SUN RISES OVER ODISHA
With historical roots in the Kalinga empire, a 485 km coastline and 20 per cent of India’s mineral wealth, Odisha can become the next breakout state, provided it replicates the development of its coastal belt in its hinterland
Attracting the highest private investments in industry—mainly in manufacturing and mining—compared to other states and clocking 8 per cent growth rate between 2003 and 2011, Odisha has dramatically reduced poverty. 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. The literacy rate has gone up by almost 25 per cent from 1991 to 2011. Through major innovations in disaster management, the state successfully evacuated a million people during supercyclone Phailin in 2013. Yet, the prosperity of its coastal areas is in sharp contrast to the poverty of the tribal hinterland. If Odisha reduces 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.
The annual Jagannath Rath Yatra, the ornately sculpted Konark temple, the awesome architecture of the Lingaraja temple—all conjure up alluring images of Odisha. With a two millennia-old heritage of the Kalinga and Kharavela kings, Odisha remains culturally rich, but economically poor—a typical BIMAROU state. However, since 2000, with a new party in power (Biju Janata Dal), led by the visionary Chief Minister Naveen Patnaik, the state has doubled its growth rate after 2003.
What triggered such a growth surge since 2000? One major cause is the beginning of liberalisation in 1991, heralding the end of the licencepermit raj and easing the entry of new enterprises. It was also a direct result of the general boom in the country between 2003 and 2012, a spin-off from globalisation. However, at 8 per cent, Odisha grew at a much faster pace than the rest of the country during this boom period. This could partly be result of a much lower base previous to 2000 compared to the more developed states, but partly also because of an industrial turnaround in the state
under a new leadership, especially in manufacturing and mining.
The Industrial Policy document of 2001 made a case for aggressive industrialisation by attracting private investment. The BJD government provided land at concessional rates, gave tax concessions, exempted new industrial units from electricity duty and rationalised labour laws. In 2007, the Patnaik government came up with a new industrial document with the purpose of transforming Odisha into a vibrant, industrialised state and promoting it as a manufacturing hub. A policy statement concerning micro, small and medium enterprises (MSMEs) was hammered out in the MSME Development Policy document of 2009. The objective was employment generation and value addition. Such concentrated efforts in industrial policy ended up pushing growth rates and increasing the industry’s share in the state’s Gross Value Added (GVA) to almost equal of services.
According to The Economy of Odisha, edited by Pulin Nayak, Santosh Panda and Prasanta K. Pattanaik, three factors aided the state’s growth: massive industrial investment, fiscal discipline and effective disaster management. “Many industrial houses were invited to set up manufacturing units in steel, ferro-alloys, aluminum, and so on. This would have contributed to the growth rate,” argue Nayak et al. “Second, following the advice of the Finance Commission, the state followed an oath of fiscal discipline and Odisha turned into a revenuesurplus state. Year 2003-04 turned out to be a pivotal point in this respect. This would have created a congenial atmosphere for growth. Third, the state government has taken some innovative disaster-management initiatives against cyclone and flood since 2003. These initiatives seem to have mitigated the negative impact of natural disasters on the GSDP (Gross State Domestic Product). This could also have contributed to the increase in GSDP growth rate.” Panda adds, “Investment in irrigation since 2003 has also been rather high as have been welfare measures for the poor.” Farmers’ income has doubled in one decade, says Ashok Dalwai, chair of the committee on doubling of farm incomes, Union agriculture ministry, and CEO of National Rainfed Area Authority.
The tragic memory of 1999, when almost 10,000 people died in a supercyclone that hit Odisha, served as a lesson for the new government that assumed power on March 5, 2000. During Cyclone Phailin in 2013, only 44 people died, thanks to an early warning system being put in place and a successful rescue mission that evacuated over a million people.
