Neoliberalism and Class Reproduction in India: The Political Economy of Privatisation in the Mineral Sector in the Indian State of Orissa

Abstract

Recent years have witnessed a process of integration of the Indian Union within the new international economic order, characterised by the ascendance of neoliberalism. Orissa, historically one of the Indian states mostly affected by severe poverty and economic stagnation though richly endowed with natural resources, has enthusiastically endorsed the neo-liberal project, implementing all the relevant national policies related to it. In the last 15 years, while the economic policy of the State of Orissa has been thus increasingly shaped according to the neoliberal guidelines recommended by the Centre, the disturbing socio-economic scenario of the State has not changed significantly. This paper aims to highlight how specific power relations in the State of Orissa are reproducing themselves in the course of the transition of the Indian Union towards the neoliberal order. This paper aims to consider as an example of this process the privatisation policies in the mining sector, namely the main economic sector of Orissa. Moving from the fundamental role historically played by Orissa within the Indian Union as a supplier of raw materials to the pan-Indian market, the paper intends to highlight the rentier character of the Orissan dominant class, traditionally capable of performing a basic intermediary function in the provision of raw materials to the Indian market. Once taken into account the socio-economic role historically played by the local dominant class in Orissa within the context of the wider capitalist dynamics at work at the all-Indian level, the paper will focus on the scenario which came into being since the start of the neoliberal economic reforms in 1991. The major shifts in the mineral policy at the central level since 1991 will be taken into account and, within this context, the implementation of privatisation policy in the mineral sector in Orissa will be analysed, with special reference its socio-economic implications. The paper aims to highlight the way in which the State of Orissa has broadened its traditional role, becoming an important supplier of raw material not only to the all-Indian market, but to the international market in general. It will be argued as well that, in continuity with the past, the intermediary function of the local dominant class in this process has remained fundamental. Therefore the paper aims to argue that the current scenario supports the proposition that the unfolding of neoliberal dynamics in Orissa opened the way for the creation of new spaces of social reproduction for the local dominant class and, with them, for the reproduction of old relations of power and social domination in the State.

Keywords:

• India
• Orissa
• neoliberalism
• mineral sector
• class analysis

Notes

 1 This work aimed at providing a class analysis of an ongoing conflict over illegal aquaculture practices in Chilika Lake, situated on the coastal part of Orissa.

 2 Recently Orissa’s growth rates have improved. In the period 2002/2003 to 2006/2007 the gross state national product (GDSP) average growth rate was 8.6%, in an overall scenario of growth without inclusion (Panda 2008). Within the scope of the present article the nature of this recent growth will be discussed later on, focusing exclusively on mining and related secondary sector activities.

 3 Mohanty (1990) points out that a possible process of diversification of the caste make up of this class was underway in the 1980s, when the khandayat caste group proved able to acquire positions within the state apparatus. The continuation of this process into the 1990s was also confirmed by fieldwork interviews.

 4 Up to 2010 this situation had remained unvaried. For more information about this issue see also the Orissa Department of Steel and Mines website, http://www.orissa.gov.in/steel&mines/index.htm.

 5 See, for instance, the speech delivered by the Chief Minister of Orissa at the 52nd Meeting of the National Development Council, New Delhi, 9th December 2006, http://www.planningcommission.nic.in/ plans/planrel/52ndc/Orissa.pdf.

 6 Here it is significant to mention that taking the year 2005/2006, the iron ore production of the Orissa Mining Corporation was 3.4 MT (Government of Orissa 2007) and the iron ore requirement of the integrated Rourkela Steel Plants was 4.1 MT. Altogether the public sector accounted for 7.6 MT of production in Orissa out of a total state production of more than 55 MT. In 1991–92 the private sector iron ore production in Orissa was 36.7% out of total state production (Padhi 1994).

