Chapter 5 – Conclusion: Profit, Lies, Poverty

5.1  Introduction

The chapters presented so far are structured around data – data that we gathered through our research teams or data that was already published in one form or the other but has been ignored this far. The conclusions we have drawn in each chapter are closely linked to the data. We have made every attempt not to stray too far from the data. There is a truth that bare facts can tell. There is a story that mere data can itself make visible. This far our effort has been to stick to such data driven conclusions.

But there are stories that cannot be conveyed through data. There are emotions and understandings that the data ends up hiding. And these understandings are important because they point to the future – the ways forward or the way out of the crisis. For, unless we are able to understand the complex nature of the struggle and its importance to the people, we can never reach out to them in solidarity.

When two of us from the research team had finished our work in Keonjhar, we asked some of the local people – who had helped us during the research—for help with bus tickets to Cuttack. “There is one last lesson you will learn when you go by bus” one of them said, as they took us to the bus station to get our tickets. We boarded the bus at 10 PM. We reached Cuttack, just a mere 182 kms away, next morning at 10 AM, twelve hours later. It took us more than eight hours to negotiate the first 40 kms. out of Keonjhar town. Our bus was packed in between an endless queue of trucks, loaded and weighed down with iron ore. Most of it was being carried to Paradeep for export. On the other side of the road, all through the night, was an endless, unbroken queue of empty trucks lined up and waiting to get in and load up and leave. As the first strands of daylight broke through the denuded forest cover, we reached the end of the queue on the other side of the road – nearly 40 kms of trucks queued up, bumper to bumper. It was the starkest measure of the rate of extraction that Keonjhar was facing. And nothing we saw suggested anything but a dirt poor district.

When we reached Cuttack we called the person who had put us on the bus.

“Thank you,” we said.

“What you saw is nothing,” he said, his voice grave and measured. “I was once stuck just ten kms. outside town for a day and a half.”

We wondered how many sick people have died on that highway, unable to reach medical help in time. How many children can never make it to a school just a few kms away? What must be the life of the truckers who spend twelve hours getting in and twelve hours getting out, day in and day out? And of course, the simplest question of them all: Who was ripping the land off and profiting from it? Certainly not the impoverished Adivasis.

If the ride from Keonjhar was about the expansion of time because of the extraction of ore with no profit for the local Adivasis, then a ride from a railway station barely six kms from the village of Dhinkia was about the expansion of time because of fear. In July, one of our researchers had travelled from Cuttack by a passenger train to Badabandha station just a few kilometers from the project site.  None of the villagers with a motorcycle or a scooter dared go out of the village to pick her up from the station because of fear of being arrested. Almost everyone who was young and capable of riding a bike had more than one case registered against him or her. There are over 800 people with cases registered against them. More than 300 of these are women.

The village as bounded by a wall of fear extends to almost every aspect of life in coastal Jagatsinghpur. Yet, life does go on with quiet fortitude. One evening, after a day of counting betel leaves on vines, and measuring paan kheti plots, one of our researchers ended up in the middle of a marriage negotiation. It took several hours for the date could not be exactly figured out because of various things related to the struggle – all of which had to be accommodated. As someone put it wistfully, “Everything had to slow down [due to the struggle]; even making arrangements for a wedding takes more time now.”

We narrate these stories of life out of order and ordinariness because it was part of the fabric of the research we did. There was anger and frustration, pain and occasionally joy that was all expressed to us. These were conversations about big things – about democracy, about research, about truth and lies, about wealth and poverty and sometimes about the future. And out of these conversations we have isolated three themes that we feel the residents of coastal Jagatsinghpur and Khandadhar were struggling to make sense of — themes that reflect the core crisis of the age in India.

5.2  Crisis of Reality: What are the actual costs and benefits of the POSCO project?

One thing that stood out starkly for us while researching the POSCO project is the pathetically small effort made by the government to justify its decision to go ahead with the POSCO project.  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.  While the Orissa government certainly made some claims of prospective increases in employment over a number of years, and prospective tax revenues due to the project (claims, we note, for which it offered absolutely no substantiation); it has uttered not a word as to the costs involved–social, economic and environmental–to help us compute how these costs compare against the projected benefits. In the absence of any public scrutiny or informed debate about the claims of the state, the project itself appears to be simply offered to us, as an article of faith.

It was left to the National Council for Advanced Economic Research (NCAER) to offer a public justification for this colossal project through its study, “Socio-economic Cost-Benefit Analysis of the POSCO project,” published two years after the MoU had been signed.  Claiming to take all costs and benefits into account, this study comes to the conclusion that the project is highly desirable to the state of Orissa, since it has a high Economic Internal Rate of Return (EIRR is a measure of the profitability of a project from the perspective of the whole economy rather than the project itself), and it will eventually contribute 11.9% of the state’s domestic product.

