Two large industrial projects, one poor state, two likely different outcomes — and a long-haired, flamboyant environment minister-turned-crusader starring in both. No, this is not your latest blockbuster but it has the makings of one.
Rewind to August in the same state, Orissa. U.K.-based Vedanta’s $1.7 billion project to mine bauxite in the Niyamgiri Hills was rejected by a panel of the same environment ministry on the grounds that the livelihoods of tribals living in the area and biodiversity would have been destroyed.
The environment minister, Jairam Ramesh, has been criticized by various commentators for blocking projects in non-Congress ruled states and supporting projects in those ruled by the Congress. Be that as it may, in this case we are looking at two projects in Orissa, so the criticism is moot.
So what’s going on? First, we must note that Posco still hasn’t been completely cleared. It will take yet another decision by Mr. Ramesh, expected by the end of this month, for the full green light.
But let’s say Mr. Ramesh, who’s both an engineer and economist by training, did a cost-benefit analysis of the two projects. What would be on each side of the ledger for both?
First, there’s the difference in order of magnitude, a $12 billion versus $1.7 billion investment — presumably, much more economic benefit is riding on the larger than the smaller project. Further, a “no” to Vedanta perhaps wasn’t too damaging for the foreign investment climate but a “no” to Posco would surely have a chilling effect on future foreign investment and large-scale development projects.
Second, backing or lack of it by the respective home governments could have played a crucial role.
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