The relatively better economic performance of Odisha during the Covid pandemic can be because the State’s economy is significantly dominated by the manufacturing sector, which primarily is founded upon the rich mineral resources of the State.
As per the Odisha Economic Survey 2020-21, the share of the Industry sector in State Gross Value Added (GVA) has remained around 40 per cent since 2011-12 but it is expected to be 36.26 per cent, as per 2020-21 (AE).
The manufacturing sector is the largest contributor with a share of 17.55 per cent to GSDP in 2020-21 (AE), followed by mining and quarrying (8.98%). Odisha’s industry sector is mostly led by mining and metal industries which includes mining of mineral resources like iron ore, bauxite, coal, chromite and others as well as the production of steel and aluminium.
The Union Government under the ESMA (Essential Services Maintenance Act) exempted ‘production, supply or distribution of coal, power, steel or fertilizers’ and ‘operation of mines of iron ore, cooking coal, thermal coal, limestone, dolomite, manganese and chromite as well as operations of ferroalloys and iron ore pellet plants which supply critical raw material for steel making’.
Such moves helped Odisha's industry sector that provides about 30 per cent of employment in Odisha during the pandemic to continue its operation and contribute to the State’s economy. Operations of these industries also facilitated allied sectors like road transportation of raw material and finished goods, port operation and rail transport.
At present, the total installed capacity of steel plants is 32.82 MTPA, as per the Odisha Economic Survey 2021. The State is now the largest steel and stainless steel producer in the country. More than half of the aluminium in India is produced in Odisha also.
In the financial year 2019-20, Odisha produced about 19 million tonnes of steel and in the financial year 2020-21, the steel plants in Odisha produced about 20 million tonnes of steel (up to December 2020). Similarly pellet making capacity and sponge iron making capacity in Odisha is about 30 million tons and 15 million tons. From April 2020 to December 2020 the State-based plants have produced about 9.6 million tons of pellets and 3.8 million tons of sponge iron.
Considering their iron ore requirement and mining operation to support the production of steel, pellet and sponge iron, it is estimated that these industries have contributed more than Rs 3,500 crore of revenue to the State exchequer.
This revenue is from mining levies such as royalty and contributed to the NMET and DMF and does not include the GST applicable on the value-added products. Such huge revenue contribution during the time of the global pandemic, when the economic activities were severely affected due to the pandemic control measure, is a great respite for the State economy and the Government.
In addition to these, the operation of these industries also helped in ensuring employment to over ten lakh families, directly and indirectly. The aluminium industry of the State also continued its operations and supported the State's economy in a similar fashion.Continued operation of metal and mineral-based industries is also evident from the report on the traffic handled by Paradip Port, which is a major port of India. In 2020-21 (up to January 2021), the Port handled more than 150 lakh MT of iron ore, 82.88 lakh MT of iron ore pellet, 12.45 lakh MT of Hot Rolled Coils, 8.14 lakh tons of steel billets, 2.28 lakh MT of steel slabs, 1.35 lakh MT of steel plates and various other materials.
Data reveals that the amount of most of these materials handled by Paradip Port has increased, compared to the previous year. These mineral metal industries which include some of the large industrial organisations in the State such as Tata Steel, Odisha Minining Corporation (OMC), NALCO, Vedanta, Jindal Steel and Power, Aditya Birla and JSW have also contributed significantly to the State Government’s fight against Covid-19 in various ways.
The Government of Odisha was the first State in India to set up exclusive Covid-19 hospitals with support from corporate social responsibility (CSR) funds of industries. On March 29, 2020, the Government signed a memorandum of understanding (MoU) with two private hospitals to set up dedicated Covid-19 hospitals with CSR funds of the Odisha Mining Corporation.
Several companies like Tata Steel, JSPL, Nalco, MCL and several others set up dedicated Covid-19 care centres / hospitals at various locations in the State.
These companies also assisted the Government and administrations’ fight against Covid-19 with various CSR activities like providing free food to the needy, distribution of face masks, sanitisers, community sensitisation drives etc.
Some of the companies also helped in facilitating the supply of oxygen and ventilators to the Covid-19 care centres run by the State Government.
Several mining and steel companies in Odisha also contributed significantly to the Chief Minister’s Relief Fund (CMRF) and PM CARES Fund. Odisha Mining Corporation contributed Rs 250 crore to the CMRF.
Companies like SAIL, Jindal Stainless, IMFA and others contributed considerably to the CM Relief Fund.
Similarly, JSW, Jindal Steel, Vedanta and several other companies having a significant presence in Odisha’s mining and metal industry donated to the PM CARE Fund.
Such efforts by the State-based metal and mining industries were also very helpful for the State Government and the local administrations to fight against and control the global pandemic.
Reserving a part of a portion of mineral resources for use by industries operating in the State would work as an incentive for investors, new and existing, to invest in the State, which in turn will generate more revenue to the State exchequer as well as create more employment thus facilitating welfare programmes and socio-economic development initiatives by the State Government.
We must recognise the fact that despite all efforts, Odisha still lacks attraction for other industry sectors like automobile, electronics and others.
The industrial climate remains very attractive for metal and mining industries because of various natural advantages like raw material, port and others. The State Government need to continue promoting this sector further and encourage existing investors for brownfield expansions. This is because existing investors know the State’s industrial environment and it would be easier for the State Government to reach out to them.
Secondly, brownfield expansions would require less land acquisition and minimal displacement, which is a major challenge for most industrial projects across the globe. Existing facilities created by the industries such as railway lines, water supply, rehabilitation mechanism etc. can be used, reducing the overall cost of the projects.
Existing infrastructure like railway corridors and roads can be used optimally. There will be more conservation of agricultural land and minimal damage to the forest and environment as less land would be required for the project and related infrastructure.
The High-Level Clearance Authority (HLCA) and State Level Single Window Clearance Authority (SLSWCA) of the State Government should give preference and priority to brownfield projects over greenfield projects. Newer technology in steel making and mineral processing like hydrogen-based steel making, coal gasification technology, automated drilling, use of the internet of things (IoT) and artificial intelligence in mining should also be encouraged to minimise the environmental damage and maximise productivity.
Odisha should incentivise such brownfield expansions by providing exemptions in taxes and electricity duty. An assurance for time-bound clearance of various permissions and approvals required for the project would also be highly beneficial.
This will in long run create a robust industrial economy of the State, reducing employment pressure on the agriculture sector and further expanding the service sector in the State. The State with its existing band of investors can be a lead producer of metal and mineral resources, thus becoming an industrial powerhouse of India.
(The writer is a researcher and advisor of Odisha chapter of the Centre for Socio-Economic Studies, New Delhi)