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Underdevelopment by Design?

Based on primary source material, this paper unravels the undermining of development of vital transport infrastructure in Orissa, namely, Paradeep port and a proposed railway line for exploiting the rich mineral resources of the stateâ??s hinterland. As the analysis suggests, quite apart from the importance of the contemporary macroeconomic strategies and the inefficiency of resource use, an explanation in a quasi-federal set-up of continuing regional deprivation must be sought in the design of the politico-bureaucratic pressure tactics and the process by which major public sector investment proposals eventually have to succumb to the compulsions of contingent politics of vested interests.

Underdevelopment by Design?

Undermining Vital Infrastructure in Orissa

Based on primary source material, this paper unravels the undermining of development of vital transport infrastructure in Orissa, namely, Paradeep port and a proposed railway line for exploiting the rich mineral resources of the state’s hinterland. As the analysis suggests, quite apart from the importance of the contemporary macroeconomic strategies and the inefficiency of resource use, an explanation in a quasi-federal set-up of continuing regional deprivation must be sought in the design of the politico-bureaucratic pressure tactics and the process by which major public sector investment proposals eventually have to succumb to the compulsions of contingent politics of vested interests.


erpetuation of underdevelopment in certain regions has been an area of much concern in the literature on uneven development. Despite remarkable growth and use of sophisticated empirical tools of analysis, processes underlying the complex phenomenon of chronic economic backwardness do not always get captured. In a federal set-up, as in India, an earnest recognition of the non-techno-economic factors that determine the nature and locus of development must form the sine qua non of any enquiry into the problematique of persistent “backwardness”. In explaining the factors and processes contributing to the stagnation/decline of regional economies, the most commonly proffered arguments relate to the distortions engendered by the chequered colonial rule. While there is no denying that significant historicity, the post-colonial state has also to share much of the responsibility. This is especially so since the avowed intention of the state has been to use intervention including policies to make for regionally balanced growth. As argued, in a developing economy, where the lower middle class and the rich peasantry virtually perform the role of the ruling class, when a resource crunch restrains extension of the public sector, and hard choices have to be made, the conflicts of interest within the so-called “intermediate regime” become obvious [Raj 1973:1194]. A distinct outcome of such a situation may have been the politically inarticulate provincial governments losing out in the bargain [Das 1993 and 1997].

The reinforcement of regional underdevelopment can actually be worth linked to the quantum of demand recession that, in turn, would have shrunk the availability of investible resources with the government. More importantly, the cumulative wastage of capital through cost and time overruns of public sector projects has played havoc with scarce resources [Morris 1990]. Quite apart from the importance of the contemporary macroeconomic strategies and the inefficiency of resource use, an explanation of the continuing regional disparities must be sought in the design of the politico-bureaucratic pressure tactics and the process by which major public sector investment eventually gave in to the compulsions of contingent politics of vested interests. Even during the post-reform phase, the historically neglected economies, especially disadvantaged by poor infrastructure, have failed to keep a date with development. For sure, the passivity of regional polity and the indifference of a pampered bureaucracy are yet to wake up to the tricks and tribulations of Indian federalism.

This paper is a modest attempt towards enquiring into that design and the process. In what follows, we present the case of utter neglect of vital infrastructure (namely, Paradeep port and the proposed railway line linking the mineral belt to the port) in the state of Orissa in connection with harnessing the vast and rich mineral resources of the hinterland, thereby utilising the immense potential to generate income and employment locally, during an active phase, 1960-80, in the global market in iron and steel. Orissa has 4,833 million tonnes (mt) of proven iron ore reserves, 177 mt of chromite deposits, and 118 mt of manganese reserves, apart from huge deposits of limestone, dolomite, quartz and coal. It also has large tracts of wasteland and copious water supply.

Global Trade Scenario in Iron and Steel: 1960-80

The two decades between 1960 and 1980 were probably the most dynamic period in the world iron ore trade. For instance, during the period 1955 to 1976 global consumption of iron ore increased by around 55 per cent, from 403 to 859 mt. It was then that two of the largest iron ore producing/consuming regions of the world – Europe and the US – emerged as net importers. The third largest consumer, Japan, which hardly owned any ore, turned out to be the real engine in terms of expansion of steel production. By the 1970s, steel from the US and also from other advanced countries was becoming expensive. This situation was further complicated by investment tie-ups or backward integration in the form of provision of loans towards mine or port development by the steel companies in the importing countries. The international iron ore market was characterised, on the demand-side, by a few buyers and, on the supply-side, by keen competition. In other words, virtually, the residual free market was only a small segment of the total trade.

India, with very few investment tie-ups and long-term contracts, could succeed only in maintaining a share of 5 to 6 per cent in the expanding global market. Moreover, by exporting more than 70 per cent of its ore to Japan, the country was heavily dependent on the latter’s demand. It may be seen from Table 1 that during this two-decade period, whereas the world exports had gone up by 125 per cent, Indian exports had shot up significantly, by 144 per cent.

Japanese steel production was expected to reach 85 mt by 1974, on the basis of which the Planning Commission Sub-Group on Iron Ore (1967) estimated the demand for Indian export at 23 mt. But, even by 1969, Japan’s steel production had risen dramatically to 78 mt. Consequently, it was reestimated that India’s export or iron ore to Japan by 1979 would be 40 mt, of which the major mining area of Barajamda-Barbil-Bansapani (B sector) was to provide 2 to 4 mt annually.

