Archive for the ‘Orissa Economy’ Category

Chit Funds :The Simple Business of Cheating Poor People – Rule Roost In Odisha

Chi Funds - Swindling Millions from people

Chi Funds - Swindling Millions From People of Odisha

Ever since Sudipta Sen, the beleaguered head of the tainted Shradha Group hit the headlines for his  audacity and brazenness in making crores by swindling innocent people through his chit fund company, there have been “crackdowns “  on such money circulation companies in Odisha. Till late evening, police arrested as many as 110 functionaries of different companies, detained more than 80 people and registered more than 97 cheating cases against several illegal NBFCs in the state. While  raids were conducted on 50 dubious “chit fund companies” across 185 different locations in odisha, the police action is expected to grow stronger in the coming days.

While the state government has currently no data of the number of NBFCs, chit fund companies and money circulation firms existing in Odisha and the volume of money invested, police expect that they would be able to find out those details after the end of the ongoing raids. Interestingly though, whistle on the obnoxious ways of chit fund companies was blown in Odisha much earlier. It was in the year 2009 that the Bollywod actor producer Naseer Khan was first charged and later arrested for swindling innocent people from Odisha through his chit fund company “ Fine India Sales”.

While questions are being raised now why noose were not tightened on the chit fund companies even after the “Fine India “ scandal, what actually should invite attention of the sleuth is “ what actually makes Odisha a teeming ground for the burgeoning  chit fund companies?”

Though the general notion is that people of odisha aand other eastern states of the country are gullible, what actually matters is the fact that the Chit Fund Companies take advantage of the weak legal framework. While the RBI and SEBI have specific guidelines for operations of NBFC’s in India , there are no guidelines that control the  Chit fund companies. This apart, the legal provision of imprisonment of only two years for the culprits found cheating people through chit funds, is actually not a deterrent for unscrupulous people in this business.

In Odisha, the State Legislative Assembly passed the Odisha Protection of Interests of Depositors (Financial Establishment) Bill, 2011, making provision of punishment against unscrupulous chit fund companies. The Bill still awaits the President of India’s assent. The provisions of the bill specifies that if a person is found guilty of cheating people of their money, he could serve jail term for 10 years and his/her properties could be confiscated . The proposed Act has the provision of returning money to investors by selling properties of the culprits.

The Bill once it gets presidential nod will no doubt provide respite to victims of fraud and also serve as a deterrent to the dubious “cheat fund” companies. But what matters now is what will happen to people who have been defrauded by these companies now? An estimate proves that  chit fund companies have looted to the tune of Rs 1,500 Crore from investors in odisha alone.  Companies like Seashore securities that cheated to the extent of Rs 600 crore , Ashore, Safex, Sai Pragati, Star Consultancy and Florish India are yet to return the money to their investors.

Nothing describes the angst among the people better than the fact that  on a single day on may 2  at least 127 hapless depositors made a queue to lodge their complaints with the State Crime Branch against the Saradha Group at Baleswar. The company, it is estimated has swindled to the tune of  Rs 50 crore from Baleswar only.

In a way, the unsuspecting investors now don’t have any other option but to blame it on their fate for putting their hard earned money with these swindlers!

 

Prospering Odisha: Hurdles Ahead

Odisha: Challenges Ahead

Odisha On Progress Path: Challenges Ahead

Earlier posts in this blog on odisha have   highlighted positives of the odisha economy that is clearly in ascendence. There is no dearth of statistics that indicate to the visible changes in the economy of Odisha. Let’s consider the points below:

  • The annual average rate of Odisha economy is 8.23% in the 11th plan.
  • Poverty in Orissa has declined by 20.2 percentage points from 57.2 per cent in 2004-05 to 37 per cent in 2009-10. This is the highest reduction in poverty among all States.
  • Overall literacy rate  of Odisha is 73.45 per cent against the national average of 74.04 per cent in 2011, male literacy being 82.04% and female literacy being 64.36%
  • Infant mortality rate and maternal mortality ratio have declined from 73 and 303 respectively in 2006 to 61 and 258 respectively in 2011.

While the statistics reveal too much and provide every reason to gloss about, there are indicators that cannot be avoided if growth in real terms  need to be achieved in the long term and on a consistent basis!

