People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 39

September 26, 2004



CPI(M) Suggests Ways To Overcome Orissa’s Backwardness


EVEN after 68 years of the formation of a separate state and 56 years of our independence, Orissa continues to be a symbol of abysmal poverty and indescribable backwardness. Chronic poverty and acute underdevelopment, combined with the onslaught of natural calamities, has made the life of the Oriya people miserable. While droughts and floods are regular invaders, cyclones and super cyclones make their routine visits, taking heavy tolls. Over and above all this, the unsympathetic and discriminatory attitude of the union government, the callous attitude of the state administration and their faulty policies have further worsened the situation. Starvation deaths and sale of children for a pittance have become a regular feature, and have even attracted the notice of the National Human Rights Commission (NHRC).



The state of Orissa was created in 1936 as a truncated and deficit state, with specific provision for subventions under the government of India act of 1935. In spite of an expert committee’s recommendations for subventions, the colonial rulers changed the provision only a few days after the formation of this state. This fiscal distortion meted out to Orissa by the Sir Otto Nimeyer commission remained uncovered and unrectified to date despite so many finance commissions. Orissa, the only non-category state, has been rendered a deficit state in non-plan revenue accounts after the devolution of central taxes.


Another area of great concern is that of capital repayment and interest payments that in case of Orissa went up to 123.04 per cent in 2002-03, followed by Bihar 106.29 per cent, while in case of Maharashtra in the same year it was 29.58 per cent, for Gujarat 40.16 per cent, for Haryana 31.21 per cent and for Karnataka 30.62 per cent. One may point out here that successive finance commissions have so far failed to develop and nurture a prudent and sustainable fiscal management system and culture --- both at the central and state levels.  


The galloping revenue deficits, the mountainous debt burden to the tune of Rs 32,000 crore (about 63 per cent of gross state domestic product) and the precarious fiscal health of Orissa are primarily owing to the following reasons:

  1. The loan component in plan assistance, as per the defective Gadgil formula, which is 70 per cent for the state from 1969-70.

  2. There has been a sudden increase in the rate of interest from 4.5 to 11.13 per cent on central government loans from 1984-85.

  3. Impact of the 5th pay commission’s recommendations on the state budget since 1998-99.

  4. Rampant corruption in the administration and less investment in productive and remunerative sectors.

  5. Improper appreciation of successive finance commissions of the week revenue base and revenue needs of the state as well as non-appreciation of the special problems of the state and its developmental needs through budgetary and extra-budgetary sources by the Planning Commission.

  6. Improper utilisation of the mineral, forest and other natural resources of the state, to the advantage of the monopolists, traders and other vested interests,

  7. Irregular and irrational revision of the royalty on coal and minerals of the state, due to which Orissa is losing at least Rs 100 crore a year.


It will not be out of place to mention that while the royalty on coal of selected grades has increased 132 times between 1971-2001, in case of power grade coal, which is abundantly available in Orissa, the royalty rate has increased only 38 times during the period. As a result, while the highest royalty rate was only 11.76 per cent over the lowest royalty rate in 1971, it is now 300 per cent over the lowest royalty rate, which is a glaring case of imbalance.




Investments by the scheduled banks are less than 40 per cent of what they collect from a poor state like Orissa. Financial institutions like the IDBI, IFCI and ICCI have invested only 17.14 per cent in the 5 low income states, namely, Orissa, Bihar, UP, Rajasthan and Madhya Pradesh, while these have 44.64 per cent of the country’s population. On the other hand, the high income states like Maharashtra, Gujarat, Punjab and Haryana with 18.8 per cent of the country’s population but received 43.19 per cent of these investments. As a result of this investment policy, Orissa with 4 per cent of the country’s population, has received only 1.79 per cent of such investments. This has contributed a lot towards the backwardness of Orissa.


With regard to industrial and infrastructural development, the less said the better. Barring the north east and Jammu & Kashmir, Orissa has the smallest railway network. There are several districts that are connected neither by railways nor by a national highway. The market oriented policy with regard to industrialisation and the policy of keeping the state aloof from the scene have led to the state’s growing de-industrialisation, with closure of the state public sector undertakings as well as of thousands of small private units. The so called ‘reform’ measures, enforced upon the state government during 1999-2001 by the central government, have further deteriorated the situation, forcing the closure and sale of state public sector units, further aggravating the unemployment problem. The power sector ‘reforms’ have proved disastrous because of the steep hike in power tariff. On the other hand, the mineral and forest resources of the state are being systematically plundered at the expense of the state and its people.


Further, policies related to agriculture and water resources have multiplied the miseries of the rural poor and 65 per cent of the agricultural land remains non-irrigated. Distress sale of the peasants’ produce is now a regular phenomenon. Landlessness of the peasants and sharecroppers has increased in the absence of any land reform measures. Transfer of the tribal lands, by legal or illegal means, is also a regular trend. Unemployment among the educated as well as uneducated people has increased to harrowing proportions.