The B sector covered by Keonjhar, Sundargarh (both in Orissa) and Singhbhum (Bihar) districts has been supplying the largest quantity of iron ore in the country. Of the total iron ore production in and export from this sector, the share of Orissa in the 1960s was around 40 per cent and 20 per cent respectively. The second major iron ore sector in the state is the Daitari sector in Cuttack district.

Nevertheless, by the beginning of the 1960s Orissa’s share in iron ore export had declined to 10.6 per cent from 26.4 per cent in 1957-58 [NCAER 1963:24]. This lag in export is traceable to inadequate infrastructural development in terms of transport facilities. In those days, “Barajamda had come to be a by-word for bottleneck in transport. Wagons were either in short supply or supplied irregularly at such places as Bolani, Bansapani, Barbil and Jajpur Road” (ibid). In such a situation to help step up exports from Orissa, the deep-water port on the state’s coast, i e, Paradeep, needed to be linked with the mining area and its bulk-handling capacity enhanced. This was all the more significant, because barring Goa, the proximity of iron ore deposits to the port is greater at Paradeep than in any other part of the country. In the following section, we shall look into the issue of development of Paradeep port.

Deep-Sea Port Development: Case of Paradeep

The need to develop Paradeep as a deep-sea port was stressed by numerous surveys conducted both at national and global levels, over five decades. In 1948, the Port (Technical) Committee recommended the government of India (GoI) investigate into establishing a sheltered deep-sea port between Calcutta and Visakhapatnam, in view of the growing congestion and specially the silting at the former port, as also to promote trade and industry in Orissa and neighbouring states. In response, the Central Water-Power, Irrigation and Navigation Commission (CWINC) had cited Paradeep as the best location as it had the required depth, wide expanse of water, easy accessibility from the sea, small range of variations of tides and low dredging cost [Mohanty 1962:138].

Later, in 1951, a French mission of consulting engineers, invited by the GoI, unequivocally selected Paradeep as the most suitable location for a deep-sea port on the grounds that the dredging and maintenance costs would be much less than that in the case of Calcutta (ibid:139). The mission recommended that port facilities should be situated within the estuary with an approach channel dredged through the bar and to be protected by breakwaters on both the sides [RPTCE 1962:5]. They proposed model tests to determine the best means of stabilising the mouth of the Mahanadi and for overcoming the problem of the littoral sand-drift, a serious problem besetting all ports situated on the east coast of India. This proposal was later supported by the Central Water and Power Research Station, Poona in 1954. Meanwhile, a number of detailed studies had been undertaken to enquire into various aspects of port establishment [ibid:6; Mohanty1962:140].

Incidentally, around the same time, as part of the post-second world war reconstruction strategy, the Japanese interests were seriously examining the possibilities of importing massive quantities of iron ore from the Sukinda deposits in Orissa. A survey mission consisting of transport, mining, construction and harbour engineers was sent out by the Kinoshita and Company of Japan in July 1956, with the “blessings”, as they said, of the Japanese ministry of international trade and industry, the Overseas Steel Manufacturing Raw Materials Committee and the leading Japanese steel mills, to make a comprehensive study of the problem of Sukinda iron ore export by building transport facilities to and port facilities at Paradeep. The Japanese carried out experiments at their own cost to find the best solution to the problem of sanddrift at Paradeep and for minimising the cost of construction and maintenance. The report submitted by them in 1958 recommended the establishment of a major port at Paradeep for the export of 2 mt of iron ore annually at a cost of Rs 8.66 crore. They also offered material, technical and financial help to build up Paradeep, in exchange of the iron ore. On the ground that the economic and technical possibility of establishing a deepsea port at Paradeep had yet to be established, the GoI did not accept this offer. The Japanese offer of assistance was diverted to what is known as the Kiriburu-Vizag project for exporting 2 mt of ore to Japan from the Kiriburu deposits in Orissa, which extended to Bihar, by expanding the port facilities at Visakhapatnam. Why and how this diversion took place is not been discussed here; this merits a detailed investigation. The GoI then referred the state government’s proposal (different from the Japanese one), to develop a deep-draft port at Paradeep to the Intermediate Ports Development Committee (IPDC), which was set up at this time by the ministry of transport.

Paradeep was declared a minor port in 1958. However, specifically due to its significance and potentialities to handle huge iron ore exports, the IPDC recommended the establishment of an all-weather deep-sea port at Paradeep, by deepening the canals, improving the locks and introducing motor launches for managing a traffic of up to 5.5 lakh tonnes per annum using Paradeep as a lighterage port. The committee, after thorough verification of different proposals, recommended formation of a deep-sea port at the Atharabanki creek, which joined the Mahanadi on the south near its estuary [Government of India 1960]. The Japanese mission had also made recommendations on similar lines.

Finally, in 1962, at the instance of the state government, Rendel, Palmer and Tritton, Consulting Engineers (RPTCE) from London, submitted the report of their “engineering survey”, where they proposed construction of a deep-water Lagoon Type Harbour at a site, about 8 km south of Mahanadi river with its entrance opposite Indian Naval Survey Station “U”. The port was to be developed in stages. Their proposal had been approved by the GoI for execution.1

In the initial phase of construction, in 1963, even after approval the project was treated as a non-plan scheme by the state government due mainly to financial constraints. The entire cost of the construction work, unlike other major ports, was being borne by the state government, which, it was pointed out, would be a heavy drain on the state exchequer.2 The GoI took over both

Table 1: Share of India in World Iron Ore Exports: 1960-78

(In million tonnes)

Year World India
1960 1965 1970 1975 1978 154.7 215.1 318.6 352.8 348.0 9.0 (5.82) 11.2 (5.21) 21.2 (6.65) 22.8 (6.46) 22.0 (6.32)

Note: Figures in parentheses are percentages to world total.

