First Foundation Day Lecture

The Story of Our State

by Bijaya Patnaik IAS
Chief Secretary, Government of Orissa

29th Nov 2010

Prof. Gopal Nayak, My friend D. N. Gupta, My Friends!

I must thank you for inviting me to deliver the First Foundation Day lecture of IIIT. When the Director Prof. Gopal Nayak first asked me to give this lecture, I asked him what I should talk about. Very generously he told me that I am free to speak on any topic of my choice. Indeed generously because if had asked me to speak on IT, I would have run away. The only IT I know of is the Income Tax Department which takes a substantial portion of my salary away.

Prof. Nayak spoke about Inspiration and how the Institute relies of Innovation and Inspiration for its future growth. Ladies and Gentlemen, let me remind you that while Inspiration is important, as the saying goes, three-fourths of inspiration is perspiration. With hard work in place and with spirit of innovation and inspiration will take you to places. Being bright students, you are born with the spirit of innovation and inspiration or else you would not have been selected to this Institute. I congratulate you on the merit you have earned.

For today’s lecture, I thought instead of telling you what you should or should not do, I will tell you a story. On a birthday of you take a box of chocolates or a bouquet of flowers or a bottle of wine. I could not bring any of that. I will tell you the story of the state we live in. We as individuals, you as students or faculty and I as an administrator do not live in isolation. We live in a mileau. We live in a set of circumstances. Therefore we must know who we are before we setout to do what we want to. Therefore I thought I will tell you about the State of Orissa.

How it has started its journey, where it is today and what you can do for the state. You must be knowing that the state of Odisha was born on 1st april 1936, not a difficult date to remember. It was carved out of three provinces. The states were Bengal in north, Madras in south and the Central Provinces. It was Madras Province in south because AP was not born. When the state was formed, the territories ware outlying areas of the above provinces. They were full of forests. 40% of Odisha is covered by forests. Because of its peculiar terrain, though very sublime and very serene, from the point of view of a ruler, be it Maratha or Mogul or the British, Orissa was not important because Orissa did not give them revenue and hence they did not invest in Orissa. If you look at governance pattern in Orissa in British times, there was a big divide between the people and the rules. It was because of the terrain, distances and the low revenue the state gave them. If you go back in history, the Bengal system adopted as the method of permanent settlement. The permanent settlement means whoever is cultivating the land is not the owner. The owner of the land is someone called the Zamindar. The British selected the Zamindar was selected through a process of auction. Theere used to be an auction and whoever offered max revenue was selected. He took a particular territory consisting of a few thousand of villages and became virtual owner of that Zamindari till his contract lasted. In a system like this the common farmer had very little stake. He was totally at the mercy of Zamindar. The Zamindars interest was to maximize his returns. Hence, he would choose a farmer who will give him maximum return. Hence, there was no sanctity, stability for the farmers. There was no connection between the farmer and the British ruler. The state was very low in governance at that time.

The revenue of Orissa in 1936 was only one crore. Today the revenue of the government is more than 13000 crores. There was no census in 1936. By some estimate the population was 1. 5 crores in 1951. Today it is 4 crores. The literacy figure in 1951 was 15.8%. Literacy means ability to read and write; it is not education. The literacy among the women was merely 4.5%. I described this long history to tell you about where we started.

