Odisha’s Industrial Activity Persistently Declines Under Naveen’s Rule



A day after Union Petroleum minister launched scathing attack on Odisha CM Naveen Patnaik over issue of stalling central government and Public Sector Undertakings (PSUs) project in the state, new statistics emerged that clearly shows that ranking of Odisha has persistently declined on various business parameters during last few years under the CM ship of Naveen Patnaik.

Industry experts pointed that despite Odisha making tall claims of improving manufacturing and investment scenario in the State, the reality is very different is evident from various studies undertaken in the recent past. Interestingly CM Patnaik organized a roadshow in New Delhi to attract investment in the state and to invite the investors to the Investor Summit being organized in Odisha.

When we churned up the database of performance of various states on industrial parameters, picture that emerged was quite grave for Odisha. Interestingly Odisha is now ranked 14th in the World Bank DIPP’s Ease of Doing Business ranking of States. This has seen a sharp decline from 7th rank in 2015 and 11th rank in 2016. In addition to this Odisha has been ranked 17th in National Council for Applied and Economic Research (NCAER)’s 2018 State Investment Potential Index which is a 6 place drop from last year, while state was placed at 24th position in Public Affairs Index 2018 by Public Action Committee among 30 states. This shows poor and unaccountable governance. Odisha is ranked 29th in both Fiscal Management and Transparency & Accountability parameters and 27th in essential infrastructure.

As per RBI data too, in 2009 Odisha was the top destination for FDI investments but by 2017 has slipped to the 12th among 16 major FDI destinations and it ranked 2nd worst (20 out of 21) in NCAER rankings for land provisioning for businesses

Industry sources are also quite blunt about the negative business climate in the states. They are of the view that the fledging law and order situation, and at times State-backed patronage to the industrial strikes have sent wrong signals to the investor community and eroded confidence in the business climate of the State. Instances of industrial strikes in IMFA Therubali plant, Raigada between April –June 2018, at J& K Paper mills in August 2018 and at MCL in Talcher over the past few months have crippled industries in the state. The strike at Talcher not only adversely affected operations in MCL but also led to severe coal crisis at the 3000MW NTPC Kaniha Thermal Power Plant.

Business community is also murmuring about increase in mafia gangs operating in various industrial hubs. Industrial and infrastructural development activities have been adversely affected due to the operation of these gangs in places like Paradip and Jagatsinghpur who control the supply of minor mineral resources and supply and transportation of industrial raw materials. The steel industry in Odisha has cried horse over the non-implementation of notification regarding freight rate for mineral transport in the state.

Opposition is also criticizing poor implementation of CM’s claims of signing of various MOUs in the state. Though government claims that 92 MoUs worth Rs. 5.68 lakh crores have been signed between 2004 to 2018, only 46 of those MoUs has materialized. Manufacturing sector contribution to Odisha GSDP has declined from around 19% in 2012 to 16% in 2018. Opposition says that though BJD in its election manifesto had claimed that “Sincere efforts will be made for revival of sick and closed industries”, the CAG report states that 15 State Public Sector Undertakings incurred loss of Rs. 507.36 crore as per their latest finalised accounts.

Importantly due to lack luster industrial policy and poor implementation on the part of state government, “Make In Odisha Campaign” has also left with glaring holes. Many of the flagship projects projected in the Make in Odisha such as the National Industrial Manufacturing Zone, petro-chemical investments and Plastic park in Paradip are initiatives of various GoI Ministries. Various Central Public Sector Units like Oil sector PSUs, NTPC, NALCO, SAIL, MCL, etc. have ongoing and proposed investment of Rs. 2,15,893 crores. Railways and road sector have ongoing and proposed investments of Rs. 60,316 crores.

Various central ministries have also red-flagged the state administration’s role in stalling central projects by politics of populism. Few of these projects are:

  • 7 Railway projects with a length of 1,042 kms and investment of Rs. 12,321 crores stuck due to delay in land acquisition. Some of these are the Khurda Road–Bolangir, Talcher-Bimalagarh line, Haridaspur-Paradeep, and Angul-Sukinda railway lines.
  • Execution of 17 critical NH projects, in the State totaling a length of 1155 kms having project value of Rs 12,868 crores has slowed down due to delay in land acquisition and providing necessary forest clearances by the State Government.
  • Ministry of Road Transport and Highways had in March 2018 identified 34 roads covering 2,526 km length of road in Odisha which have the potential to be declared as NH, however, there has been no revert from Odisha Government so far.
  • Odisha prides itself for its power sector reforms. The power sector has now been fraught with various problems. The quality of power supply to industries has become a cause of concern with low voltage issues, frequent unscheduled load shedding hampering industrial activity. Transmission and Distribution losses are at 37% which results in higher tariff for the consumers. ADB study expects power tariff for industries to increase due to ageing state generating plants.
  • The Govt of Odisha is delaying the High Level Committee (HLC) clearance to the NTPC Ltd’s Rs 9,785 crore Talcher expansion project. The clearance for the project was applied online for single window clearance on 19.04.2017. These and such delays create doubts over the efficacy of the much hyped Govt of Odisha Single Window for Investor Facilitation and Tracking (GO-SWIFT) scheme.
  • The proposed Aluminum Park at Angul has not taken off due to the State run IDCO’s (SPV Partner) delay in providing access to site and associated infrastructure.
  • Sunrise schemes such as those for establishing the food park and the electronics cluster have been awfully delayed by the inaction of the State Government as IDCO has not fulfilled the conditions for setting up of the food park. Only Rs. 73 crores of the allocated Rs. 128 crores have been spent for the Mega Food Park Project at Deras. Slow project progress by Industrial Development Corporation of Odisha (IDCO) has led to non-completion of the project even after 33 month since approval. The project was slated to be complete by May 2018. The Ministry of Food Processing Industries has expressed consternation at the lack of State Government initiatives to popularize the scheme for setting up food processing and preservative capacities (Creation/Expansion of Food Processing and Preservative Capacities- CEFPPC). No proposal has been received till date.
  • Insofar as the Electronics Cluster is concerned Ministry of Electronics and Information Technology has given final approval to M/s Odisha Industrial Infrastructure Development Corporation (IDCO) on 5th September 2016 for setting up Greenfield Electronics Manufacturing Cluster over an area of 203.37 acres at Infovalley, Bhubaneswar Industrial Area. Actual implementation has been slow and cancellation of tenders in the cluster and frauds in the Infovalley constructions by M/s Odisha Construction Corporation Limited have given the project bad press.

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