Global Policy Forum

The citizens of Odisha, an eastern Indian state rich in mineral resources, are fighting Pohang Steel Company (POSCO) in an effort to stop the giant firm from setting up a steel plant in the state. The government of India gave POSCO rights to 4,004 acres of land in 2005 and the project is estimated to total up to $12 billion. This is the largest foreign direct investment project in India to date, and the National Council for Applied Economic Research has stated that POSCO will earn the country $1.75 billion over 35 years. Critics of the project say that it will displace 22,000 local residents, leaving them without a means to earn livelihood and harm the environment in Odisha. The deal is especially under dispute because 75% of the land was given to POSCO in contradiction to the Forest Rights Act, a environmental legislative initiative. The case of Odisha proves that citizens need legal protections from the negative consequences of foreign direct investment.

By Faiza Ahmad Khan

The eastern state of Odisha in India is pitting small farmers against international business interests in a battle that threatens the Indian government's idea of development.
 
"POSCO go back!" is a common chant among the hundreds of residents from Jagatsingpur district who have been standing guard at the village borders since June 2, to prevent the forcible acquisition of their lands for a steel plant, the country’s largest, that South-Korea based Pohang Steel Company (POSCO) wants to set up. Twenty police battalions have been stationed a few kilometers away, awaiting the state government’s instructions.
 
At $12bn, POSCO, partially funded by Warren Buffett, Citibank and JP Morgan Chase, is slated to be the largest Foreign Direct Investment ever to be made in India, according to the Federation of Indian Chambers of Commerce and Industry. The Odisha government claims the mega-project will wipe out poverty from the state. But in six years, the government has not been able to finish acquiring land for the plant.

On July 16, 10 platoons of police marched into Nuagaon village with the district authorities to restart the process of land acquisition. Over 300 village women tried to stop them from felling trees in the forest. The police attacked with batons, injuring eight people, before they were driven out by the villagers.

Odisha has a wealth of mineral resources, and in order to attract investments, the government has made concessions for corporations in the form of tax-free Special Economic Zones and mineral-ore at low prices. But across the state, from Niyamgiri where the Dongria tribals are fighting UK-based Vedanta's bauxite mining project, to Kalinganagar where opposition to Tata's proposed steel plant has resulted in the killing of 19 villagers since January 2006, these large projects are being met with resistance from some of the people they purport to benefit.
 
Besides the steel plant, a Memorandum of Understanding (MoU) between the state government and POSCO includes 600 million tonnes of iron ore to be mined in the hills of Kandadhar, a captive port in Paradeep, a 1300 mega-watt power plant, special railway lines and diversion of water from the Mahanadi river, 86km away.
 
"This project will not only give direct benefits but it will create ancillary investment that will benefit the region's economy," explains Dama Raut, who was the elected Legislative Assembly representative from the area when the POSCO project was initiated. "To gain something, you have to lose something," he said, when asked about the displacement of local villagers.
 
The eight villages where POSCO is looking to acquire land have a flourishing agriculture-based economy cultivating betel-vine, rice and cashews. The protesting villagers see the steel plant as a threat to the agrarian livelihood of 22,000 people, besides adversely affecting the ecology.

Illegal land deals
 
The government needs 4004 acres of land for the POSCO project. Of this, 3096 acres are classified as land protected by the Forest Rights Act (FRA) 2006. This legislation implies that 75 per cent or more of the forest-dwelling communities have to give their consent to convert the forest land to non-forest use. In February 2011 a meeting was convened for the villagers of Dhinkia and Govindpur, in which they almost unanimously opposed the steel plant.
 
After the meeting, the state government only sent the first page of villagers' signatures to the Environment Ministry, claiming that just 69 people in Dhinkia and 64 people in Govindpur opposed the project. Based on this fraud, the Ministry gave the POSCO project the environmental clearances it needed. Later, the state government declared the village meeting invalid.
 
"If the meeting was invalid, why did the Odisha government send the resolution to the Environment Ministry in the first place? Shouldn't they have just called for another, 'valid' meeting?" questions Abhay Sahoo, leader of the POSCO Pratirodh Sangram Samiti, a social movement opposing the project.
 