Other economists, however, are more critical of Odisha’s development. According to an 2013 government panel, headed by former RBI governor
Raghuram Rajan, which recommended a new index of economic backwardness to determine states that need special assistance, Odisha was ranked at the bottom of all states. Bihar was the second most backward. What was the criteria identified for backwardness? The Rajan committee had proposed an index of backwardness of 10 equally weighted indicators—monthly per capita consumption expenditure, education, health, household amenities, poverty rate, female literacy, percentage of Scheduled Caste/ Scheduled Tribe population, rate of urbanisation, financial inclusion and physical connectivity.
With 4.8 per cent of India’s landmass and 3.47 per cent of its population, Odisha’s GSDP is a mere 2.4 per cent of the country’s GDP. Clearly, Odisha’s economic output is much below its resources and 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’s a puzzle why it is economically at the bottom of the heap.
Panda accepts the rationale behind the Rajan panel report, but argues that economic growth is not a parameter in the report. He says: “The Rajan panel report is on the basis of 10 indicators, each indicator getting one-tenth weight. GSDP growth is not a parameter here. They take per capita monthly expenditure. This is just like computing Human Development Index. Countries growing rapidly need not have high Human Development Index. However, in overall assessment, Odisha certainly will be among the bottom five. Poverty has declined at a fast rate, but Odisha still has a high number of poor. Performance in education has improved, but it’s still worse than the neighbouring states. The Rajan panel report may be perfectly consistent with the strong economic performance in Odisha in the last decade or so.”
Panda contrasts the period before and after Naveen Patnaik became chief minister: Between 1950 and 1980, Odisha limped at 2.77 per cent rate of growth, below the Hindu rate of growth of 3.5 per cent for the rest of India. In the 1980s and 1990s, its growth rate inched up to a low 4 per cent. Patnaik took charge of a cyclone ravaged and economically bankrupt Odisha in 2000. However, when given a new direction, Odisha’s economy surged to over 8 per cent growth between 200304 and 2011-12. Panda says that the period between 2011-12 and 2016-17, however, witnessed a decrease in the growth rate—to 7 per cent in consonance with a general slowdown across the country, yet above the country’s average of 6.8 per cent.
Comparison with other states
Inter-sectoral comparison and interstate comparison reveal the story behind both Odisha’s growth surge as well as the backwardness of its hinterland. The turnaround in its fortunes is visible in the changing sectoral share of GVA. The share of agriculture in GVA in 2015-16 was just 14.7 per cent. The share of industry and services in the state’s GVA was 42.6 per cent each in 2015-16. Unlike Odisha, the economies of most states are dominated by services, the exceptions being Chhattisgarh and Gujarat, which are dominated by industry.
The spread of different sectors—agriculture, industry and services—in a study done for an earlier period by Nayak et al shows the remarkable transformation that the structure of Odisha’s economy underwent. Agriculture in Odisha’s GSDP declined steadily, from 55.7 per cent in 1982-83 to 26.67 per cent in 2009-10. The share of the industrial sector, which was 15.25 per cent in 1981-82, increased to 28.8 per cent in 2009-10. The share of the services sector, which was 29 per
cent in 1981-82, jumped to 44.53 per cent in 2009-10. Industry grew exponentially from 2009-10 to 2015-16, equalling the share of services.
Rich in forest, mineral and water resources, Odisha is ideal for an industrial take-off, provided other conditions for the sector are fulfilled. The state occupies 4.7 per cent of the country’s total geographical area but about 7 per cent of forest coverage, 10 per cent of water resources and 20 per cent of mineral resources. 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, according to government figures of 2010-11.
Odisha’s literacy rate, at 73.45 per cent, is higher than of all BIMAROU states, except Uttarakhand, at 76 per cent. However, its literacy rate is 20 percentage points lower than that of Kerala and 9 percentage points below Himachal Pradesh. Female literacy rate in Odisha is about 61 per cent, higher than of all BIMAROU states, except Uttarakhand. The gender gap in the literacy rate is 19 percentage points whereas the same in BIMAROU states ranged from 20.7 percentage points in Bihar to 30.4 percentage points in Rajasthan. As expected, the gender gap in the literacy rate of Odisha is higher than in developed states, such as Kerala, where it is 4.5 per cent.
