Now, Karnataka govt faces the wrath of corporates

It was a week that Karnataka Chief Minister B S Yeddyurappa would rather forget.

Within a period of five days, his government was forced to apply the brakes on two major infrastructure projects which would have acted as a saving grace for his government that has been facing intense flak from various stakeholders and of course the opposition.

First, he was forced to denotify 2,000 acres of land for a special economic zone (SEZ) in Mangalore ,which was being developed by ONGC, and subsequently, he was cornered to push-out a proposed Rs 32,300-crore steel plant by Posco in Gadag. The proposed plant in Karnataka is expected to run into more controversies, given Posco does not want any alternate location other than Gadag and Bellary. Now that Gadag has been ruled out, the company would not be able to pick up land in Bellary either, as two other mega steel projects by ArcelorMittal and Uttam Galva are already coming up there.

The corporate sector is fuming. A cross section of Indian industry was unanimous in its opinion that Karnataka’s inability to acquire land in a time bound manner for large industrial projects would lead to a loss of confidence among the global investors.

The Karnataka government on Tuesday denotified 1,998 acres land at Mangalore from acquisition for setting up the multi-product SEZ by ONGC. On Thursday, the government announced it would not go ahead with the acquisition of land at Halligudi village in Gadag district for setting up the proposed 6 million tonne per annum steel plant by South Korea’s steel giant, Posco. The decision was taken after a severe protest from the farmers and religious heads against the land acquisition for Posco. The government had issued preliminary notification to acquire 3,382 acres for Posco in Gadag district.

“The state government should have first announced a clear land acquisition strategy before inviting the global investors to come and invest here. Their action will create a credibility gap among the investors. If the government does not take a remedial measures quickly, they will lose their credibility forever,” K R Girish, former president of Bangalore Chamber of Industry and Commerce said.

He said the challenge before the state is to address the issue of land acquisition in a time-bound manner. “The land acquisition issue is not alone for the investors to worry about. They have lots of other issues like arranging international funding, debt among others. On top of all, if the land acquisition is delayed, their other plans will be affected,” he said.

The Karnataka government should identify barren land available in the state and allot it for industrial purpose rather than asking farmers to give their fertile land, he said adding that there is a need to create adequate infrastructure like good connecting roads and railway sidings so that the raw materials can be moved from far off places.