Several surveys conducted by government and non-government agencies have unmistakably revealed that Orissa has become a classic example of “poverty amidst plenty.” Orissa is endowed with 99 per cent of chromate ore, 92 per cent of nickel ore, 65 per cent of graphite and pyrophylite, 66 per cent of bauxite, 31 per cent of mineral sand, 32 per cent of manganese, 28 per cent of iron ore and 24 per cent of coal resources of the country, in addition to 10 per cent of water resources and 450 km of coastline. But nothing worthwhile has been done to develop the economy of the state or generate employment opportunity for the Oriya people. The efforts to promote the exports of primary goods, with some nominal processing at the best, will fritter away the state’s rich resources without generating any employment or reducing the state’s financial problems. Mining activity is predominately controlled by private owners; they for the sake of profit not only plunder the mineral wealth but also destroy the environment, cause pollution and also the displacement and loss of livelihood of the tribal and rural communities.

It was in view of the already serious and rapidly deteriorating situation that a large CPI(M) delegation recently met the prime minister Dr Manmohan Singh, on behalf of the people of Orissa, and handed him over a memorandum to apprise him of the situation. Coming all the way from Orissa with a large number of people to register protest through a demonstration in Delhi, the delegation drew the prime minister’s attention to the situation facing the state and its people and sought his prompt intervention for the sake of preventing any further deterioration.


In this context, the delegation asked the prime minister to initiate the following urgent steps to arrest further deterioration in the condition of people of the state and to ensure their long-term development.




Plan Reforms:  

1.     A time bound plan to end the regional disparity, and sufficient central grant for Orissa in view of its low per capita income and presence of 38 per cent tribal and Dalit population. Scrap of the Gadgil formula and changing it to 30 per cent loan and 70 per cent grant till the state reaches the national average in so far as capital investment is concerned.

2.     In order to reduce the state’s debt burden, the union government should write-off its loans up to March 31, 2004; announce a moratorium on other institutional loans like those from the NABARD, LIC, GIC and HUDCO for a period of 10 years; and thereafter reschedule it to a low rate of interest. Repayments due in the period of moratorium must be allowed to be made in 30 years.

3.     Decentralisation of planning down to the district and block level, ensuring the real participation of people in its implementation. 30 per cent of plan transfers to the state must be earmarked for the projects designed and implemented by elected local bodies.

4.     Revision of the royalty on coal and minerals, and fixing the coal royalty at 20 per cent of the pit mouth value.

5.     Centrally sponsored schemes must to be transferred to the state.


Poverty Alleviation: In order to ensure Orissa’s development, poverty alleviation should receive primary attention. As the various central and state government schemes so far implemented have not yielded the desired result, the following urgent steps need be undertaken:

  1. People’s access to the assets of production should be ensured. The primary steps that need to be implemented are (i) land reforms, (ii) prevention of private encroachment upon common resources, and (iii) ensuring the tribal people’s access to the means of production over which they had customary user rights and from which they have been deprived.

  2. Extensive employment generation programmes must be undertaken and resource allotments made.

  3. Implementation and monitoring of poverty alleviation programmes must be the responsibility of panchayats. The centre and the state must undertake formulation of such programmes in consultation with local bodies. A pool of experts must be made available to help the local bodies design and monitor these schemes.

  4. Restoration, strengthening and efficient management of the public distribution system must be undertaken to prevent the recurrence of hunger deaths and malnutrition. With the highest infant mortality rate and malnutrition among infants and expectant mothers in the country, Orissa needs a special dispensation to take care of the health of expectant mothers, while the central scheme for child nutrition must enhanced 10 times for the state.

  5. Five lakh homes under the Indira Awas Yojana must be provided to the poor SC and ST families in the state, since Orissa has the highest concentration of the SC and ST population among the non-category states.

  6. The government of India must fund the dry-land horticulture project in the Koraput-Bolangir-Kalahandi (KBK) region of Orissa.

  7. The coverage and amount of the old age pension and pension for widows must be increased.

Development of Agriculture:  

1.     There must be a Master plan for permanent control of flood and drought, and a plan to achieve 100 per cent irrigation potential within 10 years by utilising river water as well as ground water. Adequate drainage to prevent water logging must be provided for and construction of a chain of small dams to provide for irrigation and prevent flood need by be undertaken on war footing. The central government must provide adequate funds for this purpose and the state government must also share responsibility. The central government should provide 5 lakh tube wells for lift irrigation purposes.


2.     Attempts to privatise and marketise the water resources and the state’s withdrawal from the responsibility of providing and managing irrigation should be immediately reversed.