 7 This information was provided in 2007 by the Orissa Steel and Mines Department.

 8 This information is available on the Rourkela plant webpage on the Steel Authority of India website, http://www.sail.co.in/pnu.php?tag=rourkela.

 9 In 2009/10 the number of memoranda of understanding signed by the government of Orissa with private players for setting up steel plants grew to 49, with a total estimated steel production of 75.66 million tonnes p.a.. By that year, the number of private players that had started partial production rose to 28. Their total achieved production capacity of steel was 4.01 million tonnes p.a., while the achieved production capacity of sponge iron was 5.16 million tonnes p.a. and the achieved production capacity for pig iron was 0.63 million tonnes p.a. (Government of Orissa 2010).

10 Uncertainty about the possible implementation of the agreement was still persistent up to 2010. The possible stalemate of the project has even been mentioned on the website of the Department of Steel and Mines, Government of Orissa, where the existence of issues related to land acquisition, displacement and issues related to the long-term lease of iron ore are recognised ( http://www.orissaminerals.gov.in/Website/ NewIni.aspx?GL=indst&PL=2). However, and despite the strong social opposition generated by the agreement, the government of Orissa has continued to support it. Besides, at the beginning of 2011 the Union Ministry of Environment and Forests (MoEF), which in August 2010 had stopped land acquisition work for the Posco project, granted conditional clearance to the company’s steel plant (Das 2011).

11 The refinery became operational by 2009. As far as bauxite mining is concerned, the proposal for forest land diversion for the Vedanta project was submitted to the Union Ministry of Environment and Forests (MoEF) in 2005. The area identified for mining was Niyamgiri hills, which span parts of Kalahandi and Rayagada districts, and whose environs are inhabited by the Dongriya Kondh tribal people. In 2008 the MoEF granted in-principle clearance to the Orissa government and the subsequent year the State government applied to the MoEF for the final clearance. The Forest Advisory Committee (FAC) in the MoEF recommended to consider this application only after ascertaining the community rights to forest land. At the beginning of 2010 an ad hoc committee of specialists, chaired by Naresh Saxena (former secretary of the Planning Commission), was set up. The report submitted by the Saxena Committee highlighted the negative consequences the Vedanta project would have, both on the Niyamgiri hills region ecosystem and on the livelihood of the Dongriya Kondh people. On the basis of this report, in August 2010 the MoEF denied the clearance to start mining operations in Niyamgiri (Sen 2010; Venkatesan 2010). The Saxena report highlighted that the refinery’s bauxite requirement was fulfilled by sourcing the mineral from 14 mines based in Jharkhand. As per the report, 11 mines out of these had not been granted a mining licence (Venkatesan 2010).

12 In 2009/2010 NALCO continued to be the most important aluminium producer in the state. According to official data available for the production of alumina obtained in January 2010, NALCO’s production was 37.15 thousand tonnes of alumina, and Vedanta Aluminum’s production was 27.37 thousand tonnes (Government of Orissa 2010).

13 The details for the forestry and fish sectors have not been shown, being not relevant for the present analysis.

14 The importance of a political economy approach to the mining question able to uncover the specific, contextualized social relations historically governing capital’s access to land has been stressed by Ben Fine (1990).

Additional information

Notes on contributors

Matilde Adduci

I am grateful to the Department of Political Studies, University of Torino, for funding the fieldwork. I wish to thank Jens Lerche, who helped develop the argument with valuable questions and suggestions, and also Alfredo Saad-Filho for helpful comments. I also thank Birendra Nayak, for useful advice at an early stage and helpful comments and two anonymous reviewers for helpful comments and criticisms. Earlier versions of this paper were presented at the Second IIPPE International Research Workshop, Procida, Naples in September 2008 and at the Agrarian Change Seminar Series at SOAS, London in March 2009. I would also like to thank participants in the research workshop and in the seminar for helpful feedback. This article is dedicated to the memory of Sakti Padhi, whose comments, suggestions and criticisms have been invaluable.