Our Democracy and their Democracy: Our Livelihood but their GDP

Seema Duhan August 31, 2011

Image credits: Kheel Center @Flickr


Numerous undertones, pictures, frames of political and philosophical thoughts rise and settle down with this word ‘Democracy’. In the 21st century, no other political thought seems to have touched chords with ideologues and general people from right to left across the world as overwhelmingly as the word 'Democracy'. It is assumed to be the ultimate political system that can exist wherein the sensibilities of the community can house harmoniously with that of individual aspirations, ideas and diversity. This write up is also going to talk about the saga of one the many such struggles, fancies and betrayals in the name of ‘The Democracy’ which might appear boring and cliché. It might be asked, if so is the awareness of it attaining monotony, then why the same talks. And my answer would be – because mayhem, treachery unleashed are still there, rather amplifying from all possible corners and the pretexts consistently used are of justice, equality, development, national interest that are time tested lies and obsolete at the same time. Indeed the structure(s) or institution(s) even of democracy are learning from the mastered art of maintaining powers since antiquity by any means and do not need any creativity to appear as reasonable with the changing times.

POSCO is one such anecdotal unfolding of the largest FDI1 or should I say the largest land scam of crony capitalism in the democratic, free nation of India with a whooping estimated cost of US$ 12 billion, approximately equal to Rs. 52,000 Crore. POSCO is the acronym for Pohang Steel Corporation2, a South Korean steel firm which is the third largest steel maker of the world. Fascinating is the journey of POSCO, which kicked off as a state-owned unit in late 60’s under a typical protectionist economic policy/regime of South Korea; it was nurtured, it was inflating with the increasing profit flow every year as a state-owned unit. But after the economic crises of 1997, its systematic disinvestment began and by 2000 all of its shares were divested making it a private firm. Interestingly, the status of being 'world class steel makers', that POSCO achieved while it was still a 'state-owned unit', very much like many Indian PSUs such as SAIL, BHEL, Oil Corporations etc which have been bestowed with 'Navratna' status.

On June 22, 2005, a Memorandum of Understanding (MoU) was signed between Orissa Government and POSCO, according to which, by establishing an Indian Company as POSCO – India, it would construct and operate a Steel Plant with capacity to produce 12 MT of steel per year starting with 4MT in the first phase, all with a proposed investment of Rs 52,000 crores or US$ 12 billion. The plant would be located on the north western bank of the Jatadharmohan river creek 12 km south of the Paradip Port requiring a total of 1620.496 hectares (4004 acres) of land, of which 1253.225 hectares (3000 acres) is forest land spread across 8 villages of three Gram Panchayats of Erasama block, Kujang Tehsil. The MoU consisted of guidelines that the company would develop and operate:

(i) A mining project in areas allocated by the Government of Orissa/Government of India for which the hills of Khandlahar spread across districts of Keonjhar and Sundargarh are under deliberations. These are the areas which are further disputed due to claims placed by few public sector units such as Kudermukh Iron Ore Company prior to signing of MoU;

(ii) A transportation project which includes a dedicated railway line, road and a port. But the Port is considered to be geographically and environmentally unviable and unreasonable proposition since any port with in 10 km proximity of an already existing Paradip Port is uncalled for;

(iii) An integrated township of both South Korean and Indian make that forms a part of the SEZ. Clause of township development indicates interest of the company in real estate investment;

(iv) The Development of a water supply infrastructure or a privatised water project to meet the water demands of the steel plant. For this, the water resources of Cuttack city are under considerations.

The Government of Orissa and the Company agreed to be “Partners in Development”. In this context, the MoU assured that the State Government would facilitate clearances and approvals from the Central Government as and when required.

At present, the contentious issue is that of the construction of the steel plant with an integrated township and a captive port, since planning to begin work for the construction of the plant was given a nod by both the Orissa Government and the Ministry of Environment and Forests (MoEF), violating all environmental laws. The first clearance from the MoEF came when Ministry of Environment and Forests (MoEF) gave CRZ3 (Coastal Reserve Zone) and Environment Clearance for the Captive Minor Port and Integrated Steel Plant with Captive Power Plant in 2007. The Ministry also granted in-principle (stage I) clearance for diverting 1253.225 ha. forests land for the project in 2008 under the Forest Conservation (FC) Act 19804, stipulating a set of conditions for compliance before final clearance. Denizens of the villages had been resisting the plant since the time of signing of the MoU in 2005. It was clear to them that the establishment of plant would be a direct assault on the flourishing agrarian economy and other means of livelihood which would be completely decimated rendering their lives to be miserable from self-adequacy. Due to vociferous resistance at grass roots and the advocacy, the project could not take off and bypassed the deadline of 5 years in 2010, reasonably rendering it redundant now. However, plausible fears for the loss of livelihood of thousands of people weigh lightly for the Fedreal Governments since all their concerns and sympathies are employed in minimising the loss of profits for the apple of the eye – The POSCO.