Fighting poverty
Until 2004-05, Odisha had one of the highest incidences of poverty in the country, but high growth rates turned around the trend. In 1993-94,
about 60 per cent of the population was below the poverty line, which fell by only 2 per cent till 2004-05. Since then, the state has succeeded in reducing poverty substantially. Between 2004-05 and 2011-12, Odisha’s poverty estimates declined by about 25 percentage points. The incidence of poverty in 2011-12 declined to below 33 per cent. When compared to other states, this is better than three—Bihar, Jharkhand and Chhattisgarh—and matches the performance of two—Assam and Madhya Pradesh.
One of the reasons for high poverty in Odisha is its social composition. About 40 per cent of the state’s population comprises Scheduled Castes (17 per cent) and Schedule Tribes (23 per cent), the two most poor and deprived communities of the state. Poverty among the state’s SCs is the highest in the country; poverty among STs is second highest, after Chhattisgarh.
Poverty is highest in the southern KBK (Kalahandi-KoraputBalangir) region, followed by the northern areas. In the coastal region, the incidence of poverty is much lower. In 2011-12, the proportion of rural population living below the poverty line in the southern, northern and coastal regions were 48, 40 and 22 per cent respectively. The northern and southern regions account for almost 77 per cent of the state’s poor people. While about 46 per cent of people live in the coastal belt, only 22 per cent are below the poverty line.
The KBK region, which consists of the eight districts of Kalahandi, Koraput, Balangir, Nuapada, Sonepur, Rayagada, Malkangiri and Nabarangapur, is one of the poorest in the state. The August 2016 incident of Danu Manjhi, a resident of Melghara village of Kalahandi district, carrying his wife’s corpse on his shoulders for over 10 kilometres, since he had no money to pay for a hearse van, is a grim reminder of the situation in Kalahandi, which reported severe food shortages in the 1980s. P. Sainath, in his book Everybody Loves a Good Drought, wrote about how parents were forced to sell their children out of utter penury. The KBK region, holding 31 per cent of the geographical area, is largely tribal, with 39 per cent STs and 17 per cent SCs.
The Odisha Directorate of Economics and Statistics estimates district-wise rural poverty in the state from the National Sample Survey 68th round in 2011-12. About 12 out of 30 districts in Odisha have 50 per cent of the population below the poverty line, almost all in the KBK region. More than 70 per cent of the population of Koraput, Gajapati and Rayagada districts is below the poverty line. While Koraput and Rayagada belong to the KBK region, Gajapati district is part of coastal Odisha, but has high incidence of poverty as it is largely tribal. In sharp contrast, only 15 per cent of the population of Khordha and Cuttack—both part of coastal Odisha—is below the poverty line.
Only about 75 per cent of total households have access to safe water, a record below all the BIMAROU states, except Jharkhand. The health system in Odisha is mainly public with a very limited role for the private sector. Despite serious efforts by the state government, the overall status of public health remains poor. Life expectancy (2010-14) in Odisha, at 65.8 years, is less than the national average of 67.9 years. However, among BIMAROU states, Odisha’s life expectancy is better than Chhattishgarh’s at 64.8 years, Madhya Pradesh’s at 64.2 years, and Uttar Pradesh’s at 64.1 years. Infant mortality in Odisha is 40 per 1,000 live births, lower than the national average of 41 per 1,000 live births and lower than all BIMAROU states, but it lags behind all the coastal states and the developed states.
The growth surge in the state in recent years has not translated into better Human Development Index. Only about 30 per cent of households live in good pucca houses compared to 50 per cent households in the rest of the country. In terms of housing quality, Odisha is below all BIMAROU states. As per the 2011 census, only 23 per cent of the households have access to toilet compared to 50 per cent households in the country. Only 4 per cent of the households in Odisha have access to closed drainage. Odisha’s record in sanitation and availability of toilets is below that of all BIMAROU
states. Though the state government has made serious efforts to improve the health condition of the people, much effort is needed to improve the health indicators.
