Policy: Playing To Win Pg. [1]

POLICY
Playing To Win

Chhattisgarh and Jharkhand are at the start of an exciting game. Prosperity awaits the smarter of the two. Who will get there first?

By Seetha Photographs by Shome Basu

Ask Tata Steel's Managing Director J.J. Irani about the prospects of the six-month-old state of Jharkhand carved out of Bihar in mid-November and he uses an interesting allegory. ''The car in which they are driving towards industrialisation and prosperity has an open road ahead,'' he says. The metaphor could well apply to Chhattisgarh, 15 days older and an offshoot of Madhya Pradesh.

The Perplexing Politico

The Grassroots Man

Infrastructure Challenge

Picture this. Jharkhand Chief Minister Babulal Marandi, inherited a battered jalopy of a state. The law and order situation had broken down and both Naxalite groups and political hooligans were running amok. He was also saddled with a demoralised bureaucracy, unused to taking decisions, and poor infrastructure. All this added up to the negative image of a state that was little better than Bihar. Jamshedpur was the only star in Jharkhand's firmament. Fortunately, he's got a road-map drawn out for him. At the request of members of Parliament from the state, the Confederation of Indian Industry, Boston Consulting Group, Tata Steel and the XLRI have drawn up a vision document for the state, emphasising issues like governance and broader socio-economic development to pull in investments.

Chhatisgarh: Ajit Jogi, 54 Across the border, Chhattisgarh Chief Minister Ajit Jogi, isn't exactly driving a Limo in top form. And he's only just commissioned PricewaterhouseCoopers to draw up a vision document. But he's inherited a car in slightly better shape. Sure, the state's industrial base is not as highly developed as Jharkhand's, several bureaucrats posted to the new state have been reluctant to shift, the quality of infrastructure is poor, and 12 of the 16 districts that make up the state are reeling under drought. But Chhattisgarh started out with a positive image, since Madhya Pradesh was seen as an extremely investment-friendly state. Having been a bureaucrat for 16 years, Jogi knows the intricacies of administration and has been putting pressure on his bureaucrats to perform. And the state has 300 mw of surplus power.

The race between these two states-both born on the plank of neglect of tribal regions by their parent states-to prosperity will be a close one. For both have a lot going for them. Abundant mineral resources, for starters. Between them, the two states account for more than half of the country's mineral reserves-iron-ore, bauxite, dolomite, copper, mica, and diamonds in the case of Chhattisgarh. With copious coal deposits, both have immense potential for thermal power generation. Nearly half their respective areas are under forests. As Irani says: ''Not many regions are fortunate to get a second chance in history.''

Jogi and Marandi are both determined to use this chance to chart a new course for their states. Declares Jogi: ''I want to disassociate Chhattisgarh from the Bimaru states. I want it to become like the southern or western states.'' Marandi sings a similar tune: ''I want to bring Jharkhand on par with the industrially developed states in four years.'' They have big dreams. But not all dreams materialise into reality, do they?

AJIT JOGI, CHHATTISGARH
The Perplexing Politico

Chhattisgarh chief minister Ajit Jogi's hobbies include-shiver, shiver-occult sciences. Jogi will certainly need to use all the spells he has learnt to dispel the unflattering Jurassic Jogi sobriquet he earned for himself after his strident opposition to the privatisation of Bharat Aluminium Corporation (BALCO). But trust the Congress Party's spokesperson for four years to smooth talk his way out of the most difficult of situations. ''Anyone who understands things knows that BALCO has nothing to do with investment,'' insists the 1970 batch IAS officer-turned-politician. He opposed the privatisation, he explains, in a now familiar spiel, because the deal lacked transparency, the law doesn't permit private industry on tribal land and local laws in Chhattisgarh stipulate that tribal land in possession of non-tribals must revert to the tribals.

JOGI's AGENDA

Generaten jobs through value-addition

Woo investment in pithead power plants

Concentrate on minerals, agriculture, forest wealth

Focus on improving roads, irrigation, social infrastructure

He actually welcomes the private sector. The government alone, he says, will not be able to remove the paradox of ''the richest piece of land in the country being inhabited by the poorest of people.'' That is his top priority. ''Times have changed and most of this will have to be done by private investment.''

Then why the speeches vowing not to allow private sector operations in tribal areas? And what about the 185 km tour in 1997, in the diamond belt of Raipur district ''to spread awareness among the tribals against the entry of MNCs in the diamond mining sector?''

Jogi doesn't see any contradiction. The law of the land doesn't allow it, he insists. ''And I am trying to protect the tribals. The tribals should not be exposed to private people; they can be greatly exploited,'' he declaims. Private industry can come up in areas not under Schedule 5 of the Constitution which restricts the transfer of tribal land. The tribals can go there to work and return to their homes, where their culture and lifestyle will be preserved. Won't they aspire to the lifestyle they see elsewhere? No, they won't, Jogi asserts. ''I am a tribal, I know.'' End of argument.

And won't investors get put off? ''If they are, how come I'm meeting delegations of industrialists every other day?'' he counters.

A market-savvy administrator or a populist demagogue? Will the real Mr Jogi please stand up?

Dream#1: Engines of Growth

Walk down the Urla Industrial Area in Chhattisgarh's capital of Raipur or the Tubudana Industrial Area in Jharkhand's capital of Ranchi and it's a miserable sight. A large number of units are shut in both places. Rusty gates protect units where the machines now have only scrap value. Hardly the right environment to create industrial powerhouses, one would think. It's a small matter that the sick units are small and medium enterprises and the two governments are concentrating on mega-sized projects.