Source: Mineral Development Board, Report on Profitability of Iron Ore Export Operations, for the Committee of Secretaries (October 1980, unpublished), p 4.

Economic and Political Weekly February 18, 2006 the construction and administration of the port from the state government with effect from June 1, 1965 and it was declared as a major port the following year.3 Finally, under the Major Port Trust Act, 1963, the GoI handed over Paradeep to the port trust on November 1, 1966. With this Paradeep became the eighth major port and also the deepest inner harbour port in the country. This was the first major port in the east coast commissioned in independent India [Ports of India 1999:162-71].

Even after a couple of years, since the port was formally and fully taken over by the centre, efforts for developing the port potentialities had been sluggish. In fact, in 1967 a number of very crucial and major activities remained to be begun. The grave disinterest on the part of the centre towards this project was further confirmed, when it strongly insisted that the state must refund the loan amount of Rs 15.69 crore the latter had received from the former till June 1, 1965 towards port construction expenses.

It was understandable, for a state, that undertaking the responsibility of both construction and management of a major port was neither possible from the financial point of view, nor practicable from the point of constitutional provisions; management of major ports is a central subject. Notwithstanding the fact that under the terms of transfer of the port to the centre, the state government should not have any financial liabilities after the commissioning of the port, the state was being compelled to make an annual payment of Rs 2.5 crore towards capital, in addition to Rs 83 lakh as interest charges.4 The state government had spent the amount, “to the full knowledge of the centre, although the Planning Commission did not make any formal commitment”, for port construction (till its declaration as a major port).5

In a unanimous resolution on June 30, 1967 members of the state legislative assembly, urged the central government to take immediate steps for developing the potentialities of the port and also for writing off the loan amount.6 The “loan” burden was particularly unjust as the “calamitous” cyclone of October 9, 19677 had exerted tremendous strain on the state’s finances.

The Expressway

As the main activity at the port was to export iron ore from the rich mineral deposits in Cuttack and Keonjhar districts, its functioning was necessarily dependent upon its linkages with the hinterland. However, in the absence of a definite plan to lay railway lines, along with the construction of the port, the state government started building a 56 km long expressway (or autobatin) to connect the rich mining areas of Daitari and Tomka to the port. But after spending Rs 17.5 crore the work had to be stopped mid-way due to paucity of funds. Consequently, the route remained circuitous (being 64 km longer than the proposed expressway to Paradeep) and the transport charges worked out to be an excess of Rs 10 per km. Due to both longer haulage and extra transport cost it was not economical to sell Daitari ore as the fob price could not accommodate the higher transport cost. The result was that the work in Daitari mines came to a standstill after an investment of Rs 7 crore in mining operations.8

This implied an annual loss of Rs 70 lakh by way of interest alone apart from the trained manpower remaining idle. It was also estimated that Paradeep port would incur a loss to the tune of Rs 1.5 crore per annum by way of port dues, and the central government almost an equal amount by way of export duty. Besides, the country would lose foreign exchange earnings of the order of about Rs 11 crore. In view of such “substantial stake” involved, the centre was pleaded with to provide at least Rs 2 crore to complete the expressway.9

Further, it was equally exigent to extend the National Highway (NH) system to reach the port. The centre had provided such NH links to all major ports in the country. It was urged that the Cuttack-Paradeep road, which was the only existing road link to the port connecting NH No 5 and was not designed to carry heavy traffic, must be strengthened to sustain the current level of traffic load. This request to convert this 104 km long road into an NH link to the deepest major port in the country, however, was “turned down” by the centre, despite the fact that the concerned cabinet minister had assured an “early action”. Responding to the request, V K R V Rao, then minister for transport and shipping, had stated that, “we can take a decision on additions to the National Highway system of the country only after plan allocations are finalised and the resources position becomes clear. The question of inclusion of a National Highway link to the Port of Paradeep, in the National Highway system will be given due consideration at the appropriate time.”10 A year later, during the minister’s visit to the port, on January 10, 1969, the same request was reiterated and Rao assured to take early action. However, no steps were taken in this direction. In continuance of the longmade case for the conversion of the Cuttack-Paradeep road into NH link, requests were made again to the next minister for transport and shipping, K Reghuramaiah, but, to no effect. The matter remained pending for long in consecutive ministries and none seemed to take cognisance of its importance with reference to the development of the port.

General Cargo Berth

As early as in 1963, when the port construction was progressing with the state’s initiative, serious thoughts had been given to the quantum of cargo expected to be handled at the port. In fact, in full acceptance of the assessment of the traffic potential at Paradeep, as presented in NCAER (1963), the state government had decided to create port facilities for an initial traffic of about 2 mt of iron ore by 1965-66 and capacity to handle general cargo, in bulk or smalls, of the order of about 1.5 lakh tonnes, and coastal movements of about 1 mt of coal. The general cargo berth was to handle food and fertiliser imports, export of steel, pig iron, chromite and manganese ore. However, except for one mechanised berth exclusively for handling iron ore, there was not even a single general cargo berth, even in 1965. This seriously handicapped transactions in general cargo, particularly at a phase when several enquiries were being made to trade through Paradeep port. The construction of only one cargo berth out of the proposed total of 19, as was part of the original master plan, was not taken up by the centre, even though the first condition of transfer of this port was to complete this essential task. Instead, belatedly, in February 1967, a committee (chairman L K Luthra) was specifically constituted by the ministry of transport with the Planning Commission as one of the participants, to enquire into the necessity of building a cargo berth.

