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Natural Resources, Development Strategies, and Lower Caste Empowerment in India’s Mineral Belt: Bihar and Odisha During the 1990s

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Abstract

Despite having equally vast endowments of natural resources and similar socioeconomic profiles, the Indian states of Bihar and Odisha pursued markedly different development strategies during India’s first decade of economic liberalization. Whereas Bihar turned away from its natural resource sector and adopted policies of social empowerment, Odisha courted private investment in extractive industries and aggressively pursued market reforms. To account for this divergence, we argue that the social composition of political power in each state directly shaped the strategies that leaders embraced towards the natural resource sector and overall development. This paper makes contributions to the writings on natural resources and the political economy of India. We show that the presence of abundant natural resources does not necessarily result in a predictable pathway of sectoral and economic policy outcomes. Instead, social factors can be a powerful determinant of how resource-rich states approach their economies.

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Notes

  1. The name of the state was officially changed from Orissa to Odisha in 2011. We use the new name throughout, except when referring to a published document with the name in the title or to a distinct historical formation, as in British Orissa.

  2. According to the 2011 Indian census, the populations of Bihar (excluding Jharkhand, which was created as a separate state in 2000) and Odisha are 103.8 and 41.9 million, respectively. The largest planned foreign direct investment to date in India was a project originally negotiated in 2005 by the South Korean firm POSCO to build a 12 million ton integrated steel plant in Odisha. The project includes a mining operation, port facilities, and a steel manufacturing plant that will be one of India’s largest.

  3. See Jenkins (2004). Writing about subnational comparison, in general, Harriss (1999) notes that the potential for comparative analysis of India’s states “[has] not been taken up very much” and that much of the most important work on Indian politics and political economy remains wedded to the analysis of individual states (p. 3367).

  4. Bihar was split into two in 2000. The portion that retained the name Bihar was left with very few resources, the bulk of which were concentrated in the new state of Jharkhand.

  5. The original acronym, “BIMARU,” excluded Odisha, but in recent press reports, the acronym has been expanded. For example, see Kaushal (2012).

  6. According to the 1951 census, the estimated OBC populations of Bihar and Odisha was 16.6 and 10.8, respectively, but according to the first backward classes commission in 1953, the OBC population was 38.1 in Bihar and 9.3 in Odisha (Galanter, 1978). More recent estimates of OBCs in Odisha are considerably higher, one estimate putting it at close to 50 % of the state’s population (Mohanty 1998). According to Kumar (2004a, pp. 115–116), OBCs are 32 % of the population in Bihar and more than 30 % in Odisha.

  7. Iversen et al (2013) challenges some of the conclusions drawn by the earlier piece, but Banerjee et al. (2013) respond by reasserting the validity of their findings.

  8. Authors’ calculations using data in Prasad (1997, pp. 275, 292).

  9. Authors’ calculations using data in Rao (2003, p. 39) and data retrieved from IndiaStat, “State/Coal Company-wise Royalty Paid by Subsidiaries of Coal India Ltd. (1999–2000 to 2002–2003)” (http://www.indiastat.com).

  10. Authors’ calculations using data retrieved from IndiaStat, “State-wise Mining Lease Distribution in India” (http://www.indiastat.com).

  11. Authors’ calculations using data from Rao (2003) and data retrieved from Indiastat, “Revenue Receipts of Orissa (various years)” (http://www.indiastat.com). The measure of government revenues excludes grants from the central government.

  12. Authors’ calculations using data from “Annual Report of the Ministry of Coal” (New Delhi: Government of India, various years).

  13. Authors’ calculations using data retrieved from Indiastat, “State-wise Mining Lease Distribution in India” (http://www.indiastat.com).

  14. Authors’ calculations using data from “2001–2002 Annual Report of the Ministry of Commerce and Industry” (New Delhi: Government of India).

  15. Data retrieved from IndiaStat, “State-wise Break-up of Foreign Direct Investment and Foreign Technical Collaboration Approvals Accorded in India” (http://www.indiastat.com).

  16. Data retrieved from IndiaStat, “State-wise Eighth Plan (1992–97) Outlay for Large and Medium Industries in India” (http://www.indiastat.com).

  17. Data retrieved from IndiaStat, “State-wise Plan Outlay for Village and Small Industries in India” (http://www.indiastat.com).

  18. Rudolph and Rudolph (1967) stands as the classic refutation to modernization theory’s assumptions about identity politics.

  19. For example, over the last 10 years, there has been extensive public discussion about whether reservations should be enforced in private sector employment.