3.     Agriculture must be diversified to meet the variegated needs of the state’s people.

4.     The so called new agricultural policy which transfers government land, at throwaway prices, to power brokers and rich persons close to the corridors of power be scrapped. Land must be distributed to the landless. The sharecroppers’ rights must be recognised. Land reform measures must be effectively implemented.

5.     Peasants must be supplied high-yielding seeds, fertilisers, implements and loans at easy terms. The government must undertake the job of land development.

6.     Energy charges for agricultural use be reduced and subsidised. Energy charges from the victims of flood and drought among the peasantry must be exempted.

7.     Crop insurance must be provided on the real value of crops.

8.     The government must take measures to ensure remunerative prices for agricultural produce, and direct procurement of foodgrains from peasants by government agencies. It must make provisions of adequate cold storage, transport, marketing facilities and promotion of food processing industries.



1.     Small and medium industries must be set up, based on our agricultural, mine and forest resources, with special emphasis on agro-based industries.

2.     Rather than relying upon the export of raw materials, export of value added goods must be promoted. There should be emphasis on production of manufactured goods.

3.     The trade of valuable minerals must be taken over by the government. Only those private capitalists whose industrial unit requires chromate and other minerals must be given lease of mines, and that too for the required amount and not more.

4.     Keeping in view the mineral prices, royalty rates must be suitably and regularly revised. Losses to the state due to non-revision of royalty at regular intervals must be compensated.

5.     Labour intensive industries must be preferred to capital intensive ones. Balance must be struck between use of modern technology and employment generation.

6.     Privatisation of public sector undertakings must stop. Workers’ participation in management must be ensured to free it from the clutches of corrupt bureaucrats.

7.     Necessary steps need be taken to set up the Paradeep refinery of Indian Oil Corporation at an early date.

8.     Weavers and artisans must be provided necessary assistance to revitalise their trade and for the revival of the dying handloom sector.

9.     Cabinet approval for the second phase of NALCO’s expansion at an estimated cost of Rs 4092.51 crore must to be expedited. 

10.     Efforts should be made to start a big sponge iron plant at Bonai by the Steel Authority of India (SAIL).


Employment Generation:

1.     Long term and short term measures must be initiated to solve the problem of unemployment whose magnitude, at present, is over 25 lakh in Orissa. Public as well as private investment must be stepped up and adequate incentives for self-employment provided.

2.     Existing vacancies in the government and public sector units must be filled up.

3.     Favouritism, nepotism and corruption in self-employment schemes must stop.

4.     Banks must ensure finance to the beneficiaries selected. The present credit-deposit ratio, which is adversely affecting the state, must be promptly corrected.



1.     The Daitary-Talcher-Bimalagarh, Bansapani-Khurda Road-Bolangir, Jungarh-Lanjigarh, Anugul-Sukinda Road, Haridashpur-Paradeep rail line and Basapani-Sukinda rail line must be completed within 5 years. The Rupsa-Bangiriposi and Gunupur-Nuapada narrow gauge lines must be converted into broad gauge and extended up to Rayagada.

2.     The East Coast railway zone must be strengthened.

3.     Grants must be provided to all gram panchayats to construct pucca roads.

4.     The Paradeep port must be developed to match the Kandla, Mumbai and Cochin ports. The Gopalpur port and ports like Dhamra must be developed to match the needs of an all-weather major port.

5.     Massive public investment to build up power generation units should be made. There must be a review of the power sector ‘reform’ and cheap power must be ensured to the small scale sector and agriculture. The Indian Electricity Act 2003 must be repealed.


Human Development:  

1.     Orissa should attain real 100 per cent literacy within 5 years and steps must be taken for qualitative improvement of education. Free and compulsory primary education must be ensured, accompanied by suitable incentives to check the dropout. A central university must be set up in Orissa. Emphasis must be given on the development of technical education.

2.     The central government and Orissa government must implement their manifestoes and set up one primary health centre in every gram panchayat.

3.     Tribals constitute 22 per cent of Orissa’s population. Their rights on forests must be restored and ensured. Fee education up to matriculation in their language must be provided. Autonomous ST councils must be set up in ST dominated districts. The lot of SC people who constitute 16 per cent of state’s population must be improved. The Tribal Panchayat Act must be implemented. Transmission line to each ST and SC hamlet must be ensured.

4.     A part of private investment in mega projects must be earmarked for spending on social sector schemes.

5.     An All India Institute of Medical Sciences (AIIMS) must be established at Sijua, Bhubaneswar.



1.     Deforestation should be sternly curbed to prevent insufficient rainfall, drought, soil erosion and floods due to raised riverbeds. Afforestation scheme must be taken to increase the forest area. 2.     The interest of environment should be kept in mind while taking steps for industrialisation.

The CPI(M) has placed these demands before the UPA government in the hope that, if the suggested steps are undertaken in earnest, it will go a long way to eradicate poverty and backwardness of the state and bring it to par with the rest of the nation.