As expected, in November 1967, the Luthra Committee established in clear terms that a general cargo berth was highly essential and there was “complete justification” for the same. On the basis of this observation the transport ministry asked the finance ministry to sanction the required funds. Though enough delay had been caused in even starting the work on the cargo berth, the finance ministry held up the sanction on absolutely unnecessary grounds. The ministry indulged in a “chain of correspondences”11 with the state government enquiring whether sufficient cargo would be available for the cargo berth. The painful procrastination and blatant neglect of an urgent requirement of the port was evident when the first general cargo berth was inaugurated a decade later!12

Provision of Dredging and Sand-Pumping

Despite a key recommendation in the RPTCE report, Paradeep port had been commissioned without any provision for dredging and sand-pumping, which resulted in massive siltation at the port within a period of three years. By 1968, the quantum of accumulated sand was of such magnitude that the width of the port’s entrance had contracted from 600 ft to 250 ft, whereas the draft depth had shrunk from the original 42 ft to 28 ft. This had serious implications as far as movement of vessels was concerned.13 On the one hand, it brought the trading to a standstill and, on the other, serious criticisms were levelled by traders abroad, against the port’s fundamental construction defects.

A central committee (chairman R R Sukhrani),14 pointed out that the absence of dredging and sand-pumping facilities, in violation of the original master plan recommendations, had led to the siltation problem in an otherwise flawless and efficient port. In fact, the report observed that the degree of siltation in a port functioning for 32 months without a dredger was relatively low considering the tidal vigour of the east coast.15 Highlighting the imminence of restoring the original draft depths at the port before the approaching south-west monsoons (i e, before March 1969), the Sukhrani Committee recommended immediate procuring of high-powered large dredgers from abroad and installing sand-pumps for prompt action. These recommendations were in no way dissimilar from the ones given by the foreign expert team of the International Ports Association in their report submitted to the GoI six months before. The ministry of transport and shipping had invited this team to examine the problems of the deep-sea ports in the country. As part of it, the team had carried out investigations at Paradeep port in February 1968. It had drawn urgent attention of the centre to the growing siltation problem and had expressed serious reservations as to the current inefficient and poor quality management.

In any case, the centre had taken no preventive measures in this regard. And when finally it took note of the complaints,16 the reaction was both slow and imperfect. The central government had commissioned the first Indian made dredger, “Konark” (built at Calcutta’s Garden Reach workshop), which broke down a number of times and long time was taken for its repair. The interesting point is that, a port which required urgent and sophisticated dredging facilities, was chosen as the location where the country’s first dredger could be tested on a trial basis.

As regards the sand-pumps, the preliminary work had just started by August 1968, when it was reported that some parts of the same had been damaged. As there was no possibility of importing the parts from abroad, it was proposed to manufacture those within the country. Consequently, the cabinet minister stated that the sand-pumps could not be made operational by the scheduled time, i e, before the arrival of the south-west monsoons, from the strong waves generated by which the harbour had to be protected.17

Keeping in view the deterioration of the port following siltation and the resultant closure in traffic and also the need for full development of the port including a township for the employees, the state strongly urged the centre to enhance the outlay on Paradeep port during the Fourth Plan. Unwarranted as it was, the “shocking” news of non-inclusion of Paradeep port in the scheme of expansion programme of all major ports with regard to expanding general cargo berth at the port, as also other projects, including the Talcher-Bimalagarh rail link and the fertiliser plant at Talcher, under the draft Fourth Five-Year Plan was no worse than a blow below the belt to the state. Not only that the above decisions negated any sound techno-economic logic of attempts at removing regional imbalances through Plan allocations, it also lent support to the suspicion that it was a calculated and deliberate move on the part of the centre to neglect Orissa, probably, on political considerations. There was enough reason to consider so, as during the last elections, the state had not voted the Congress to power.18

The need to develop the port at this juncture of time was of crucial significance. It was part of a large industrialisation programme being envisaged by the state including enhancing exports. However, in order for all these projects to be economically viable it was highly essential that the port and the mineralrich hinterland, were connected by proper transportation network, through the shortest possible route. Discussion on the proposed railway links follows.

Case of the Missing Rail Links

The iron ore from the B sector had traditionally been despatched through the Calcutta port. Later, when it was closed down to iron ore traffic, due to congestion, two other ports were developed

– Haldia and Paradeep. But until 1973 Haldia was not ready to handle bulk iron ore export. Meanwhile, the entire iron ore export from the B sector was being despatched by a combination of rail and road transport via Kharagpur and Nergundi (or, Dhanmandal) causing considerable cost to Minerals and Metals Trading Corporation (MMTC), which was in charge of the exports [Government of Orissa 1970].

Further, during 1975-78, Haldia port faced difficulties due to draught restrictions and the importers were unwilling to send ships there for loading, which resulted in its virtual closure for iron ore export activities. This left Paradeep as the only port available for exports from the B sector. Apart from iron ore, the manganese mines located in the Koira and Barbil area were estimated to be contributing around 1 mt of manganese ore towards export. The Rourkela and Bhilai steel plants were also in a position to export one million tonnes of pig iron and steel through Paradeep.19 To sustain such a long-term and growing export programme, besides developing port facilities, it was essential to establish new rail links so that the benefit of investment would accrue through cost reduction to the maximum.

