By Nageshwar Patnaik in Bhubaneswar, June 3, 2018

“Odisha marches ahead to ‘Take off’ stage of growth in its economy. Political stability and abled economic leadership pave the way for Odisha to an empowered and developed economy of the nation…… Sustained Team work, Transparency and Technology may transform Odisha into a self-sustained developed economy”. – Odisha Economic Survey – 2017-18

Odisha has come a long way from a “starving”, “land of snake” and “child sale” state to a fast growing state in the last one and half decade. And yet, it has miles to go as Odisha’s Gross State domestic Product (GSDP) is a mere 2.4 per cent of the country’s Gross Domestic Product (GDP) even now.

With 4.8 per cent of India’s landmass and 3.47 per cent of its population, the resource rich state’s economic output is much below its potential. With the state having a coastline of 485 km, spread from Baleswar to Ganjam districts, and possessing almost 20 per cent of India’s mineral wealth, it still remains economically backward.

Between 1950 and 1980, Odisha clocked 2.77 per cent rate of growth, below the Hindu rate of growth of 3.5 per cent for the rest of India and was in the headlines of media for starvation deaths, child sale, natural disasters and underdevelopment. In the next decade, its growth rate went up to a low 4 per cent. But with the opening of the economy, liberalization in 1990s, things started changing. The state faced its worst natural disasters in 1999 when a Super Cyclone hit the state killing nearly 10,000.

Naveen Patnaik took charge of a cyclone ravaged and economically bankrupt Odisha in 2000 and has led the state to grow like never before up till now. The state’s economy surged to over 8 per cent growth between 2003-04 and 2011-12 and the economist attribute the turnaround to the general boom in the country between 2003 and 2012, a spin-off from globalization.

Besides, at 8 per cent, Odisha grew at a much faster pace than the rest of the country during this boom period largely due to a much lower base previous to 2000 compared to the more developed states. At the same time, one cannot dispute Naveen’s leadership and direction that led to the industrial turnaround in the state especially in manufacturing and mining.

Between 2011-12 and 2016-17, however, witnessed a decrease in the growth rate-to 7 per cent largely due to slow down across the country, yet above the country’s average of 6.8 per cent.
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The percentage of population living below the poverty line declined from 60.8 per cent in 2004-05 to 39.2 per cent in 2009-10. In fact, poverty reduced incredibly by average annual reduction rate of 3.5% percentage points as against a lower reduction rate of 2.18 percentage points at All India level. The literacy rate has gone up by almost 25 per cent from 1991 to 2011.

Nevertheless, there is a widespread disparity between the coastal with hinterland. The prosperity of its coastal areas is in sharp contrast to the poverty of the tribal hinterland. “If the state succeeds in reducing this gap through a green revolution, it can easily shed its BIMAROU (acronym for Bihar, Madhya Pradesh, Rajasthan, Odisha and Uttar Pradesh, referring to their poor economic conditions) tag and compete with the more developed coastal states”, says former chairman, Odisha State Finance Commission and noted economist, Dr Sudhakar Panda.

Following fiscal discipline as per the advice of the then Finance Commission, Odisha turned into a revenue-surplus state. During 2011-12 to 2016-17, the state’s economy grew steadily at an annual average rate of 7.02 percent. In 2016-17, Odisha has bounced back to double digit real growth rate of 10.39 percent; increase in real per capita income to Rs.63,674/-, recorded low level of price inflation of 1.3 percent, with above 27 percent growth in the crops sector accompanied by decline in unemployment rate.

Even in 2017-18, Odisha has clocked a growth rate of 7.14% beating the national average of 6.5%, according to the Economic Survey Report 2017-18. Farmers’ income has doubled in the last decade. Poverty ratio fell sharply and over 8 million poor people were pulled out above poverty line between 2004-05 & 2011-12. Infant Mortality Rate stands reduced from 96 per thousand live births in the year 2000 to 40 in 2015-16.

The Survey, however, admits low growth in agriculture sector and diminishing contribution of industry sector to the GSDP. The Perspective State policies, strong institutional mechanisms, skilling of potential youth and enhanced sectoral outlays in priority sectors expect to maintain the optimistic growth trajectory of Odisha’s economy in future, it says.

In fact, it was during the tenure reign of Naveen’s father late Biju Patnaik, Odisha began work for an industrial take-off. Way back in 1993, the state was flooded with 13 steel plant proposals. But it took almost a decade to materailise during the present chief minister, Naveen Patnaik’s tenure.

Odisha has rich deposits of coal, iron ore, bauxite, dolomite, limestone, manganese and graphite. It has about 95 per cent of chromite, 92 per cent of nickel ore, 55 per cent of bauxite, 33 per cent of iron ore, 24 per cent of coal, 20 per cent of fire clay and 43 per cent of graphite reserves of the country.

The state is all set to have an incremental steel capacity of 56 million tonnes per annum (MTPA) in the next few years, taking its overall production level to more than 100 MTPA by 2030.

“As of now, steel plants in the state have an installed capacity of about 33 MTPA, with commitment for another over 56 MTPA in the next few years as major proponents like SAIL, Tata and JSPL have plans for expansion of their installed capacities,” the state government recently in a letter to the Centre pointed out while seeking relaxation of area limits for mining leases of iron ore.

There are as many as 45 memoranda of understanding (MoU) with the state government for steel projects and 33 other firms are working on steel plants. Of these, 10 projects with a capacity of 13.13 MTPA are in the project implementation stage and are likely to be commissioned soon. The remaining steel plants have already been commissioned with an installed capacity of 25.7 MTPA and a committed capacity of 47.84 MTPA.

However, the state suffered a setback, when the much billed South Korean steel giant POSCO withdrew from the much hyped 12 million ton steep plant near Paradip. Now the state government virtually banks upon JSW for setting up a 12-MTPA Greenfield steel plant at the same place.

Establishment of four investment regions for industrial clusters at Kalinganagar, Paradip, Dhamra and Bhubaneswar, Make in Odisha conclave in 2016, Single Window Investor Facilitation Portal like GO SWIFT are expected to attract investment to spur industrialization in Odisha.

But the key to sustainable and equitable growth can only happen in the aftermath of an agricultural revolution. “If Odisha is to emerge out of its BIMAROU status and compete with the developed coastal states, it must focus on agriculture and allied sectors. The way to prosperity across the state can only be possible via a green revolution in the KBK region and by replicating the development experience elsewhere in the country”, remarks former National Farmers’ Commission member, Jagadish Pradhan.