In January 2008, the Forests Right Act 2006 (FRA)5, one of the progressive legislations for safeguarding the rights of Scheduled Tribes (ST) and Other Forest Dwellers (OTFD) on forest lands, became operational. Under its effect, MoEF issued circulars asking State Governments to produce certificates of completion of FRA process in the concerned areas along with supporting letters from each Gram Sabha6 as well as letter of consent or rejection from the Gram Sabha about the proposed project. Acting true to its nature, the bureaucracy from the state furnished a certificate to the MoEF stating the completion of FRA process while in actuality, the facts were misrepresented since no certificate of clearance for the usage of forests for non-forest use was issued by the Gram Sabhas in question.

Anti POSCO Protest Image Credit: [Joe Athialy @Flickr](http://www.flickr.com/photos/joeathialy/)

POSCO symbolizes the developmental model of neo-capitalist, neo-colonial aspirations which equate modernisation to urbanisation and produce neo-slavery in service of neo-feudal structures of ‘steel and uniformity’; where in corruption proves to be the lubricant for the sustainability of contractual democracy of urban-modernised citizens. Since, the time of signing of the MoU, residents of 8 villages of Jagatsinghpora district are calling all the sane and just voices to join them in the battle of reclaiming the ‘republic’ which the citizens of this country gave to themselves but was hijacked by the very same establishment of the state which was constituted to serve the sovereign citizens. The survey report prepared by the Mining Zone People’s Solidarity Group7 concludes with, “It boggles our mind that more than five years after the MoU was first signed, the government has offered no systematic justification, nor conducted any public study, nor shared any insight into why a gigantic project of this size, with massive social and environmental repercussions, is actually in the ‘greater common good’ of the nation and society”.

A fair cost-benefit analysis of the project done by MZPSG, based on simple empirical tools represents the economic analysis done by NCAER8 bogus which came out with mythical figures of revenue generation owing to the project. The concerns raised by MZPSG regarding the viability and sustainability of the POSCO steel project for the localities in the long run are crystallised with the survey later done by the Majority Report of the POSCO enquiry Committee9 constituted by the Ministry of Environment and Forests, Government of India. The economic assessment of NCAER is also a joke in itself. On one hand the project has been assigned status of SEZ10 which is evidence in itself that it will enjoy tax holidays worth billions per year. Further to add the farcical toppings, according to the NCAER report, revenue generation from corporate tax on commercial activities @ 33.6% per year over a period of 35 years will be higher for SEZ unit in comparison if the entire project is placed in Domestic Tariff Area (DTA)11. Significant to note here is that, the assumptions or calculations or claims about the revenue generation, as have been furthered in the report over a period of 35 years are:-

Central Government will get Rs. 92,100 crores and Orissa Government Rs. 77,870 crores as tax income. But at the time of signing the MoU, estimated tax revenues were Rs. 89, 000 crores for Central Government and Orissa government was entitled to sum of Rs. 22,500 crores over a period of 30 years.

In such a scenario, where two different claims from government are being made, which one should be considered authentic? As per a report published in The Hindu12, dating back August 19, 2005, an industry analyst calculated the virtual tax evasion of amount Rs. 120,000 crores over a period of 30 years in the project. In the same report, violation of national mining policy and iron ore export by the Orissa government was exposed, i.e. POSCO sought 400 million tonnes of iron ore per year to be exported for the use of its steel plants in South Korea which runs contrary to the current policy. The Government of Orissa said it "will assist POSCO in establishing suitable contacts and interfaces with the Government of India for the same purpose." And of the 600 MT, MoU allows POSCO to swap 30 percent of Orissa’s iron ore with the imported one from Brazil. POSCO says this will make better steel. However, research shows that the low phosphorous content in Orrisa’s iron ore makes it far more profitable to sell. Every move of both the State and the Central Government in this episode, presses one to ask, how else could the national interest and market driven, development hungry state be euphemistically defined. World over companies pay relatively fair-market rates for the iron ore reserves they mine. India is one of the rare exceptions that offer mining leases on a royalty basis. Until 2009, it was Rs. 27 per tonne. In 2010, a revised policy has increased the royalty to 10 percent of the pre-shipping price. It gives a feel of family portrait as if State and POSCO are sister concerns.