Sudhir Mahapatra, a betel-vine farmer from Dhinkia, is firm in his resolve to protect the forest and his land. "You will never hear of starvation deaths here. The forest gives us everything we need," he says as he works in his plot of betel-vine. "I make almost Rs 40,000 ($900) a month. Landless workers that I employ earn Rs 250 ($6) a day. Even the aged find employment in this accommodating economy."
 
Ex-minister Raut believes that the project will improve the locals' quality of life, even if people are forced from the land. "If a family had one acre of land and was producing some food grain, it was just sufficient to provide food for one year. But now in one go, the family will get Rs 17 lakh ($38,000) as compensation."
 
Mahapatra, the farmer, is amused with this compensation package. "I earn more in one year than the compensation being offered. This land will take care of my children and their children. And at my age, what sort of a job am I going to be able to do? I can’t speak English. They’ll ask for a shirt and I’ll hand them a banana instead! They’ll say I am incompetent and sack me and I’ll have to go about with a begging bowl,” he laughs.

Conflicting reports
 
In June and July 2010, Jairam Ramesh, the then central Environment Minister of the state government, sent two committees to study the implementation of the Forest Rights Act (FRA) and the viability of the POSCO project.
 
Both committees reported that the POSCO project was not feasible, the FRA was being blatantly flouted, and suggested the environment clearances given to POSCO be revoked.  The Ministry paid no heed to its own committees’ recommendations.
 
Instead the government is justifying the project on a report by the National Council for Applied Economic Research (NCAER), an economic research institution based in New Delhi. It asserts that POSCO will earn the country Rs 1.75bn ($39. 2m) over 35 years in taxes and offer 870,000 jobs over 30 years. What was not made public is that fact that one of the sponsors of NCAER is POSCO.
 
Shalini Gera of the US-based research group Mining Zone Peoples' Solidarity Forum, that produced a report to counter the claims made in the NCAER report, points out certain errors. "If you get Special Economic Zone (SEZ) status, you are only taxed on domestic sales. Between 53 and 67 per cent of POSCO's output is going to be exported. So the corporate tax that they will have to pay is less if they were under an SEZ. Yet the report claims that POSCO will have to pay more tax if they are under an SEZ." 
 
Flaws abound in the NCAER report, which in calculating the cost-benefit analysis takes the current local economy to be at zero and does not calculate rehabilitation or environment costs, Gera said.
 
"POSCO's website says that the number of jobs in three phases is 37,000. Yet the report says it will generate 0.87 million jobs - since economies are linked, money invested in POSCO will generate more jobs in ancillary industries. But they’re calculating at 100 per cent investment. If 65 per cent of the raw material, the machinery is to be imported, how much of local economy are you stimulating?"

Police 'intimidation'
 
The villagers protest that government has been trying to crush the protests by using violence and intimidation. Nearly 800 false cases have been put on the villagers. People are threatened by the police into signing blank papers, which as and when required, are filled with details of charges.
 
It is for this reason that 62-year old Kanchan Malla from Dhinkia, who has a steel pellet buried in her head from a police firing a year ago, had not left her village. "I need to get an operation but there might be a case against me that I don’t know of and if I leave the village, I might get arrested," she says.
 
"The way we're going, our resources will finish in 30 years. The first thing the government should do is to sell the iron-ore at market rates of $170, instead of the 10 per cent (or $17) royalty it is being given away at," says activist Prafulla Samantra. "That way, instead of inviting five companies to mine, we can do with just one. But if government does not give these corporates any concessions, who is going to fund their election?"
 
Raut, the politican who supports the project, disgrees with that thinking: "Why should we think of 30 years from now? Science and technology will produce something that will take care of us 30 years from now!" he counters. 
 
Joining the ranks of those opposing the POSCO project is newly-appointed Tribal Affairs minister V Kishore Chandra Deo who asserted that the FRA should be implemented before any more displacement takes place.
 
The issue of land acquisition, not just in Odisha, but in other parts of India too, is a growing one, its end result certain to define the future path of the nation’s idea of "development".

"I’ve seen what happens when these companies come to our villages,” says Ramchandra Behera of Dhinkia. In 1999 his land was acquired for an oil refinery by Indian Oil Corporation Limited. "We never got the jobs promised to us. Hundreds of people migrated out of here. No one knows where they went."