After India got Independence, we started building our state through the planning process. You must be familiar with the planning process introduced by our first Prime Minister Jawaharlal Nehru. The basic purpose of planning was to bring about balanced growth to all parts of the country. When you have a literacy rate of 15.8%, poor health indicators, only 3 lakh student on the whole state, how far can you go even with the planning process. Nevertheless, under different plans, we started a process of induced growth. Induced growth means the state will induce growth by making investments and interventions. The biggest intervention made in the Center was the Hirakud Dam. The investment was only 100 crore. The budget of IIIT is 50 crores. We will scale it up as we go along. The Hirakud Dam which irrigated 3 Lakh Hectares in Coastal area and about 1.5 lakh hectares in western Orissa cost only 100 crores. When compared with the states revenue of 1 crore per year, 100 crores was a fortune. As we started our developmental process, the finance of the state went from bad to worse. Why did this happen? In a state like Orissa, the state had to set up schools, colleges, hospitals. Apart from that state had to promote agriculture, irrigation etc. Since there was no scope for private investment, the government had to invest in dams, setup manufacturing units and public sector units. Above all the government had a bloated bureaucracy employing more than 5 lakh employees. The income of the state did not commensurate with the expenses resulting in huge fiscal deficit. To cap it all, in 1999 we had to suffer the super cyclone in 1999 which was one of the worst disasters to hit the country. That took more than 5000 lives and shattered the economy of the coastal Orissa. That was the story of Orissa’s economics from 1936 till the end of the century.

By the turn of the new century thing have started to improve. The population has grown from 1.5 crores to about 4 crores. Our literacy has caught up with the national average and has reached 63%. The revenues of the state have grown from 1 crore to 13500 crores. The GSDP was 9000 crores in 1951 and today it is 90000 crores at 2000 prices. The growth rate has picked up from sub 5% to 9.5% in the 10th plan when the country was growing at 7.8 %. In the first 3 years of the 11th plan we have maintained a growth rate of 8.7% against the national average of 7.9 %. From the year 2003-04 the tide has turned. We have signed 88 MOUs in steel, aluminum, ports, chrome, IT etc. We have signed 50 MOUs in Steel. And 30 of them have gone into full or partial production. If you happen to go around the state you will observe immense industrial activity. For a long time we had only one port – Paradip. Two more ports have been added – Gopalpur and Dhamra and couple of more in pipeline. Orissa has remained the most favoured investment destination in the country. We rank either the first or the second in size of investment made in the country. We expect to maintain the tempo in the years to come. I have given you this picture in 1936 and 2010 so that you understand where we started and where we have reached.

Having achieved what we have achieved, are we satisfied? What is the road ahead for us? In spite of shining performance in terms of growth, Orissa remains one of the poorest states in the country. The biggest challenge before the state is poverty. In 1973-74, 66% i.e. two thirds of our population was below the poverty line. Today i.e. in 2004-05 the percentage has come down to 40%. We have been able to reduce to reduce the poverty by 26% while the rest of the country has reduced the poverty by 33%. That means, we doing well but other states are doing better. That is where I will request you to play your role. We have 9000 people working in the IT industry in the state. The export figures are about 1200 crores in IT. That represents only about 1% of the country’s export. The entire field is open to you.

Apart from reduction of poverty, there is a lot to do in infrastructure. We have been able to irrigate about 40% of the land. We have potential to irrigate another 20 lakh hectares of land. And the investment required is 60000 crores. If you want to provide roads to villages with a population of 250, you need 30000 crores. If you want to power to all the villages, provide healthcare to everyone, bring industry for job creations, you can imagine the size of the problem. Our plan size is about 10000 crores. It has grown 4 times in last 10 years. If we want to provide Bijli, Sadak and Pani to everyone, it will take 30 long years.. And crux of the matter is how do we raise such resources.

If you look at today’s papers, you will observe a great debate being raised on the issue of industrialization. Why is the Government laying so much emphasis on Industrialization, Tourism, IT etc. They claim we are pandering to the need of the Industry. There is a continuing debate on Agriculture vs Industry. Let me tell you that it is not about Agriculture vs Industry, it is about Agriculture and Industry. The agriculture needs irrigation, power, roads, seeds, godowns, technological services and other infrastructure to flourish. Where do you get the money for all these. The source of money is Industry and Services. That is why the Government is keen to promote the Industry.

Therefore, we need to create an environment which facilitates industrialization whether we like industry or not. A lot of controversy has been created about Posco. One plant of Posco 12 metric ton will have annual revenue of 2500 crores. IT creates jobs. These people spend money which gives government tax revenue and creates secondaty jobs. Hence, let us not get carried by Agriculture vs Industry debate. Both are necessary and one complements the other. Hence there is nothing wrong in fostering industrialization and IT sector.