Other tall claims made by the State Government in support of the project are generation of jobs for localites, hence contribution towards the development of the state and compensating the loss of forests with planting of trees by the company itself under its Corporate Social Responsibility Project. However, as reported by Tehelka13 (December 11, 2010), “Government data shows the number of workers employed to produce 1 MT of iron ore dropped 32 percent from 2005 to 2009. Shockingly, even the official report on Regional Imbalances shows that Odisha’s top three mining areas have actually registered ‘downward mobility’ in terms of development. According to labour ministry data, jobs in the mining sector per 1 lakh of output fell from 0.03 percent in 2000 to 0.009 percent in 2006. In Keonjhar, one of the prime mining areas, labourers claim that life expectancy has declined by about 50 percent, many dying before the age of 40. The trend of increasing mechanisation in the mining sector suggests that employment generation is usually much lower than projected.”

In the past decade, Orissa has seen three major resistance movements against the mining industry and the experience of those has given a clear cut idea to the residents of Jagatsingpura about the jobs that will be generated for them. They say that at present they are dependent upon agriculture and allied activities which are self sustainable. They themselves are the owners as well as the labourers; therefore a sense of self dignity is attached to their work. While, POSCO can employ them only as semi-skilled labourers or few may be employed as security guards at maximum. They will be dependent on the mercy of the labour contractor everyday to find out work on daily basis. Dependency on contractor would reduce their bargaining power for daily wages in competitive labour market. Hence, the maximum daily wage will be almost half of what many are getting by working as farm labourers on the farms of others. Therefore, there isn’t anything in the project which can be considered as an economically secure option even by the farm labourers what to say of those whose land, state is eyeing upon to annex for the project.

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On May 2, 2011, MoEF gave ‘final forest clearance’ to the project overlooking all the rationale, reports submitted by the committees constituted by MoEF and pleading to look into the matter impartially and the memorandums sent by the Gram Sabhas denying departure from the land under any given situation.

Rather, it better suited the then Minister of State Environment and Forests, Jairam Ramesh to hide behind ‘faith and trust of cooperative federalism’ to support the position of the State Government on POSCO. He argued that beyond a point, the bonafides of a democratically elected State Government could not always be questioned by the Centre. Such a positioning is self explanatory that logically the project does not sound worth of implementation but since the decision of State Government has to be respected which does not want to step back, hence, the ‘clearance order’. From another dimension this also reflects a strategy to ping-pong the matters like land acquisition and safety of environment which have direct implications on the lives of people, within the federal structure of republic. It does impel me to think, is democracy all about giving mandate to a candidate with relative majority votes to become representative as a matter of condition in parliamentary democracy and let the voices of protest, dissent forgo dreaming that the representative would always reflect the opinion of people again with the metaphor of ‘faith and trust’.

Jairam Ramesh Image Credit: [Mat McDermott @Flickr](http://www.flickr.com/photos/matmcdermott/)

The three major reasons cited by Minister of State, Environment and Forests behind the clearance to POSCO14 were:-

  1. No quorum in the Palli Sabha meetings of Dhinkia and Gobindpur (villages), where the resolution of not giving the Forest land to the Company had been taken, only a handful of villagers attended the Sabha.

  2. The Palli Sabha was not legally convened under the prescribed format of the Orissa Gram Panchayat Rules, 1964 and Forest Rights Act, 2006.

  3. The Resolutions were not kept in a prescribed book format signed by the Panchayat Secretary and the Sarpanch under the Gram Panchayat rules.

Now the facts are that copies of the resolution taken by Palli Sabhas on Feb 21 and 23, 2011 were sent to both the Orissa government and the Ministry of Environment and Forests. Here are the details15. Almost 70 percent of the villagers participated and signed the resolution, rejecting the proposal for diversion of forest lands to POSCO or any other project.

FRA rules say that the Gram Sabha will be conveyed by the Gram Panchayat. Neither the Forest Rights Act nor its rules define the term ‘Gram Panchayat’ and nowhere it has been hinted that this will be bound by any State Government’s interpretation. In a case, where the Sarpanch of the Dhinkia Panchayat certifies that Palli Sabha resolutions are genuine, what is the point in saying that the Palli Sabha meetings were not legally convened?

And it seems futile to even discuss the third reason. In actual sense, all the three reasons cited are in themselves a proof of deliberated treacherous attitude of the Governments. Since, there was not any substantial ground to give the clearance; therefore the best strategy could be to discredit the villagers, activists, Gram Sabhas by twisting their elbow and misconstruing the law. After all, it is implanted in the system of power that courts, law, police, and every institution of establishment is to safeguard and assert the hegemony of the state which sees itself of different character much alienated from the people.

