R Krishna Das: One step forward, one step back for industry in Jharkhand

The government has been trying to ensure ease of doing business but problems have persisted

In March 2010, when ArcelorMittal decided not to build a huge steel plant in Jharkhand, the mood at a tent in Khunti-Gumla village from where an agitation against the project had been launched, was strangely not jubilant.

Tribals, who would have lost their land had the project taken shape, actually wanted ArcelorMittal to set up the plant — just not at the cost of their interests.

“Had the Jharkhand government and the company ensured that every person affected by the project would get a job along with proper rehabilitation, the project would have got support,” said tribal woman activist Dayamani Barla, who led the agitation.

On October 8, 2005, ArcelorMittal (then, Mittal Steel) signed a memorandum of understanding with the Jharkhand government to invest Rs 40,000 crore in setting up a 12 million tonne per annum steel-making unit. The land required for the project was 12,000 hectares; the site chosen was Khunti-Gumla village. This meant land owned by tribals had to be acquired.

They refused.

The resistance against land acquisition for the project was so pervasive that the company's representatives could not hold a single meeting with the villagers. In March 2010, ArcelorMittal told the government it was relocating the project.

Barla said the state had a history of giving land for welfare projects. She blamed the then government for the ArcelorMittal pullout, saying it lacked a “development vision” and had no policy for land acquisition by industry.

Cut to the present: Jharkhand is now showcasing its “development vision”. In an attempt to woo investors from India and abroad at its Global Investor Summit in February next year, the state government is holding road shows in important cities, Delhi, Mumbai, Bengaluru and Hyderabad to name a few.

Ramesh Sharan, head of the economics department at Ranchi University, is sceptical about the state government’s recent moves. “Such meets and shows have been organised by governments in Jharkhand earlier too, but they failed to yield any result,” he said. “About 150 MoUs had been signed; most of them were not realised.”

A report released by Assocham recently states that Jharkhand could attract only a fraction of the promised Rs 6.21 lakh crore for investment. Industry’s contribution to the state’s gross domestic product had dropped 11 per cent in the last decade. The Economic Survey said that the manufacturing sector was yet to gather momentum.

According to Sharan, despite the state accounting for about 40 per cent of the total volume of minerals produced in the country, the state government was not focusing on core sectors that include steel, power, aluminium and cement. The core industries could help bring ancillary units and aid micro, small and medium enterprises, both of which would lead to employment for the local population.

At the road shows, Chief Minister Raghubar Das talked about his government’s focus on information technology (IT), agriculture and automobile sectors.

“But why would a well-settled IT company in Hyderabad or Bengaluru wind up its office there and come to Jharkhand,” asks Sharan. After all, there were manifold challenges in the state, including land acquisition and a bureaucracy that dragged its feet, he said.

Jharkhand government officials claimed they had implemented the framework of ease of doing business and devised business-friendly policies, “transforming” the state's industry climate. Jharkhand is currently ranked third in the country by World Bank in terms of ease of doing business.

To ease the problem of land acquisition that had forced most investors to think twice before investing in the state, the government is taking steps.

“The state government would be creating a land bank that would be allotted to industries,” said state Industry Secretary Sunil Kumar Barnwal.

The state government had recently amended the Chotanagpur Tenancy Act, 1908, and the Santhal Parganas Tenancy Act, 1949. Both Acts were important tools for the tribal population and restrict the transfer of tribal land to non-tribals. With the amendments, the state government is trying to relax norms and facilitate land acquisition by industry.

However, the ruling Bharatiya Janata Party in Jharkhand has taken a stand against the amendment of both the Acts. A bigger challenge for Das would thus be keeping his house in order before wooing investors.