Paradeep port was connected to the mining belt through the 670 km long circuitous route via Kharagpur. A project to link Cuttack with Paradeep was under consideration, but this alone would not have provided sufficient transit facilities for export items, as all the materials had to go to Kharagpur and then come back to Cuttack for onward transport to Paradeep. As a result the handling charges formed more than 70 per cent of the fob cost. The Hindustan Steel (HSL) had to pay larger freight charges which ultimately affected its competitiveness in the international market. Further, routing all traffic through Kharagpur from Bhilai and Rourkela would further choke the already congested Nagpur-Kharagpur and Kharagpur-Cuttack rail line of the South Eastern Railway. It is relevant to note here that there was demand for a railway line connecting the port and Bansapani sector as early as in 1964 [Government of Orissa 1964]. The two alternative lines proposed were: (1) Bansapani-Koira-Bimalagarh-Talcher-Paradeep line and (2) Bansapani-Nayagarh-Jakhpura-Paradeep line [for details, see, Government of Orissa 1968 and 1970].

It would be pertinent to mention here that much earlier, in 1963, the NCAER, as part of the port development programme had recommended that the Dumaro-Talcher rail link (116 km) would

Economic and Political Weekly February 18, 2006 have to be built by 1968-69 in addition to the Cuttack-Paradeep rail link which would have to be completed two years prior to it. It is to be noted that the Dumaro-Talcher rail link was meant to serve the same area as would the proposed Talcher-Bimalagarh link; the lines from Rourkela to Bimalagarh and Talcher to Cuttack were already in existence. These projects proposed to provide the Rourkela Steel Plant with a direct and the shortest possible link with Paradeep port and comparatively lesser haul along the proposed routes making export of iron ore from the Bansapani sector the most profitable proposition. An increasingly competitive export trade in iron ore called for maximum possible reduction in the cost of inland transport.

The Bansapani-Koira-Talcher route involved an alignment from Joruri to Talcher via Koira, Gangnaposi and Bimalagarh

– a total distance of 202 km.20 On the basis of prevalent rates, it was estimated that this new project would cost around Rs 18.24 crore. The sector-wise cost break-up is provided in Table 2. Moreover, the mine owners in the area had argued to pay for the 8 to 11 km of railway line between Bansapani and Joruri. A vast industrial belt starting from Rameli to Paradeep could be linked up by expeditious realisation of the railway link between Talcher and Bimalagarh. In fact, the existence of this cheap and convenient link could potentially have broken the rigidities and internal dependence of these upon the joint and individual performance of each other, via easier international trade – both import and export. Thus, possibly steel mills could have exported when the demand collapse took place; similarly, coal imports, say, for power, net exports of other ores, would have been most likely.

This rail link, besides touching the iron ore belts of Khandadhar and Malangtoli, would also pass through a number of ferrous and non-ferrous mineral deposits, like mica, garnet, quartzite, coal, limestone, fireclay, ilmenite, chromite, manganese, kyanite, graphite, etc. The heavy industries like Bokaro Steel Plant, Heavy Engineering Corporation, Rourkela Steel Plant, Talcher Coalfields and power station, already formed focal points in this belt.

Paradeep once connected via Cuttack and Jakhpura would be the nearest port from the B sector, the distance being 305 km as against 390 km to Haldia. It was estimated the fob cost of Barajamda ore at Paradeep via Kharagpur was Rs 53.67 per tonne as against Rs 36.47 per tonne via Jakhapura and Cuttack [Government of Orissa 1968:5]. This would have reduced railway freight by Rs 15 to 20 per tonne and made the iron ore loaded at Paradeep the cheapest in the country.21 Moreover, with the laying of the proposed line, export from Daitari, Tomka and Gandhamardan mines would also have been facilitated.

The proposal for the laying of railways and related port development was not altogether an unusual phenomenon. In fact, a major project was undertaken around 1974 for iron ore export, comprising the development of iron ore mines at Bailadila (Madhya Pradesh), construction of a rail link over a distance of 477 km and extension of the capacity of Vizag port (Andhra Pradesh) from 6 to 10 mt. Against this pattern of development it was worth recording the strategic location of Paradeep port both with respect to the resource-rich hinterland and bourgeoning demand for iron ore and other minerals. Considering regional development potentials and the prospective iron ore export programme, the establishment of the much discussed rail links was almost synonymous with the precondition for industrialisation in one of the most backward regions of the country. It was imperative, therefore, that this proposal got implemented during the Fourth Plan period.

That the port facilities at Paradeep could not be developed and utilised until the proposed rail links were constructed was strongly felt, particularly when “the entire project (of port development) has been moving too slow to be useful”.22 The resolution adopted by the Orissa state legislative assembly on June 30, 1967 recommended that the state government should strongly urge upon the GoI to take immediate steps for providing rail links from Paradeep to Cuttack and also the mining areas and the hinterland, including Talcher and Rourkela.23

It was learnt within a month’s time that the work connected with the link between Cuttack and Paradeep was being undertaken during the next working season. But the demand for rail link network still remained unrecognised. As regards the Rourkela-Talcher line, the government emphasised the findings of the preliminary surveys carried out during 1947-48, which had revealed it to be unremunerative. Moreover, it took a strong stand that only when schemes for exploitation of the ore deposits on the western face of Malangtoli block were finalised, would be necessary. The “unusual emphasis” on the 1947-48 surveys was rather unjustified as during that period, practically, there was no industry in that region to justify a rail link. On the basis of the findings of the GSI, that there was a prospective deposit of 150 mt of 63+ per cent iron ore situated at a very economical distance from the port, the railway ministry had agreed to reconsider the proposal.24

Eventually, the centre refused to go in for a rail link between Rourkela and Talcher during the Fourth Plan. One fails to understand how the Talcher-Bimalagarh (Rourkela) railway link with Rs 18 crore investment could not be considered important when one considers the fact that in order to develop iron ore export through Vizag port, a railway line of more than 477 km was constructed at a cost of Rs 70 crore between Vizag and Bailadila. Notwithstanding the setting in of the much-debated stagnation of the mid-1960s, Orissa, essentially, lost out as a politically weak state. This was all the more disturbing as Orissa was the only state which had been served with the minimum railway mileage.

