India's Economic Battle: Development Vs. Tradition

Jan 3, 2012
Originally published on January 3, 2012 10:44 am

As India's economy rapidly expands, there is a recurring theme that plays out across the country: Plans for major development projects come into conflict with traditional ways of life centered around farming.

One of those showdowns has been dragging on for years in the eastern Indian state of Orissa. A proposed $12 billion steel plant has been facing resistance from local farmers and fishermen, but an endgame may be at hand.

The project is being promoted by the South Korea-based firm POSCO, the world's fourth-largest steel producer.

In 2005, POSCO signed an agreement with the state of Orissa. The deal called for the company to build a steel mill, electrical generating plant and port near India's eastern coast.

POSCO Vice President Vikash Sharan says the mill will eventually provide 18,000 jobs in what is now a rural area that depends on agriculture and fishing. He says the company believes another 30,000 jobs will be created indirectly.

"We also planned that at least one person from each displaced family will get a job in the company," Sharan says. "We [planned] many training programs so that they become employable."

The plant was set to begin producing steel in 2010, but so far, the company hasn't even broken ground. That's because local residents and environmental activists have blocked the project in the courts and on the ground.

Daily Protests

Anti-POSCO demonstrators are still holding out against the mill. Each day, around a hundred people from three villages gather under some fir trees on a sandy rise.

They say they have come here so they can be ready to block a proposed road to the site that POSCO wants to build.

Manorama Khatua, one of the leaders of the anti-POSCO group, says POSCO wants around 4,000 acres. Much of that is government land that has already been committed to the deal, but Khatua says the farmers control about 400 acres at a crucial part of the site.

Khatua, a young woman with piecing eyes, gestures out from the demonstrators' spot on the sandy rise and down to the idyllic landscape below.

She says the local farmers aren't interested in the promised mill jobs. They already make a good living, she says, from their livestock, fish, cashew nuts, bananas and arbors, where they grow betel leaves for the ubiquitous Indian chew called pan.

Prashant Paikray, an anti-POSCO activist and member of Orissa's Communist Party, also charges that the company bribed politicians to win approval for the deal.

"The state political leaders, ruling-class people," says Paikray, "they are involved in this great corruption."

Company Denies Allegations

POSCO's Vikash Sharan emphatically denies the bribery allegations.

"POSCO is globally known as a very ethical company," he says. "We believe in following the correct processes and following all the laws of the land to the hilt."

Sharan says the very fact that POSCO has waited six years to develop the project shows its commitment to comply with the law, including measures to protect the environment.

But Khatua says the company and the state haven't waited patiently during the legal challenges. She charges that they have tried to break the resistance movement by sending thugs to attack the demonstrators.

She says the police have filed dozens of trumped-up charges against the main organizers in an effort to wear them down.

The leader of the anti-POSCO movement, Abhay Sahu, was arrested last month on what the police say were outstanding warrants for alleged crimes that had nothing to do with the protest.

More Jobs Needed

In the capital, New Delhi, R. Venkatesan, a consultant at India's National Council of Applied Economic Research, says India needs the foreign exchange that exports such as steel can provide.

More importantly, states like Orissa need to create jobs for the enormous number of young people who will be entering the job market in the coming years.

"Orissa is a mineral-rich state, and its development would be only when these minerals are processed," he says. "So obviously, from the state viewpoint, it has tremendous development potential."

But Venkatesan says that's not much incentive for the people who stand to lose farmland that provides them with steady income.

"So how would you compensate so that their livelihood is not affected, but at the same time development happens?" he adds. "This is the dilemma."

POSCO recently set up a small headquarters at the site where the steel plant is to be built.

Sharan, the POSCO vice president, says the company is talking directly with local people who have questions about the plant, and he adds, most people are coming to support the project. He says the company plans to begin serious construction soon.