State of the State analysis
With a firm belief that the future of the country lies in its states and Union territories, the State of the State survey has, since 2003, emerged as the touchstone for analysing the performance of states. The survey does a sector-wise analysis at the district level. Instead of being a subjective survey of citizens’ perceptions, the study analyses objective data. A detailed view of each district is prepared based on 10 categories of development, each category being a composite index of a few variables. The stark disparity in the levels of development across the states is also prominent at the regional level, which calls for an in-depth analysis of each region separately. The State of the State report undertakes a detailed analysis of the intra-state situation with respect to the levels of development, which is measured across time, space and dimensions.
Odisha is exemplified by an intricate amalgam of regions carved by nature and history. The physiographic contrast created by the eastern coastal plains, northern plateau, central table land and the Eastern Ghats has far-reaching impacts on the regional levels of development in Odisha. The tripartite regional division of Odisha created by the National Sample Survey (NSS), which divides the state into northern, southern and coastal regions, is superimposed over these physiographic divisions.
The northern region, largely plateau, comprises 11 districts rich in mineral resources. Mayurbhanj, Kendujhar and Sundargarh districts, which form the iron ore belt, and Angul and Jharsuguda, which is the coal mining hub, are the constituent districts of the northern region, which forms the mining-industrial belt of Odisha.
The southern region, largely hilly, roughly coincides with the ridges of the Eastern Ghats, and is composed of eight districts, out of which six belong to the KBK region, which is demarcated as the poorest region of India. The KBK region, largely tribal, is marked by frequent occurrences of severe droughts resulting in crippling famines, high incidence and persistence of poverty and food insecurity. Therefore, the region is infamously labelled as the ‘hunger belt of India’.
The 11 coastal districts are the most prosperous: Cuttack, Puri, Khordha and Jagatsinghpur are the most developed. The capital city of Bhubaneswar, the most populous, is located in Khordha district and boasts of 48 per cent urbanisation. Ganjam and business capital Cuttack are the two most populous districts of Odisha, after Bhubaneswar.
While most of the developed and better-performing districts in almost all the parameters of development are inevitably located in the state’s coastal region, followed by the miningindustrial belt of northern Odisha, the most backward regions belong to the hunger belt of southern Odisha. Concerted efforts at developing these backward, tribal and hilly regions of southern Odisha have delivered positive results to some extent. As a result, the most backward KBK region has shown significant improvement in levels of development.
A district-level analysis of the recent levels of development and the decadal improvement in development of the districts has been undertaken for nine categories of development—education, health, infrastructure, water and sanitation, agriculture, industry, services, prosperity, law and order—as well as an aggregate category of overall development. The districts with the best performance in each of these 10 parameters have been highlighted and discussed in detail along with another set of districts that have shown maximum improvement in their respective
levels of development, in these parameters, during the preceding decade.
BEST DISTRICTS
All 30 districts of Odisha have been ranked according to their levels of development across categories. The top-ranked districts in each category have been declared as the ‘Best’.
Education—Ganjam
Ganjam ranks second in teacher to pupil ratio, classroom to student ratio and in the number of schools per thousand population. The accessibility to educational infrastructure, especially for elementary education, makes it the best in educational development.
Health—Puri
Puri achieved the first rank in maternal health parameters (institutional child delivery) and the second rank in family planning parameters (use of modern contraceptive methods among married women of age 15-44 years). It boasts of a high level of awareness of family planning techniques. About 88 per cent of children aged 12-23 months have received full immunisation compared to the state’s average of 79 per cent.
Infrastructure—Cuttack
The coastal district has the second highest percentage of households with electricity connection. It ranks second in percentage of households residing in ‘good condition’ census houses. Cuttack has more than 50 per cent of households with a telephone connection and ranks fourth in teleconnectivity. The district performs much better than the state average in accessibility of banking services, with over 50 per cent of households availing banking services.
Water and Sanitation— Khordha
Khordha has grabbed the first rank in three out of four parameters of availability and accessibility of drinking water and sanitation facilities. The district, neighbouring Puri, has the highest percentage of households with closed drainage facility and toilets within the premises and the highest percentage of households with access to drinking water within premises.