Importantly, way back in 1945-46, discussions were held between the ministry of railways and the state government with a view to examine the feasibility of constructing a line which would not only provide easy and cheap transport from the northern and western part of Orissa with the coastal area, but also provide an outlet for exploitation of vast mineral resource of this state.25 The railway ministry, however, maintained its negative stand on all the suggestions made.

Meanwhile, with the demand for the rail link persisting,26 in September 1968, V K R V Rao, the union minister of transport and shipping, made the suggestion to conduct a “fresh survey” to assess the economic viability of the Talcher-Bimalagarh rail link on the ground that the existing survey report was outdated.27 This suggestion obviously overlooked the unimpeachable facts and claims brought out by the HSL, the National Mineral Development Corporation (NMDC), the ministry of steel, mines and metals and the GSI on the efficiency of the Talcher-Bimalagarh link. Subsequently, a high-level inter-ministerial conference was held in New Delhi on January 14, 1969, under the auspices of

Table 2: Sector-wise Distance and Cost of Proposed Rail Linesin Orissa: 1967

Route Distance (km) Cost (Rs Lakh)

Talcher-Gangnaposi 122 (10) 1,016 Gangnaposi-Koira (via Jamdih and Samaj valley) 48 (14) 440 Koira-Joruri 32 (28) 368 Total 202 (52) 1,824

Notes: (i) Bracketed figures indicate distances of tracks in hilly areas.

(ii) Cost estimated @ Rs 8 lakh per km in plain area and Rs 12 lakh per km in hilly terrain.

Source: Memorandum submitted to the Ministry of Railways, GoI, 1967 (Annexure V).

the ministry of steel, mines and metals, which was attended by the representatives from ministries of railways, petroleum and chemicals, steel, mines and metals, transport and shipping as well as the HSL, the MMTC, the NMDC and the government of Orissa. The conclusion reached in the said conference was as follows:

The general consensus of opinion at the meeting was that in view

of the present and prospective traffic requirements, the proposed

Talcher-Bimalagarh rail link with access to Koira valley could be

recommended for the inclusion in the Fourth Five-Year Plan subject

to the engineering and traffic surveys proposed to be conducted

by the railways establishing the possibility of the line.28

The engineering and traffic survey of the proposed line to ascertain the economic viability of the project had been ordered for the year 1969-70, i e, the first year of the Fourth Plan. Surprisingly, the ministry of railways had directed that the survey would have to be taken up from Talcher to Bimalagarh leaving the 80 km link connecting the rich mineral regions of the Koira-Joruri. This gave sufficient room for misgivings about the intentions of the central government and the Action Committee, Talcher-Bimalagarh Rail Link, presented a detailed memorandum to C M Poonacha, who was to inaugurate the construction of Cuttack-Paradeep rail link on February 12, 1969.29

In this context special mention must be made of the following instance, which conclusively proves the apathy of the Railway Board towards the development of railway communication in Orissa. In an inter-ministerial meeting held on March 31, 1971 in New Delhi30 in connection with the development of the Malangtoli iron ore deposits, the officer representing the Railway Board was recorded to have said that the laying of the railway line from Jakhpura to Bansapani was estimated to cost not less than Rs 40 crore and was unremunerative. The railways would like to utilise the capacity of the Bansapani-Haldia line to take extra traffic of about 5 mt before laying any further lines in the area, which would involve only minor investment.31

It is to be noted here that by the time of this meeting on March 31, 1971 the outcome of the fresh engineering and traffic survey into the proposed Talcher-Bimalagarh rail link had not been made public, even though the Railway Board possessed the report. The Railway Board could well anticipate that once it was known that the rail link would prove unremunerative, there would be insistence on the alternative line – the Jakhpura-Bansapani rail link. By suggesting the alternative of Bansapani-Haldia line the Railway Board effectively pre-empted the second choice. It also needs to be mentioned that in actuality, there was no direct link from Bansapani to Haldia, as the officer tried to impress upon the meeting. There was a rail link from Bansapani to Rajkharasuan which was connected to Kandra. From Kandra via Jamshedpur it touched Kharagpur and Pansukura, from where there was a straight-line up to Haldia. The distance of the mining areas to Haldia in comparison to Paradeep was so circuitous that the transport to Haldia would not be economic, as is evident from Table 3. Further, the survey, the Railway Board representative was referring to, was conducted in the year 1965-66, while during the intervening period much development in various mining areas had taken place.

Table 3: Distances between Ports and Mining Areas

Name of Mining Areas To Haldia via Rajkharsuan(km) To Paradeep via Jakhpura (km) Likely Savings in Freight per Tonne (Rs)
BansapaniMalangtoliJoruri KeonjharBarbil 417 477 415 390 400 340 330 321 345 390 2.90 4.40 3.30 1.50 0.40

Detailing the facts and circumstances referred to above, N Khuntia, chairman of the Rail Link Action Committee, observed with concern and regret that, both the Railway Board and the South Eastern Railways did not allow this state to develop the rail lines despite the existence of the deepest natural port and huge deposits of rich minerals. It observed, “it is the firm belief of the people of Orissa that the proposed Talcher-Bimalagarh rail link was a victim of this conspiracy and had to be declared unremunerative in spite of ample justifications established in its favour.”32

The Infrastructure, So Far

Has much improvement has taken place over the last four decades or so in the infrastructure of Orissa, that, in the least, would have acted as a catalyst towards industrialisation of the state? We may consider a few facts.33

Notwithstanding the relatively better performance (by productivity indicators, considering ports of Kolkata, Haldia and Visakhapatnam) of Paradeep port, much of what was originally planned to develop the port remains only a wishful thinking. Till recently, Paradeep had only three general cargo berths out of the 19 as proposed over 40 years ago. Even for iron ore, the main cargo handled, Paradeep has only one berth, the draft and number being less than that of Visakhapatnam port. As of multi-purpose berths, of which Calcutta has 27 and Visakhapatnam has 12, Paradeep has none.