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STEVE INSKEEP, HOST:

And let's talk about to grow the infrastructure and the economy of India – one of the world's rising economies. One of India's biggest plans is for a $12 billion steel plant in the eastern state of Orissa. It involves money coming from a South Korean company, which would make the biggest foreign investment in modern India.

But as NPR's Corey Flintoff discovered, farmers and fishermen living in that area don't want the plant.

COREY FLINTOFF, BYLINE: The project is being promoted by the South Korea-based firm, POSCO, the fourth-largest steel producer in the world. In 2005, POSCO signed an agreement with the Indian state of Orissa. The deal called for the company to build a steel mill, electrical generating plant and port on India's east coast.

POSCO Vice president Vikash Sharan says the mill will eventually provide 18,000 jobs in what is now a rural area that depends on farming and fishing. He says the company believes another 30,000 jobs will be created indirectly.

VIKASH SHARAN: We had also planned that at least one person from each displaced family will get a job in the company. We had also conducted many training programs so that they become employable.

: The plant was set to begin producing steel in 2010, but so far, the company hasn't even broken ground on a site. That's because local people and environmental activists have blocked the project in the courts and on the ground.

(SOUNDBITE OF CROWD CHATTER)

: This is an anti-POSCO demonstration on land that would be lost to the steel mill. About a hundred people from three area villages are gathered under some fir trees on a sandy rise. They say they come here each day so they can be ready to block a proposed road to the site.

MANORAMA KHATUA: (Foreign language spoken)

: This is Manorama Khatua, a young woman with piercing eyes who has become one of the leaders of the anti-POSCO group. POSCO says it needs around 4,000 acres. Much of that is government land that has already been committed to the deal, but Khatua says the farmers control around 400 acres at a crucial part of the site.

KHATUA: (Foreign language spoken)

: She gestures out from the sandy knoll where the demonstrators sit. The land below is idyllically beautiful. Khatua says the local farmers aren't interested in the proposed mill jobs. They already make a good living from their livestock, fish, cashew nuts, bananas and arbors where they grow betel leaves for the ubiquitous Indian chew called pan.

Prashant Paikray, an anti-POSCO activist, also charges that the company bribed politicians to win approval for the deal.

PRASHANT PAIKRA: The state political leaders, ruling class people, they are involved in this great corruption of POSCO.

: Paikray sits on a cot in his small house in Bhubaneswar, the state capital, under fading photographs of Lenin and Marx. He's a member of Orissa's active Communist Party.

POSCO's Vikash Sharan emphatically denies the bribery allegations.

SHARAN: This is absolutely wrong. POSCO is globally known as a very ethical company. We believe in following the correct processes and following all the laws of the land to the hilt.

: Sharan says the very fact that POSCO has waited for six years to develop the project shows its commitment to comply with the law, including measures to protect the environment. But Manorama Khatua says the company and the state haven't waited patiently during the legal challenges. She charges that they have tried to break the resistance movement by sending thugs to attack the demonstrators. She says the police have filed dozens of trumped-up charges against the main organizers in an effort to wear them down.

The anti-POSCO movement's leader, Abhay Sahu, was arrested last month on what the police say were outstanding warrants for alleged crimes that had nothing to do with the protest.

R. Venkatesan is a lead consultant at India's National Council of Applied Economic Research in New Delhi. He says India needs the foreign exchange money that exports such as steel can provide. More importantly, states like Orissa need to create jobs for the enormous numbers of young people who will be entering the job market in the coming years.

R. VENKATESAN: Orissa is a mineral-rich state, and its development would be only when these minerals are processed. So obviously from the state viewpoint, it has a tremendous development potential.

: But Venkatesan says that's not much incentive for the people who stand to lose beautiful farmland that provides them with steady income. Vikash Sharan, the POSCO vice president, says the company is talking directly with local people who have questions about the plant, and he says most people are coming to support the project. He says the company plans to begin serious construction soon.

Corey Flintoff, NPR News, New Delhi. Transcript provided by NPR, Copyright NPR.