  20. Sinha (2005) makes a related argument in explaining the antagonistic stance of the Tamil Nadu government after the political victory of the non-Brahmin DMK in 1967. The DMK’s oppositional stance towards the central government resulted in a decline in central public sector industrial investment in its early years in power. Instead, the party favored pro-peasant policies. On the economic policies of the DMK, see also Subramanian (1999), particularly Chapter 5.

  21. Authors’ calculations based on data in Kumar (2004a, pp. 128, 131).

  22. Brahmins are the traditional priestly class, while karan can roughly be translated as the “writer” community. They were often traditionally employed as scribes and rose to administrative prominence during the British period.

  23. The factors that explain the static nature of this aspect of political life in Odisha are beyond the scope of this paper. Kumar (2004a) argues that the reasons are related to historical land-ownership patterns.

  24. The names for this exercise are taken from the “Disposition of the All-India Service and OAS Officers in Orissa, 38th edition” (Government of Orissa 2009). Coding was done with the help of A. Mishra, a political sociologist in Bhubaneswar.

  25. In 1931, 13.7% of Bihar’s population belonged to the upper castes, which includes the above three groups along with bhumihars and rajputs (Robin 2009, p. 66).

  26. “Credible Leadership Key to Progress: Irani,” The Hindu: Business Line, December 2, 2003.

  27. “Bihar Government Sits on Tisco Steel’s Land-lease Renewal,” Indian Express, October 5, 1999.

  28. See, for instance, Gargan (1992).

  29. According to Michelutti (2008), “Ordinary Yadavs…became politicized because of the material, and to a lesser extent, symbolic gains that they could obtain by entering into politics. Political power was for many Yadavs the principal path for material improvement…” (p. 223).

  30. Biju Patnaik, Orissa Legislative Assembly Proceedings, March 1, 1963 (cited in Mishra 2002, p. 146).

  31. “Khanna Commission holds Patnaik, Mitra guilty on 12 counts,” Times of India, January 18, 1969.

  32. The fact that Patnaik headed these two ministries suggests how important Odisha’s mining and mineral resources were in Patnaik’s vision of development.

  33. One crore is equal to 10 million in the South Asian numbering system. In this context it is referring to Rupees.

  34. As a consequence of factional politics within the Congress, a large contingent of Congress leaders defected to form another party in 1971. This party, initially called the Utkal Congress, joined the broad-based coalition that opposed Indira Gandhi’s emergency rule from 1975–1977, changing its name first to the Janata Party and later to the Janata Dal, of which Biju Patnaik emerged as the leader in Odisha.

  35. Biju Patnaik, remarks made to the Meeting of the National Development Council on June 18–19, 1990.

  36. Padhi’s contribution is Chapter 3 of the report. The data on sectoral composition of GDP are from Table 3.4, 76.

  37. Das’s contribution is Chapter 6 of the report.

  38. “Biju all praise for Manmohan,” Times of India, March 2, 1992.

  39. “Orissa steel plant’s chances fizzle out,” Times of India, July 4, 1990.

  40. “South Indian coal-fired schemes cleared by Delhi,” FT Energy Newsletters—Power Asia, January 14, 1991.

  41. International Coal Report, “India plans to export to France,” FT Energy Newsletters—International Coal Report, June 26, 1992.

  42. “US group win BOO deal in Orissa state,” FT Energy Newsletters—Power Asia, February 10, 1992.

  43. Mathew and Moore (2011) compare Lalu Yadav to Venezuela’s Hugo Chávez and Kenya’s Daniel arap Moi.

  44. Our thanks to James McGuire for clarifying this point for us.

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Acknowledgments

An early version of this paper was presented at the American Political Science Association meetings, and we thank fellow panelists and our discussant, Ashutosh Varshney, for very insightful comments and suggestions. A later draft was presented at the Workshop on Subnational Research in Comparative Politics at Harvard University in March 2014, and we thank the conference organizers, Richard Snyder, Agustina Giraudy, and Eduardo Moncada, as well as our discussants, Matthew Amengual and James McGuire, for their thoughtful criticism and suggestions. We greatly benefited from conversations with Harishwar Dayal, Prabhat Ghosh, Shaibal Gupta, Sanjay Kumar, Amit Prakash, and Ramesh Sharan. Any remaining errors of fact or judgment remain our own.

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  1. Jackson School of International Studies, University of Washington, Seattle, WA, USA

    Sunila S. Kale

  2. Department of Political Science, Tufts University, Medford, MA, USA

    Nimah Mazaheri

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Kale, S.S., Mazaheri, N. Natural Resources, Development Strategies, and Lower Caste Empowerment in India’s Mineral Belt: Bihar and Odisha During the 1990s. St Comp Int Dev 49, 343–369 (2014). https://doi.org/10.1007/s12116-014-9162-2

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