Agriculture—Subarnapur
The district has attained the top rank in yield of major foodgrains and sectoral share of agriculture in GDP and ranks second in agricultural GDP per capita. In comparison to the state’s average, the district holds a higher
percentage of net irrigated area to net sown area as well as percentage of cultivators to total main workers.
Industry—Jharsuguda
Jharsuguda has the third highest percentage of workers employed in industries. It has performed way better than the state average in the other parameters of industrial development— sectoral share of industry in GDP and the industrial GDP per capita.
Services—Cuttack
Cuttack records the second highest percentage of workers involved in the services sector, after Khordha. Its sectoral share of services to GDP (68 per cent) is way higher than the state average of 49 per cent.
Prosperity—Angul
Angul has the highest GDP per capita, which is higher than the state average. Compared to the state’s average, the monthly per capita consumption expenditure and rural casual wage rate are better than the state average.
Law and Order—Bargarh
Compared to the state average, Bargarh has a lower rate of occurrence of crime—cases of kidnapping and abduction as a percentage of total cognisable IPC crimes, cases of murders as a percentage of total cognisable IPC crimes and percentage of other IPC crimes to total cognisable IPC crimes).
Overall—Khordha
With Bhubaneswar, the capital of Odisha, located here, Khordha emerges as the most urbanised district. Of the nine parameters of development, it appears among the top five in water and sanitation, infrastructure, services and prosperity. Khordha is closely followed by Cuttack as the second best performing district in overall development.
MOST IMPROVED DISTRICTS
The districts that saw maximum improvement in respective ranks during the preceding decade have been declared ‘Most Improved’.
Education—Bhadrak
Bhadrak has shown the highest improvement in educational development during the preceding decade. During 2005-06, it stood at a dismal 23rd position among the state’s 30 districts; by 2015-16, it had clinched the third position. During 2005-06, Bhadrak was the worst performing district in terms of classroom to student ratio and teacher to pupil ratio. In 2015-16, it achieved the top rank in these parameters. The district ranks second in the ratio of girls to boys’ enrolment for standard I-VIII.
Health—Jajpur
Jajpur has improved its health ranking from 22nd to sixth between 200204 and 2015-16. It has shown major improvement in the percentage of institutional child deliveries, from 36.2 per cent to 94 per cent. The percentage of children aged 12-23 months having full immunisation has increased from 35 per cent to 90 per cent during the same period.
Infrastructure—Kendrapara
Kendrapara improved its ranking from 18th to fourth during the decadal analysis preceding 2011. While the percentage of households with electricity connection has doubled, from 26 per cent to 53 per cent, during 2001-2011, the percentage of households with telephone connection has also increased sharply. The percentage of households availing banking services has gone up from 24 per cent to about 60 per. The percentage of households residing in ‘good condition’ census houses has increased from 22 per cent to 36 per cent.
Water and Sanitation—Nuapada
Nuapada has improved its ranking from 28th to 23rd during the decade preceding 2011. It has shown a significant rise in the percentage of households having toilets within the premises, from 6 per cent to 15 per cent, between 2001 and 2011.
Agriculture—Rayagada
Rayagada district held the 21st rank in agriculture during 2004-05, but by 2011-12 it had scaled to the 11th position. It marked a notable rise in the percentage of net irrigated area to net sown area, which increased from 16 per cent to 35 per cent between 200405 and 2014-15.
Industry—Nabarangpur
Industry in Nabarangpur, largely led by construction activity, has improved tremendously, with ranking shifting from the 27th position during 200405 to 10th during 2011-12.
Services—Sambalpur
The relative rise of Sambalpur from the 26th position in 2004-05 to fifth in 2011-12, and the percentage of workers employed in the services sector increasing from 6 per cent to 37 per cent for the same period makes it the most improved district in services.