According to the latest available information on “new” lines project, the date of completion of the age-old Daitari-Bansapani as also Cuttack-Paradeep sections remain unspecified! Fortunately, after a staggering four decades, the Talcher-Sambalpur route was declared complete in early 1999.

Interestingly, only reaffirming the decade-old techno-economic findings over the unmistakable suitability of various locations in the state for establishing integrated and “mini” steel plants, numerous investors – domestic and foreign – have evinced keen interest to invest in the sector. Moreover, the government itself has lined up projects by 20 other companies; these projects can generate about 50,000 jobs, direct and indirect (

Despite the potential, as recent reports have been pointing out, the poor state of existing infrastructure in Orissa, particularly, transport, has been a strong dissuading factor for the investors. Inadequate port facilities, road network and the railway lines, that are required to support the new projects, have continued to plague development of a high value added industrial sector.

Concluding Observations

As development of both the port and railways involve central decision-making, on the one hand, the state’s dependence on the central authorities, and hence, its vulnerability to bureaucratic interference, heightens, and, on the other, it leads to unhealthy competition between aspiring states based mainly on parochial political interests.

As far as the port issue was concerned, despite its proven superiority as a major port, the centre’s indifference was very clear. This was particularly evident when the central government disregarded the significant recommendations made in the report of the consulting engineers. The absence of even the critical provisions like sand-pumping and dredging and also required number of cargo berths definitely led to the deterioration of the port.

The case of the proposed railway link was no different. The justiciability of the otherwise economically viable proposition

Economic and Political Weekly February 18, 2006 was never appreciated by the concerned central authorities. In fact, any move in this connection had been effectively thwarted, often on false premises. This once again proved the subversive attitude of the central bureaucracy and also the inaptitude of the regional political decision-makers. In such a situation the weaker states usually emerge as the real losers, no matter how genuine their demands are.

The wanton neglect of the vital infrastructure in Orissa is too real, blatant and protracted to be missed in the maze of explanations centring on either the “blame-it-on-the-colonial-past” syndrome, or even the debate on the demand recession since the mid-1960s. Even during the post-liberalisation period, the infrastructural scenario in the state remains grim, defying the banality of conventional analyses of regional development, or, for that matter, underdevelopment.

1 m



[For detailed and extremely helpful comments, I am indebted to SebastianMorris and Tara Nair. Sincere thanks are due to Thomas Isaac, Frederic Landy, Sakti Padhi, Pradhan H Prasad, J C Sandesara and K K Subrahmanian for their advice and encouragement. I alone am responsible for any errors and omissions.]

1 For relevant extracts of recommendations from RPTCE (1962), see, Das(1992: 249-51).2 ‘Orissa Newsletter: Paradeep Port Work is Proceeding Apace’, The Economic Times, March 23, 1963.

3 The declaration was made with effect from April 18, 1966, under theIndian Ports Act, 1908. It was “intended to administer the port directlyas a department of the GoI for sometime till the port is ripe for beingconverted into an autonomous port trust like those at other major portsin India.” Vide Brief for the Meeting of the Informal CunsultativeCommittee, August 26, 1966 (mimeo).

4 N Khuntia’s observation as quoted in ‘Unanimous Demand to Develop Paradeep Port Potentialities’, Amrita Bazar Patrika, July 1, 1967. 5 H K Mahtab’s statement as quoted in ‘Centre’s Neglect of Paradeep’,

The Matrubhumi, July 2, 1967 (in Oriya).6 Resolution adopted by the members of the Orissa legislative assemblyon June 30, 1967.

7 The natural disaster had taken a toll of about 700 human lives and 20,000 cattle, and demolished one lakh houses in an area of 1,400 square milesconsisting of 2191 villages and had rendered 9 lakh people destitute. Evenin this dire distress, central help was only to the extent of Rs 2.4 crore.

8 Paradeep’s Plight, Memorandum submitted to the president Zakir Hussainon his visit to the port, on December 6, 1967, p 2.

9 Ibid, p 3. It may be mentioned here that, this request was yet to beconsidered by 1967, whereas originally the completion of the expresswayshould have been effected at least by 1965, when Paradeep had alreadybeen ranked as a major port.

10 Vide letter No 16-PII(84)/67, dated December 6, 1967.11 N Khuntia, ‘Paradeep Port and the Central Government’, The Matrubhumi, September 3, 1968 (in Oriya).

12 Paradeep – Its Decade of Despondency, memorandum presented toU S Dikshit, Union Minister of Shipping and Transport, who was theinaugurator, on April 15, 1975 at Paradeep port, p 1.

13 It was reported in 1968 that three large iron ore carrier vessels from Japanhad to be diverted to other ports and vessels above 12,000 tonne carriercapacity were unable to be anchored at Paradeep port. See, ‘ParadeepPort and the Central Government’, op cit.

