Page last updated at 22:44 GMT, Monday, 11 May 2009 23:44 UK

The challenge of India's iron wealth

By Shilpa Kannan
Business reporter, BBC News India Business Report, Paradip port

Iron ore being stored in Orissa
Iron ore is now Orissa's main export

A thick haze clouds the horizon as rich red dust is poured down.

As more of the fine granules of iron ore arrive on loud, rumbling conveyor belts, the loading machine scoops up large quantities to drop into the open hatch of the waiting ship. This is like gold in these parts.

This may look like any other busy sea dock in India. But on India's iron ore rich eastern coast, Paradip port is a vital link to global markets.

Every month, millions of tonnes of iron ore are exported from here - bringing in much-needed cash and turning the region into a vibrant commercial hub.

The question is whether in one of India's poorest regions, some people are being left behind.

Chinese connection

The Paradip port is a gateway into India's source of mineral wealth, spread across the three eastern states of Orissa, Jharkhand and Chattisgarh.

While Orissa has managed to tap into its location advantage and natural resources - it hasn't included the people who need it most
Santosh K Mehrotra, government planning commission

Nearly 80-90% of India's iron ore is exported to China, and this accounts for at least 80 million tonnes of cargo every year. The bulk of this goes through Paradip.

So despite the global economic slowdown, the port has handled all-time record traffic this year.

The port's chairman, K Raghuramaiah says this is mainly due to the location advantage the port enjoys. Being so close to China and the rest of East Asia gives them access to some of the best global markets, he says.

"We are forecasting much more cargo coming our way, so the port's capacity to handle cargo needs to increase," he adds.

"The cargo traffic here has doubled in the past six years. Dredging operations are already taking place to deepen the port and we also plan to add more berths to increase their capacity.

"Since the demand is going up, and we have the ideal infrastructure in place to cater to it - we hope to handle 100 million tonnes of cargo by 2016. We are getting ready for that."

Heavy traffic

With nearly 95% of India's foreign trade being routed through the seas, ports like this one are increasing in importance. As doing business in the state gets easier, more and more foreign investment is headed here.

Ore being loaded onto a ship
The iron ore is exported from Paradip to China

So despite these measures to expand, the port is crushed under the heavy traffic.

Outside the dock you can see lines of trucks which often have to wait for days before they can unload the iron ore that they are carrying from far way mines.

There are now plans for expansion - for new roads and new railway lines. And the private sector is taking the lead.

Workers in bright orange overalls are busy welding in the bright mid-day sun.

Simplex Infrastructures is building a new jetty to help handle more vessels in the dock.

Amitabh Mundra, the director of the company, says Orissa presents a huge potential for the private sector to tap into.

Lorries unloading iron ore
Lorries bring the iron ore down to the port

"We have been lucky that this port project was completed in the fast track," he says.

"We are also involved in a new dedicated rail corridor and other connectivity projects with the port.

"The mindset here is changing - as bigger multinational companies move into the state, the demand for basic infrastructure is growing."

Industrial growth in the state has increased to more than 20%. The world's biggest steelmaker ArcelorMittal, South Korea's Posco, British mining firm Vedanta and many others are looking to setup here to cash in on huge reserves.

Displaced people

But even though businesses are happy with the progress, for a lot of people here the development is not welcome.

Orissa men
The big question is whether more people can benefit from the wealth

As companies mine the earth - it often means moving the tribal people who have lived here for centuries.

And while the companies get cheap land and electricity - many people feel ignored by the politicians and excluded from the region's economic boom.

Santosh K Mehrotra of the Indian government's planning commission says this is because the growth has not been inclusive.

"While Orissa has managed to tap into its location advantage and natural resources - it hasn't included the people who need it most," he says.

Nearly 40% of the state's population is made up of people belonging to lower castes and tribal groups. These people constitute the majority of those below the poverty line.

And Orissa is among a handful of Indian states where the number of poor people is going up despite the state and the country doing well economically.

By starting to improve its infrastructure, Orissa has managed to put its economy on the fast track.

The state has high hopes for the future. But the economic advancement isn't judged only by the number of new roads and ports - it also depends on the quality of life for all its citizens.

Unless that growth is inclusive, many fear that they will get left behind.



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