poverty. Five million women are the part of mission shakti movement leading to social and financial empowerment. We are the leading State in proving land rights to our tribal population. Our growth rate is higher than the national figures. Our social sector interventions are the model for the entire country. We are one of the leading States in attracting investments. Our capital city Bhubaneswar topped the smart city challenge, Naveen pointed out in his speech recently at Delhi.

On a comparative basis, according to a report by the Union Finance Minister Arun Jaitley, Odisha is the third highest in infant mortality rate with 53 deaths per 1000, while having the highest death rate (8.5) against the then national average of 7.0. And all these statistics go completely against every excuse any government could provide for the lack of development in the state. Odisha has had a stable government for 17 years.

The human development index is a composite of three indicators: Per capita income, levels of schooling, and life expectancy. On the first of these, Odisha’s per capita income puts it in the “lower income” category. To cross into the “higher income” category would mean more than doubling per capita income. Reaching the average for per capita income of developed states would mean a further doubling and more, and is a very distant prospect.

Odisha’s per capita income was Rs 61,678 against the national average of Rs 81,805 in 2016-17 indicating that the per capita income of India is about 1.3 times higher than Odisha while the PCI of top three states were Kerala [Rs 1,15,225]. Uttarakhand [Rs 1,20,759] and Haryana [Rs 1,24,092].

Not surprisingly, Odisha is among the last four ranks amongst the large states in Public Affairs Index – PAI 2017, along with Assam, Jharkhand and Bihar, according to the Public Affairs Centre (PAC) – a not-for-profit research think tank based at Bengaluru.