Prosperity—Sambalpur
Sambalpur’s rank has improved from 17th in 2004-05 to fifth in 201112. While the Monthly Per Capita Consumption Expenditure (MPCE) increased from Rs 365 to Rs 1,383 during 2004-05 to 2011-12, marking an improvement in rank from 21st to second in terms of MPCE, the rural casual wages improved from Rs 26 to Rs 94 during the same period. Sambalpur improved from 28th to 25th position in terms of rural casual wages. It has witnessed a high increase in GDP per capita from Rs 40,907 to Rs 67,542 although its relative ranking improved from sixth to fifth position in this variable.
Law and Order—Jagatsinghpur
Jagatsinghpur has shown the highest improvement in maintenance of law and order between 2004-05 and 201112. From holding the 24th rank during 2004-05, the district rose to fourth rank by 2011-12. The district improved significantly in terms of lowest reported cases of kidnapping and abduction as a percentage of the total cognisable crimes wherein the relative rank of the district improved from 29th position during 2004 to 10th position during 2014. In terms of the lowest reported cases of rapes as a percentage of total cognisable crimes, the relative rank of the district improved from 11th during 2004 to fourth during 2014. In terms of the lowest reported cases of other Indian Penal Code (IPC) crimes as percentage of the total cognisable crimes, the district’s relative rank improved from 17th to 14th.
Overall—Jagatsinghpur
Jagatsinghpur’s rank has improved from the ninth position to third in overall development. The ranking has improved markedly in five out of the parameters of overall development— water and sanitation, infrastructure, agriculture, industry and prosperity. In water and sanitation, the relative rank of the district improved from ninth to fourth during the decade. The ranking improved from 11th to third in infrastructural development. The district made significant improvement in industrial development, in which the relative rank improved from 20th to eighth. In agricultural development, the relative rank improved from 10th to fourth. In terms of prosperity, the district improved from seventh to sixth position.
The way forward
Why was economic growth slow in Odisha before 2000? The main reasons for the sluggish growth in the industrial and mining sectors
before 2000 were political ineptitude, large-scale corruption by the political elite, bureaucratic apathy, low rate of industrial investment and lack of an entrepreneurial culture among the local population. The Congress government of J.B. Patnaik got embroiled in several scams.
What contributed to such a dramatic surge in growth rates after 2000? Political stability for 17 long years under the leadership of Naveen Patnaik,
who is widely considered as honest and committed to development by the people, is the main reason. The Industrial Policy documents of 2001 and 2007 as well as the MSME development policy of 2009 unleashed tremendous growth in industry and mining. Such concentrated efforts in industrial policy ended up pushing growth rates as well as increasing the industry’s share in the GVA of the state almost equal to that of services.
Did the upsurge in growth lead to poverty reduction? Yes, the reduction in poverty in Odisha is rather significant. In rural Odisha, the decline is nearly 21 percentage points, the highest reduction among all states, while in urban Odisha, the decline is nearly 12 percentage points. Moreover, the decline in poverty after 2004-05 cuts across all social groups, be it SCs, STs or OBCs. Clearly, the benefits of growth, along with focus on the redistribution mechanism, have improved the lives of the poor. Poverty reduction in Odisha between 2004-05 and 2009-10 is much more compared to the country’s average.
Despite such achievements, the persistence of poverty, especially in the KBK region of the hinterland, largely among the tribal and Dalit population, is the single biggest challenge for the Patnaik government. Such poverty in the hinterland as opposed to prosperity in the coastal belt divides the state into two vastly different zones.
Unless the state government pushes for an agricultural revolution with the same spirit with which it pushed industrialisation strategies, it will be difficult to root out rural poverty among the backward districts of the hinterland. The direct result of such penury and inequality among the population is the rapid spread of left-wing extremism in the poverty-stricken districts.
Such dissidence can easily turn into fierce anti-incumbency unless steps are taken to end poverty and inequality. If Odisha is to emerge out of its BIMAROU status and compete with the developed coastal states, it must focus as much on agriculture as on industry and services. The way to being outstanding is perhaps via a green revolution in the KBK region and by replicating the development experience of the coastal region in the hinterland.