Let’s focus on each of these indicators here:

Agriculture : While the state’s economy is on rose, the agricultural sector is what has not shown any sign of growth over the past couple of decades. Though the state government has taken note of this and addressed the issue in this yaer’s annual budget by earmarking a total outlay of   5627.84 crore in 2012-13 to Rs 7161.84 crore un 2013-14 for the horticulture and agricultural sector, lots need to be done to increase the productivity. Increasing irrigation potential, promoting watershed development at a massive scale and drought proofing are critical pre-requisites to this. Apart from this diversifying  crops, strengthening rural marketing, encouraging  agricultural extension and technology transfer, expanding crop insurance and improving rural infrastructure are some of the steps that need to be  taken immediately.

Augment Human resource Development:  Human resources are the most important resource of any economy and if  Odisha has to  sustain growth on a long term basis, it needs to keep paying attention towards its human resources. More and more institutions of higher technical and managerial learning and massive networks of ITI, tool rooms, centres of excellence and other training facilities are required to be established throughout the State with a view to enhancing employable technical and soft skills of unemployed youth.

Stepping up Investments in Social Sectors : Though the state government has started addressing the disparity in social sector with greater thrust, statistics reveal a stark difference in prosperity  level between the coastal regions of Odisha and those areas dominated by tribal populace. The physical infrastructure and Human Development Index of the tribal areas calls for massive public investment. The  State has already embarked upon an ambitious plan to provide hostel facilities to 5 lakh girl children belonging to Scheduled Tribes and Scheduled Castes.  Other schemes targeted at  developing the tribal patches need to be pursued aggressively!.

The State should give reasonable tax breaks for attracting private investment in labor intensive manufacturing, agro-processing, tourism and other employment generating sectors in the tribal region. The removal of intra-state imbalances has been receiving special attention in the plan strategy of the State. The Koraput-Bolangir-Kalahandi (i.e., KBK) region of Orissa still considerably lags behind in terms of most development indicators. Heavy incidence and persistence of poverty in the KBK region of Orissa has been a cause of serious concern. The growth policy should focus on achieving faster, sustainable and more inclusive growth and bridging the regional, social and gender disparities.

Investments in Odisha : Much ado about Nothing

Investments in Odisha

Investments in Odisha - Much ado about nothing

Well, at a time when the Odisha government is busy  projecting itself as one of the most progressive economies of the country, the party seems set to be spoilt. No doubt Odisha has set itself ahead of all other states in terms of number of proposals received, but how many proposals actually see the daylight, is what that matters!

The  decision of the NTPC to shift out  the Rs 11,000 crore 1600 MW coal based project from Gajamara in Dhenkanal to  Gadarwara in Madhya Pradesh is a case that can be taken as a pointer. The reasons cited by the NTPC officials tell it all.  According to the NTPC, there were inordinate delays in execution of the project in odisha owing to holdups in land and environmental clearances. Another project of the NTPC which is scheduled to come up in Darlipali is similarly struck on the issue of procurement of resources necessary for the execution of the project.

Reports have it that one of the key equipment suppliers pulled out of the project and the company and the State Government failed to receive necessary clearances on time, threatening to delay the manufacturing process further. Though company officials now maintain that despite the delays they will go ahead and invite fresh tenders for procuring equipment, it needs to be seen whether this project will take off the ground or also go the Gajmara way. Similar precedents of delay in projects can be found in the  POSCO case and the proposed steel plant of the Arcelor Mittal group.

Flight of capital, for whatever reasons, is not a healthy sign from the perspective of a State that is keen on attracting more and more investment into industry.

Orissa, like any other State in the country, needs investment in industry for developing . However in most cases, the government is signing MoU’s with big multinationals and owing to execution problems on the ground level, the project gets stuck. What is common in almost all project delays in Odisha is the resistance of people to part with their land owing to displacement and rehabilitation issues. Issues like these need to be handled proactively and people of the locality need to be taken in to confidence before any MoU is signed with the investing companies. This would go a long way in curtailing the delays in implementation of the project. Similarly, critical issues like land and forest clearance need to be clarified beforehand rather than the other way round so that projects can take off smoothly without cost or time over-run.

Odisha is a mineral rich state and presents a great opportunity for those who invest however to make it more acceptable to the investor community as a truly investor-friendly State, executions of the MoU’s is needed. And the government needs to work in this regard too to ensure that investments keep flowing smoothly and steadily into the State.

