The Posco possibility

Orissa is the poorest State with an official estimate of 39.9 % of people living below the poverty line, yet, with regard to the proposed investment it stands only second to Gujarat. According to the Assocham Investment Meter the recorded investment proposals in Orissa reached Rs. 2,00,846 crore (roughly 40 billion USD) in 2009. The cause is the availability of rich mineral resources such as coal and iron ore along with cheap and easy availability of manpower. Steel and power were among the sectors which attracted maximum proposed investments in the state.

POSCO project

The $12 billion Pohang Iron and Steel Company (POSCO) project in Orissa is the largest foreign investment project ever in India. This project has three components:

Captive iron ore mines in three areas of Keonjhar District and Sundargarh District. Mining lease on 6204 Hectares in Sundargarh District recommended to be approved by the Supreme Court.

Steel plant: in Jagatsinghpur District, coastal area.

Private port: at the mouth of the river Jatadhari, close to steel plant area; the MoU only makes reference to the possibility of a “minor port” being created.

This vast project of necessity strains the nation’s less than coherent institutional framework, and in the process illuminates today’s ruling forces and the way in which they go about achieving their aims.

The elements of the assault are familiar: dispossession of tribal cultivators and the despoiling of the environment.

The parliamentary democracy has made something of a spectacle of the construction of the legislation that would appear to strictly regulate, if not prohibit outright, what is underway in Orissa today (the Forest Rights Act, etc. etc.). But statutory language does not interpret itself, and not surprisingly the ministries and judiciary are doing whatever is necessary on behalf of the ruling interests. Thus the tribal cultivators first disappear from the legal reality, before their disappearance from reality itself courtesy of the next “Tribal Hunt” operation of Chidambaram & Co.

POSCO needs approximately 4004 acres, of which only 10% belong to the cultivators. The rest of the land required belongs to the government, and this has been recorded as “under forest” in the official documentation. Government records do not show that the vast majority of this land has been under cultivation by the people living in these areas for generations.

Tribal cultivators are then termed as “encroachers”, and their eviction from mineral rich forest and hill tracts follows “legally”. Much lauded statutory provisions that purport to give protection to indigenous forest dwellers are ignored by the relevant ministries to achieve the same result.

POSCO has delinked the mining project from the plant construction in order to get the vast project underway. A license for over 2,500 hectares for the proposed Khandadhar iron ore mines has been recommended by the Orissa State government, despite opposition from other companies and locals. But existing iron ore mining in the region has already severely impacted the water resources of a large region inhabited by many thousands. In the immediate region of the proposed mines the only constant water source are waterfalls that are already contaminated from iron mining and the water is now not safe for drinking. In the larger surrounding region the Central Underground Water Board has reported that the underground water level in Joda and Barbil river areas has subsided by four metres, that forty percent of the region’s 8,000 tube wells no longer function, and that nearly half of the irrigated land can no longer rely on water from the Khandadhar waterfalls.

Meanwhile, the state government is understood to have put on hold the process of renewal of Memorandum of Understanding (MoU) with Posco India which expired on June 22 this year. The MoU was signed in June 2005 and was valid for a period of five years.

On October 26th the state Government put forth its stand that no laws had been violated at the project site of the South Korean major Posco’s proposed steel plant near Paradip in Jagatsinghpur district.


The Forest Advisory Committee (FAC) of the Ministry of Environment and Forests (MoEF) deliberated on the recommendations of the Meena Gupta Committee on Posco.

The State government’s stand at the meeting was focused on three points. That there has been no violation of Forest Rights Act (FRA) in the project. There are no traditional forest-dwellers in the project area.

Besides, the rehabilitation and resettlement policy (R&R) of the State announced for the Posco project is one of the best.

The state government which has already filed its response to the two separate reports of the Meena Gupta panel on the Posco project and requested the Centre to allow work on the Posco project to continue, is awaiting the right signals from the Centre to renew the MoU with Posco India.