14 The Sukhrani Committee submitted the report on August 20, 1968, 10days after their investigation at Paradeep port.15 Mentioned in N Khuntia, ‘Paradeep Port and the Government of India’,The Samaj, October 25, 1968 (in Oriya).

16 See, for instance, relevant communications from the Minister of Transportand Shipping, vide Letter No DO 16-PD II (42)/68, dated August 23, 1968and Letter DO No 16/PDII(42)/68, dated September 18, 1968.

17 Noted in ‘Paradeep Port and the Central Government’, op cit.

18 As part of election campaign Biju Patnaik had asserted several times inthe press that if the people of Orissa made him the chief minister, hecould very easily have got these projects included under the Fourth Planand could have got a minimum amount of Rs 450 crore sanctioned by thecentre. See, N Khuntia’s letter dated April 28, 1969 addressed to Ministers

of Railways; Transport and Shipping; and Petroleum and Chemicals.

19 Vide letter No 083-CH/67, dated March 19, 1967, written by the chairman,Hindustan Steel and addressed to the Secretary, Ministry of Steel, Minesand Metals.

20 The lines from Rourkela to Bimalagarh and Talcher to Cuttack werealready in existence.

21 Mineral Development Board, Report on Profitability of Iron Ore ExportOperations, op cit, p xvii.

22 Reported in ‘Paradeep in Wilderness: Centre’s Neglect of Rail Links’,August 27, 1967. (mimeo).

23 Quoted in ibid.

24 Letter No 65/W4/CNL/SE/6, dated July 18, 1967, written by the thenRailway Minister C M Poonacha to the Praja Socialist leader, N Khuntia.

25 DO letter No, 2627 CM; dated December 5, 1967.

26 See, ‘Plea for New Rail Link’, Amrita Bazar Patrika, September 22,1968; Letter No Nil, dated September 22, 1968 (from Khuntia to Ansari);Letter No 5705 SG dated September 26, 1968; (from secretary togovernor, to Khuntia). “The concerned Union Ministries would be wellto put it in the high priority list” in “By the Way”, Amrita Bazar Patrika, October 2, 1968.

27 Vide letter No 2267-MPS/68, dated September 27, 1968. Also, “FreshSurvey for Talcher-Bimalagarh Rail-link Suggested”, Amrita Bazar Patrika, October 6, 1968.

28 See, letter No 20(1)/69/MIV, dated January 24, 1969, being a copy ofthe record note of the discussion held on January 14, 1969 in theDepartment of Mines and Metals, New Delhi, on the subject of constructionof Talcher-Bimalagarh railway line, p 5 (mimeo).

29 Memorandum submitted to the Union Minister for Railways, C MPoonacha, on February 12, 1969, at Paradeep Port, p 5. Incidentally,the day was observed as the “Demand Day” in Orissa concerning themuch discussed demand for the Talcher-Bimalagarh rail link.

30 This meeting was attended by high ranking officers representing theministries of Finance, Mines and Metals, Shipping and Transport, Railways,Planning Commission, MMTC, NMDC, GSI and Government of Orissa.

31 See, Minutes of the meeting, para 3 (mimeo).

32 In a letter addressed to K Hanumanthaiya, the then Union Minister forRailways, dated July 14, 1971.

33 Based on Andrade (1999); CMIE (1996 and 2004); and Ministry ofSurface Transport (1996).


Andrade, Carol (1999): The Economic Times Ports of India 1999, Bennett, Coleman and Co, Mumbai.

Centre for Monitoring Indian Economy (1996): Infrastructure in India, CMIE, Mumbai.

  • (2004): Infrastructure, CMIE, Mumbai.
  • Das, Keshab (1992): Uneven Development, Indian Planning and the Strategyof Industrialisation: Case of Orissa, PhD dissertation, Jawaharlal Nehru University, New Delhi (through Centre for Development Studies,Trivandrum) (unpublished).
  • (1993): ‘Planning and Regional Differentiation in India: Strategies andPractices’, Journal of Indian School of Political Economy, 5(4).
  • (1997): ‘Politics of Industrial Location: Indian Federalism and DevelopmentDecisions’, Economic and Political Weekly, 35 (51).Government of India (1960): Report of the Intermediate Ports DevelopmentCommittee, New Delhi.
  • Government of Orissa (1964): Memorandum on the Establishment of an Integrated Iron and Steel Plant in the Bonai-Nayagarh Iron-Ore Area of Sundargarh and Keonjhar Districts, Orissa, Industries Department.

  • (1968): Iron Ore Export Programme: Development of Rail and Port(Paradeep) Facilities in Orissa, Mining and Geology Department.
  • (1970): A Survey of Iron-Ore Traffic Along the Proposed Banspani-KoiraBimlagarh-Talcher-Paradeep Railway Line, Directorate of Mines.
  • Ministry of Surface Transport (1996): Pocket Book on Transport Statisticsin India 1995, Transport Research Wing, Government of India,New Delhi.

    Mohanty, H B (1962): ‘Development in Orissa: Paradeep’, Orissa: Past and Present, Utkal University, Bhubaneswar.

    Morris, Sebastian (1990): ‘Cost and Time Overruns in Public Sector Projects’,Economic and Political Weekly, Review of Industry and Management,25(47).

    National Council of Applied Economic Research (1963): Development ofParadeep Port, NCAER, New Delhi.

    Raj, K N (1973): ‘The Politics and Economics of “Intermediate Regimes”’,Economic and Political Weekly, 8(27).

    Rendel, Palmer and Tritton, Consulting Engineers (RPTCE) (1962): Reporton the Development of a Deep Water Port at Paradeep, Commerce (Ports) Department, Government of Orissa.

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