The strategies are identical and value-addition is the common mantra. High on their must-woo list are, obviously, minerals and metals-based industries. Asserts Chhattisgarh industry secretary Narayan Singh: ''We will not allow the export of any raw material. We want value addition within the state.'' Apart from the heavier ores, Chhattisgarh is pinning hopes on its hitherto untapped diamond reserves. Prospecting is still going on, but Jogi is confident that the reserves will yield enough revenue for him to slash taxes. De Beers, sources say, has already held informal talks with the state machinery.

The value-addition isn't confined to ores mined in the state. ''Only 4 per cent of the steel Tata Steel produces is consumed in the state,''' complains Saryu Rai, Bharatiya Janata Party leader and Chairman of the advisory committee on Jharkhand's industrial policy. ''The rest goes to other states for conversion into finished products.'' High on the priority list, therefore, is the setting up of downstream industries like white goods and steel fabrication units. On the anvil is a special economic zone in the Ranchi-Jamshedpur area, besides developing industrial clusters across Jharkhand.

All eggs are not going to be put in the metals basket. There are ambitious plans in both states to develop horticulture and set up food processing parks, chemical zones, a chain of warehouses, and cold storages.

Realising all this may not be enough of a temptation for investors, both states promise to create an investor-friendly environment. Avers Rai: ''The operating environment will be the key to attract investments.'' Scything red tape, upgrading infrastructure and fiscal concessions, therefore, feature prominently in the draft industrial policies of both states. Promises Chhattisgarh Chief Secretary Arun Kumar: ''We will replace red tape with a red carpet.'' With a record of peaceful industrial relations, the two governments don't think courting investors will be too difficult.

REALITY CHECK: Not all these grand plans are unrealistic. The mining sector posted a 4.2 per cent growth in April-January 2000-01 against a 0.5 per cent growth in April-January 1999-2000. Global mining majors are eyeing these states keenly. But, CII Senior Advisor, T.K. Bhaumik, doubts the efficacy of this strategy. ''Mineral wealth won't take these states very far,'' he insists. There's over-capacity in the steel industry, he points out, and already, coal, steel, and copper are being imported.

He's equally sceptical about downstream industries flocking to these states. ''Raw material no longer determines the choice of location; markets do,'' he asserts.

In that case, Jharkhand could be poised for a great leap. It has the entire eastern and north-eastern hinterland as a captive market. With the construction of a bridge linking the northern-most district of Sahibganj with Bihar's southern-most district of Katihar, the government hopes to make road travel to the north-east much shorter. That is the main reason why Videocon International is setting up a Rs 100-crore white goods factory and Himachal Futuristic Communications Ltd (HFCL) has started work on a Rs 30-crore telephone instrument manufacturing unit, both in Hazaribagh. Chhattisgarh, on other hand, may not be a great destination for consumer industries, since the markets it can tap are already catered to by units in the western and the northern regions. That's probably why most investments in the state since November are in metallurgical industries, like the Rs 300-crore steel plant being set up by Delhi-based Bhushan Steel and Strips and a host of small and medium enterprises.

Dream#2: The Power Surge

At a chief minister's conference on power sector reforms, Jogi had an offer to make. Set up pithead power plants at coal mines in my state and zap the electricity across to your states, he told his counterparts. He's got the economics worked out. The cost of transporting coal per unit of generation is 22 paise; the cost of transporting power a mere 3 paise.

What's more, it's also more environment-friendly. Transporting coal also means transporting fly ash, since Indian coal has a high ash content. Says K. Chandrashekhar, General Manager, Tata Power: ''Pithead power plants make eminent sense.''

Chhattisgarh has been faster in turning the lights on. The government claims Delhi, Haryana, Gujarat, and Karnataka are seriously studying Jogi's offer. Jindal Power has fairly advanced plans to set up a 1000 mw power project in Raigarh, with a captive coal mine. BSEs is exploring the idea of setting up a pithead power station for the captive use of the railways. And Daewoo Power, which had pulled out of a project in Korba before Chhattisgarh was born, is re-opening the proposal, the government says.

Jharkhand is going the same route. And Jharkhand State Electricity Board Chairman Rajiv Ranjan promises a power surplus state in four years' time. Jharkhand is also planning to go non-conventional in a big way. The state is serious about tapping geo-thermal energy, which uses subsurface gases to generate power. Ranjan has identified 45 locations in Jharkhand, mainly in the Hazaribagh, Palamau, and Santhal Parganas districts where this is possible. Encouraging captive power generation also figures prominently in the two states' agendas. The draft industrial policies of both promise to remove all obstacles in the setting up of captive power plants and 10-year exemption from paying electricity duty.

REALITY CHECK: Is wheeling power more efficient than transporting coal? Yes, say power sector experts. And the idea actually originated in the Central Electricity Authority. ''It's a smart move by the states,'' says Union power minister Suresh Prabhu.

However, Jharkhand's ambitious plans to tap geo-thermal energy doesn't find many takers. As a concept, it's been around since the mid-1970s. Says Chandrashekhar: ''The quantity and quality of gas has to be enough to run a profitable power plant.'' In any case, power plants don't come up overnight, and it'll be a long while before these two states start lighting up the rest of the country.

1 2

Issue Contents Write to us Subscription Syndication

� Living Media India Ltd