Promoting Industrialization is not as simple as having 88 MOUs, so many power plants etc. Big investments bring big problems. One such big problem is displacement. The story of displacement has its roots in an act formulated in 1894 called land acquisition act. It was formulated before Orissa or India was born. By virtue of act the Government is in a position to acquire private property for public purpose. Since act was formulated by the British, it was very stringent. The Government notifies to acquire a piece of land and the if you are aggrieved, the Government is bound to listen to you but not bound to agreeing with you. After listening if the Government decides that the land is required for public purpose, the Government will acquire the land by paying you some compensation. The act was used by British for the developmental work. The act is being used today also. In Singur, the land was acquired and a plant was built and then it had to be closed because of protests. So acquiring land is a very difficult task today as the people have become conscious of their rights. They have an attachment to the land beyond economic reasons. It is their sentiment, identity and rooted in their culture. When you displace them, there is agitation. You may agree or may not agree with the agitation; the agitation may be carried out by a few people, but using force is not an option. You need to motivate the displaced people and take them along. The Government of India is thinking of changing the land acquisition act. Today we need to give them jobs, share profits apart from providing compensation.

The story of giving jobs has strange consequences. When the Steel plant in Rourkela was setup, it had a very progressive policy. RSP gave jobs to people who were displaced. However, the villagers did not like the plant atmosphere as it was hot. So they sold their appointment orders for a consideration. When I was the Collector in Sundergarh, I received a complaint from a young man that so-and-so is working in the name of his father in RSP. When we investigated we found that the father had sold his job to another person and he is working in the name of his father. Providing jobs is not a full solution to the displacement problem though it may be a partial solution. Even today, when a job is offered, the person refuses to work claiming that salary is in lieu of the land he had given away. Providing Job is not a complete solution and in any case all the people cannot be given jobs.

In Haryana, the Government’s policy is to provide a annuity to the displaced apart from compensation. Some of the industries in our state have started thinking in this line.

Tomorrow, you will be in charge of industrialization and you just cannot grab land. You will have to explain how the displaced will benefit from industrialization. You will need to innovate in the industrialization process. That is the concept of inclusive growth.

The other major problem we face today is the threat of pollution. We have signed 27 MOUs for power plants. We need 3000 MW of power. If all the 27 MOUs fructify we will have 42000 MW. We will be the power house of the country. But all these power Plants will also produce 100 Metric tons of fly ash every year. We will have environmental problems. We will disturb the elephant corridors leading to man-animal conflict.

Water is another problem. There is a fear that industrialization will lead to drying of the rivers. Hirakud Dam, Naraj, Mundali and Cuttack barrages will go dry. Cuttack city will have no drinking water if Posco is setup. What is the truth? From Hirakud reservoir the water promised for industry is less than 10% of its capacity. The water needed to irrigate our farm land is only 34% of the capacity. So even if give 10% water to the Industry will the farmers be deprived of water?

Let’s now look at Posco. There is apprehension that Posco will result in Cuttack city with no water. The Taldanda canal system will run dry. Do you know that we use only 12% the water for irrigation. More than two-thirds of the water goes into the sea. Still there is this apprehension that industrialization will lead to no water in Orissa.

I shared all these facts, problems, impressions and challenges so that as intelligent persons and future citizens of the state you can shape your future. Should we fold up under tent in the face of all these challenges. There is a saying all is well that ends well. And if it is the not well then it is not the end. Remember this whenever things do not go well.

Orissa has grown from a state steeped in poverty, illiteracy and no infrastructure to one of the high growth states in the country. We have come from jungles, hills and forests to the high streets. As budding professionals, managers and entrepreneurs, I invite you to join the glorious march to peace and prosperity.

Thank you and I wish you all the best.