After the clearance the State government took a lease of breath and spearheaded its operation to get the villagers evacuated from the villages and acquire the land for POSCO steel plant. At the same time people leading the resistance movement also made attempts to mobilise solidarity and support from across the country. On June 17, 201116, state establishment met with fierce resistance and mobilisation against the POSCO project and the acquisition was suspended citing bad weather, while hundreds of agitating villagers, including many women and children formed a human chain outside Gobindpur village in their attempt to resist the process. But the State Government has made up its mind to decimate the export quality betel vineyards for which the heart of a large population is crying. Police has cordoned off the villages and any outside entry to those 8 villages is restricted. Betel cultivation is central to the economy, livelihoods and culture of the people. A poetic analysis of betel cultivation and its economy has been given by P. Sainath17 in his column. Wish the officials also had taken a look at the exquisite betel vineyards, sensed its aroma and taken back the sweetness of betel rather than carving out cruel plans of destroying it with an iron fist.

These days, when it is fashionable and cosmopolitan to talk and get worried about the changing global climate, it must pain to hear that prior to even renewing the obsolete MoU, almost 1.13 lakh trees18 have been felled out of proposed cutting of 2.9 lakh trees. The Orissa state government is at present under pressure to negotiate with POSCO to bring contentious amendments in the MoU such as a clause allowing POSCO to swap of 30 percent Iron Ore from abroad, about which POSCO seems quite dogged.

Meanwhile, there has been no vigour lost in the protests of the people19 and everyone including children, women, old or young is consistent with their demands and rights. All the resistance groups especially POSCO Pratirodh Samiti and CPI, SUCI and other leftist groups should be commended for generating a plethora of information, analysis of POSCO project from multiple dimensions and questioning the acts of the Government within the paradigms of legislations enacted by the State itself. Salute to their courage to stand the atrocious uproar of the state to crush the protestors from villages or criminalising the peaceful protests several times in the last 6 years. They remind us, the path that leads to Democracy in political and social life is no day dream, more so it is even tougher to reclaim it if the political system claims itself to be democratic but acts like autocratic.

Other suggested readings:

  1. http://www.frontlineonnet.com/fl2804/stories/20110225280409600.htm

  2. http://www.frontlineonnet.com/fl2724/stories/20101203272408500.htm

  3. http://www.indiatogether.org/2011/may/env-fra.htm

  4. http://www.livemint.com/2011/01/31140114/Approval-boosts-global-strateg....

  5. http://www.mainstreamweekly.net/article2752.html


  1. FDI stands for Foreign Direct Investment. FDI is any investment made by a foreign country in another country. It is assumed that it will increase opportunities for employment, technological advancements and capital generation. 

  2. http://en.wikipedia.org/wiki/POSCO 

  3. http://envfor.nic.in/legis/crz/crznew.html 

  4. http://forest.and.nic.in/fca1980.pdf 

  5. http://www.fra.org.in/laws/fra06.pdf 

  6. The Gram Sabha is a meeting of all adults who live in the area covered by a Panchayat. Anyone who is 18 years old or more and who has the right to vote is a member of the Gram Sabha. 

  7. Iron and Steel: PDF report by a US based activist for Mining Zone People’s Solidarity Group regarding the economics and other aspects of the project. 

  8. NCAER – National Commission for Applied Economic Research – PDF report 

  9. PDF file of Majority Report of the POSCO Enquiry Committee constituted by MoEF. It is also called as Meena Gupta Committee. Majority because later on Ms Meena Gupta one of the committee member sent her dissent note. It is interesting to know that Ms. Meena Gupta is an IAS (Rtd) from Orissa cadre, Former Secretory, MoEF. Incidently, she had cleared the steel plant and captive power plant in 2007 as Environment Secretary. 

  10. SEZ stands for Special Economic Zone. SEZ are delineated duty-free enclaves treated as a foreign territory for the purpose of trade operations, duties and tariffs. http://www.sezindia.nic.in/index.asp, http://en.wikipedia.org/wiki/Special_Economic_Zone#SEZs_in_India 

  11. DTA stands for Domestic Tariff Area. It is the location existing outside SEZ, which does not enjoy tax exemptions in its commercial activities. Infact DTA was defined under SEZ Act in relation to area demarcated as SEZ. 

  12. http://www.hinduonnet.com/2005/08/19/stories/2005081918121200.htm 

  13. http://www.tehelka.com/story_main48.asp?filename=Ne111210whose_steel.asp 

  14. http://post.jagran.com/jairam-ramesh-nod-for-posco-project-in-orissa-1304338769 

  15. http://www.forestrightsact.com/corporate-projects/item/12-the-posco-project 

  16. http://www.thehindu.com/news/states/other-states/article2112639.ece 

  17. http://www.thehindu.com/opinion/op-ed/article2224641.ece, http://www.thehindu.com/opinion/columns/sainath/article2221799.ece 

  18. http://www.thehindu.com/news/states/other-states/article2319111.ece 

  19. http://www.thehindu.com/news/national/article2377022.ece 

democracy, Development, Essay, livelihood, orissa, Politics, POSCO, Environment, India, Neo-liberalism, Poverty, Struggles Share this Creative Commons Attribution-ShareAlike 3.0 Unported

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