At the outset we wish to once again reiterate that the NCAER study cannot be seen as “independent” or “non-partisan” because of the direct financial relation to POSCO as one of NCAER’s sponsors. Beyond this, and maybe because of this, there are some fundamental problems with the methodology used to arrive at the positive conclusions.  One methodological sleight of hand that NCAER performs that immediately makes visible their motivations is, although the EIRR calculation takes into account the maximum possible revenue from the annual sale of 12 million metric tons of steel, inexplicably it considers the minimum costs of the project by including only the steel plant and mine-works, leaving out the associated costs of the port, the township, the railway and the road links that service the steel plant. While this observation alone is enough to invalidate the conclusions of the study, it is the complete disregard of equally important social and economic costs of the project that is even more damaging to the credibility of this “social cost benefit analysis.”  Some of the most startling omissions include: the flourishing local paan-kheti economy of the area (which is completely overlooked in spite of the ADB standards that they liberally borrow from which clearly state that the baseline current economy needs to be studied); the loss of livelihoods of tens of thousands of people (which does not find a single mention in the report); the costs of forest land diversion, utilization of enormous water resources, degradation of upstream farmlands and coastal fisheries, the potential loss of viability of Paradeep port, irreparable damage to habitats of protected species like the Royal Bengal tiger, Olive Ridley Turtles, elephants and the local flora and fauna, none of which have been taken into account in any manner whatsoever.  It is these real costs which will be borne by real people that we have tried to enumerate in the preceding chapters.

While the NCAER report renders invisible project-associated costs on the one hand, it shamelessly exaggerates benefits on the other.  As we have seen in Chapter 3, the maximum direct employment in POSCO in the next 5-10 years will be 7000 (0.7% of current unemployment) and total direct and indirect jobs in the same time period will be 17,000 (1.7% of unemployment) as against a claim pushed by the NCAER that 8.7 lakh jobs will be created. Also, NCAER’s calculation of projected tax revenues from the project is wildly off-the-mark if we take into account the generous tax incentives offered to SEZ developers and units (Chapter 2). In short the positive conclusion in favor of the POSCO project from NCAER is a fabrication based on convenient assumptions, errors of both omission and commission, and sleight of hand.

Having failed to come up with its own justification for the POSCO project, the Government of Orissa has chosen to flaunt this deeply flawed NCAER study to retroactively validate its decision to sign the MoU. POSCO itself has not been far behind as it has shamelessly used the NCAER’s dubious figures in slick presentations and publicity blitzes to position itself as the savior of Orissa. When a set of well- qualified technocrats, company executives and government bureaucrats make false claims and put down numbers that are misleading, and when elected representatives unquestioningly parrot them, one cannot but conclude that these are purposeful actions with the intent to deceive the public.  In the absence of even a single reasonably rigorous and transparent evaluation of the potential costs and benefits of the POSCO project, we are forced to conclude that the Government of Orissa, POSCO and NCAER  are deliberately misleading the public about the proposed benefits of the project.

5.3  Crisis of Equity: Who reaps the profits and who bears the costs?

Even more relevant than the question of overall gains from the POSCO project is the question of how this profit gets redistributed amongst different segments of society.  Mere generation of wealth may be a valid aim for a corporation, but not for a state, unless this wealth enriches, stabilizes or at least does not further impoverish the most economically vulnerable segments of society.

From the evidence presented in this report, it is amply clear that a disproportionate burden of the costs of the POSCO project will indeed be borne by the weakest segments of the Oriya society today.  These are the thousands of small farmers of Erasama block who will be alienated from their lands, the hundreds of petty traders and small-scale transporters who live off the betel leaf economy, the thousands of wage laborers who currently make almost double or more than the minimum wage in Orissa, the tens of thousands of fisher folk who fish at the mouth of the Jatadhar, the numerous farmers along Hansua river who will see a depleting water table, the Adivasis in the Khandadhar region whose forest villages will be razed to the ground and converted into open cast mines, who will inherit only the debilitating ill-health that comes with environmental degradation, and the multitudes of Paradeep port workers who may have no viable port in the years to come.