Anti POSCO agitation in Orissa


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Another road block for POSCO

In March 2007 The Orissa government claimed it would, within the next three months, remove all hurdles to Posco’s Rs 52,000 crore steel plant in the state.

“We will find ways within the next three months to sort out all hurdles. Already the steel giant has been given 1,100 acres of land for its proposed 12 million tonne integrated steel plant in Jagatsinghpur district,” Orissa Steel and Mines Minister Padmanabha Behera said.

The company had told the Centre and the Orissa government that ‘if matters were not sorted out within the next two-three months, then it could re-consider its investment plans in the country’.

Seeking categorical assurance from the government on various issues pertaining to its project, Posco has asked the Navin Patnaik government to spell out its stand on its project as it did not want to wait for an indefinite period.

The company was also actively toying with the idea of shifting to Vietnam, which has a huge potential market and an investment friendly climate.

As of November 2010 the fate of the country’s largest FDI remains hazy. With the State Government constantly backing it and the Ministry of Environment succeeding in posing as a hurdle every step of the way one can’t help but wonder how much longer will it be before POSCO pulls out.

A for­estry panel has advised the Union Environment Ministry to reject the forest nod given to it.

If Forest Advisory Committee (FAC) recommendations are accepted by Environment Minister Jairam Ramesh in its entirety, the project at Jagatsinghpur, which is billed as the largest single dose of FDI in the country, will meet the similar fate as that of Vedanta‘s bauxite mining proposal in Niyamgiri in Orissa.

Vedanta had to shelve its plans of mining bauxite after its first clearance was withdrawn by the Environment Ministry citing violation of green norms.

At present, no construction work and land acquisition is being carried out by Orissa government for the Posco project as ordered by the Environment Ministry which acted on the recommendations by NC Saxena panel that accused it of forest rights violation.

On November 9 and 10, the Expert Appraisal Committees (EACs) on Infrastructure and Coastal Regulation Zone (CRZ) of the Environment Ministry will appraise alleged violation of green and coastal regulation norms as pointed out by the Saxena Committee.

Some of the members had also suggested FRA violation were something that could be corrected by the state government. However, the majority decision ruled which sought rejection of forest clearance.

It is learnt that the Environment Ministry will take a final call on the project later in the month after EACs meeting

Did POSCO exaggerate the employment potential steel plant in Orissa?

A group of US-based experts has accused the Korean steel giant and Orissa of fudging statistics on potential jobs to hard sell the integrated steel plant.

A paper prepared by Mining Zone Peoples’ Solidarity Group, a collection of economic professors and engineers and others based in the US, has unraveled the figures estimated in an NCAER report that POSCO funded to find that the project at best will bring only 17,000 jobs in the first year and not more than 50,000 jobs for the state with 0.99 million unemployed.

POSCO had claimed that its project in Jagatsinghpur would bring unemployment down from 0.99 million to a mere 0.12 million.

The paper states that “The employment potential of the project has been grossly exaggerated by POSCO and Orissa government, based on an inaccurate study by NCAER. A careful breakdown of the much touted ‘8.7 lakh man years of employment for 30 years’ claimed by the NCAER study shows only 7,000 direct jobs and a maximum of 17,000 direct and indirect jobs in the next 5 to 10 years.”

Their evaluation of the NCAER study and POSCO’s claims shows that even when the plant is running at its full capacity 1-30 years from when it starts construction it will only provide 48,000 jobs which is still just 4.7% of current unemployment. That too if one assumes that the number of unemployed remain static in time and doesn’t increase with time and population.

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How the NREGA works?

This is a history of minimum wage increases un...

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“…we have to ensure inclusive and equitable growth, we need to knit and integrate our rural areas…. We cannot allow India to be divided into two distinct zones.”