And do these folks get any of the purported benefits of the POSCO plant?  Even if all jobs that came up at the POSCO plant were offered to the project-affected people, they would only be a small percentage of the total livelihoods destroyed.  But realistically, a large number of the jobs that will open up at POSCO will not be filled by the locals, now de-skilled and hence viewed as “unskilled” workers who stand no chance in an industry that is turning less labor-intensive by the year, and where a large part of the jobs which will be generated will be technical and managerial in nature, benefitting the elite classes who have not borne the brunt of displacement and dislocation.  During our visit to Govindpur, when one of us went inside a betel vine shed, a worker who was sitting and replanting the betel vine said, “From an 8-year-old to an 80-year-old, everyone has a role in this work. Young and old, men and women, everyone in this village can find work. Can the company give us that?”

Who really stands to gain from the POSCO project?  The profits from this megaproject will primarily enrich POSCO shareholders, the largest of which are big U.S. banks such as Citibank and JP Morgan Chase, 196 each of which own 5-10% of POSCO’s equity, and one of the richest individuals in the world, Warren Buffett, who owns approximately 4 million shares of POSCO’s stock.197

While POSCO and Citibank, Chase and Buffet will indeed laugh all the way to the bank, there will of course be a significant group of the Indian elite and middle classes who aspire to their cut in the spoils. The largest source of wealth in the POSCO project is simply the gargantuan profits due to the mining of iron ore. If current experience is anything to go by, traders, transporters and middlemen in the mining value chain, the contractors and the suppliers who will build sub-standard roads and bridges, the real estate sharks and the township building contractors, the mobile phone franchises and the gas station chains, all stand to make immense gains; but the displaced marginal farmers and the Adivasi villagers who are uprooted for the sake of mining and steel production and whose forests and farmlands are destroyed will find their meager existence becoming even more miserable as the ore extraction and pollution from steel production ravage the immediate environments on which they depend. Certainly there will be a small handful of local rich farmers or prosperous pisciculturists who may make their entry into this class. Maybe one of them will even get a franchise for the first McDonalds in Kujang town to serve POSCO executives the paneer burger.

5.4  Crisis of Legitimacy:  Are we a Constitutional Democracy?

Maybe it was just the dissonance we were feeling as researchers as the country’s 63rd Independence Day came closer. But we did feel that the number of questions about India and its democracy only increased in the villages of Jagatsinghpur. “How can we say we are a democracy?” one of the respondents in a focus group asked. “If we are a democracy why would they [the state representatives] not listen to 20,000 people talking…” The people in the nine villages are proud of the fact that they have built a movement and an organization. And they see it as a way to push for their democratic rights. “When we started we thought in a few weeks or a few months they would listen to us. We knew that they were not going to listen to us only when we saw that they had produced false gram sabha resolutions that we had never actually passed.”  The scale at which formally laid out processes and requirements such as public hearings and gram sabha resolutions have been violated is indicative of how willing the government and POSCO is to subvert democracy.

Almost all applicable laws, whether it is the FRA, FCA, CRZ, or EPA, have been ignored and consequently violated.  “If they didn’t want to shut us up and get a public hearing done just for the paper [resolution], why would they have so much police? …And why was there a POSCO official in front, as if he was conducting the meeting?” And while it was the administration which willingly pushed through fake gram sabha resolutions, the company, POSCO, was not far behind. It claimed to have conducted a survey in 63 project affected198 villages when, in reality, not a single one was surveyed.

One of the women who has a handful of cases registered against her said it the best, “The government thinks we are puppets. They sit in Bhubaneswar and Delhi, and maybe even outside, and they make decisions and they think we will say okay.” On one occasion after a heated discussion about how the public hearing was conducted, one of the villagers who had been silent until then asked “Can somebody go to jail for breaking democracy?” There was much merriment at this question but surely it underscored the core question – What methods exist to bring those who violate rudimentary democratic norms and procedures to justice?

As researchers, we were struck again and again by the feeling that if the democratic spirit was alive in Jagatsinghpur and Khandadhar it was entirely embodied in the farmers and the Adivasis, the workers and the fishermen who came of their own volition to embrace the struggle. As we left Dhinkia one evening to return to Cuttack and from there back to the U.S., one of the women from the militant women’s wing of the PPSS waved us goodbye and said “aame bheeta maati dobu nahin.” We will not give up our land!

  1. As of June 30, 2010 Citigroup owned almost 9.8 million shares and JP Morgan Chase owned about 632,000 shares of POSCO stock. Ownership details are taken from Yahoo Finance []
  2. “Buffett wants to Raise Posco Holdings, Company Says” January 19, 2010, Bloomberg []
  3. Claim by villagers, noted in their letter addressed to the MoEF after the Public Hearings were conducted. Letter translated from Oriya into English by Chitha Behera []

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