Dr. Manmohan Singh

Prime Minister, India

At stake is the UPA government’s flagship programme, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Though petitions have been filed at Andhra Pradesh and Karnataka high courts by individuals and workers’ groups questioning the competence of the Union government to fix wages under NREGA — which is less than the wages prescribed under Minimum Wages Act — the ground battle is now being fought in the capital of Rajasthan.

If the minimum wages is undermined, then NREGA loses its meaning. One aspect of the Act is to ensure jobs for the unemployed, the other aspect is to ensure that they get the due value

The States and the Centre have been at loggerheads even while agreeing that the Minimum Wages Act is to be followed in NREGA. But while the states have been asking the Centre to make the payment, the Centre has said it was the state’s onus of meeting the Minimum Wages Act and so they should make the payment.
The NAC also endorsed the fact that rules of the MGNREGA be amended so that outside parties are also allowed to audit the NREGS. Currently, Section 13 (b) of the Act only allows the Gram Sabha to do a social audit of the scheme and keep any outsiders at bay.

The NREGS, accused of taking away labourers from other sectors by offering attractive wages, should have a coherent wage policy consistent with the law, especially with the Minimum Wages Act.

A resolution was passed  stating that “the current wage rate of Rs 100/day must be immediately indexed to the price level (using the Consumer Price Index for agricultural labourers, with April 1, 2009, as the base year), so that the purchasing power of MGNREGS wages is not eroded by price spurt”.

As of Ocotber 4th the Rajasthan state government agreeing to increase the minimum wages by 35% with effect from January 1.

As of now the people of Rajasthan are not concerned about how the state pays Rs 135 as wages for NREGA workers but that. It is upto the state whether it pays the money from its own funds or asks for a reimbursement from the Centre. But as far as the people are concerned no wages can be less than the minimum wages.
And that is exactly what the Working Group on Wages under the National Employment Guarantee Council has proposed to the Ministry of Rural Development only to meet with a staunch no for an answer.

The ministry has said: “This is not feasible. The wage rates fixed under Section 6 (1) of the Act are distinct from the minimum wages. The provisions of the Act have to be respected.” But while the ministry has its argument additional solicitor general, Government of India, Indira Jaising feels otherwise.

The lack of a coherent wage policy is responsible for this confusion over wages even in the fifth year of the Act’s implementation. The Act states wages have to be paid according to the “wage rate”, a rather ambiguous term, while the Minimum Wages Act asks states to decide and revise it according to the Consumer Price Index from time to time.

In January 2009, the Ministry of Rural Development (MoRD) of the Government of India delinked MGNREGA wages from “minimum wages” through a notification, Under Section 6 (1) of the MGNREGA, until the Centre notifies a wage rate for a particular state, agricultural rates will apply. However, in December 2008, the Centre notified Rs 80 as wages to all states which were paying less than this for MGNREGS. This fundamentally undermined the sanctity of the Minimum Wages Act for all workers in India. Questions of (un)constitutionality have been considered and ignored, responsibilities passed from one government to the other, and fiscal concerns invoked to override fundamental, human rights and issues of morality and ethics.

In early 2008, amidst concerns that delivery of NREGA wages via Gram Panchayats and other less formal methods was leading to corruption in the scheme, the Ministry of Rural Development mandated that all NREGA wages be delivered through either a bank account or post office account.

Overall, only 43% of the total payments had been disbursed through the sources other than banks and post-offices. Interestingly, in many cases compliance of states in routing NREGA wages via formal accounts seems to bear little relation to the levels of financial inclusion of the state: for example, UP in which a low share of the population holds a bank account has performed relatively well on this metric while states such as Tamil Nadu and Maharashtra, with much high rates of existing financial inclusion, have performed abysmally.

The NREGA addresses itself chiefly to working people and their fundamental right to live with dignity. The success of the NREGA, however, will depend on people’s realisation of the Act as a right. Effective levels of awareness and sustained public pressure are crucial to ensure that the implementation problems are addressed and the objectives met.

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