Odisha Economy – A lot Achieved;Still More to Go

Of late, there are good signs of Odisha’s progress! The Economic Survey Report  has come up with many interesting facts on odisha. These are

  • Odisha will grow at 9.14% in the year 2013-14.
  • The poverty index in odisha has fallen by 20.2% from 2004 to 2009.
  • Per capita Income in the state has soared to Rs 25,5484, a growth of 6.01% over 2011-12.
  • There has been a considerable appreciation in the collection of taxes in Odisha compared to that of other states.
Odisha Economy - A Lot Needs To Be Achieved

Odisha Economy - A Lot Needs To Be Achieved

But are these feel-good signs only numbers that satiate the mind of economists and the jargon of management students who seek to pepper their talks with fancy numbers?

Well, there have been great progress in the state in the past decade and as is known “numbers do not lie unless tampered with” but there are other side of the pictures that need to be taken into consideration.

The poverty index of odisha has fallen down greatly in the past decade but the regional and social disparities have widened and the imbalances are much wider. The extent of poverty on southern and northern regions of Odisha as well as among the scheduled caste and scheduled tribe population has increased along with the decrease in poverty index. Similarly the standard of living of the agricultural laborers in Odisha is one of the lowest in India and is just ahead of Bihar.

The rise in per capita income of  Odisha again presents only a partial picture of the state of things. The standard of living in the state has no doubt risen in Odisha over the past decade but again the regional disparity continues in this respect too with the majority of rich being concentrated only in the urban patches of the state.  The per capita monthly expenditure in urban areas of odisha stand at Rs 1468.84 in 2011-12 compared to that of Rs 715.59 in rural areas of the same period.

Similarly though there has been considerable rise in the taxes collected by the state government, this is more due to the leverage that the government got from boom in mineral prices. Other factors that contributed to the growth in the tax collection was the revenues earned from petroleum products and motor vehicle taxes. According to the Thirteenth Finance Commission, the tax to GSDP ratio of the Odisha government should be more than 6.75% but it is estimated to be only 5.92% in 2012-13. The same ratio, it is being predicted will not go beyond 6.02% in 2013-14.

Going by all the indicators above, it can be safely assumed that though there has been appreciable change in the economy of Odisha in the past few years, there are still much left to be done. We need to address more on rural upliftment now than ever to stop the growing economic imbalance in the society

Addressing Agriculture : Odisha Budget 2013

Odisha Budget

Odisha Budget

The Odisha state budget that was presented by Mr. Prasanna Acharya in the  State Assembly has been a mixed bag of sop and punishments. However what is notable with this year’s state budget apart it from being the highest ever budget outlay of Rs 60,303.09 Crore, is the fact that too much emphasis was laid on agriculture and allied sector.

The state government for the first time ever in the history of odisha and the second time in the history of the country (after Karnataka), presented a special tailor made  budget for the agriculture sector. The budget outlay for agriculture,horticulture and allied sector has been increased from rs 5627.84 crore in 2012-13 to Rs 7161.84 crore un 2013-14. The finance minister has also announced 3% interest subvention on farm loan and an additional 2% would be provided to the farmer on repayment of the loan. Apart from this, the budget makes provision for health insurance for farmers under the Biju Krushak Yojana.

The budget itself is an emphasis of the fact that the Government has realized the importance of  providing support to the agriculture sector. In a marked shift from its pro-Industrial policies since the inception of this century which triggered the growth and diversification of economic activities in odisha, this year’s  budget is aimed at bringing back people to the agricultural sector.

The sudden shift in government’s priorities is understandable. Owing to lack of support from the government, the agricultural sector has suffered. While the total contribution of agriculture to state’ GDP has gone down to 17.49% in 2012-13, the total productivity has hovered around 21.97 quintals per hectare, which is way below the national average. This is clearly a threatening call to the state’s 67% odd population that depend on agricultural activities for their livelihood.

So the decision of the state government to take steps to address the issue on an emergency basis by presenting a Special budgets for the farmers is understandable. However what needs to be seen is the implementation of all the schemes that have been announced. Translation of  goals into actions would certainly boost the agricultural sector in Odisha

 

Infra Blues of Odisha

Odisha Developing

Planning Out Odisha's Development

Orissa has outclassed many states of the country to emerge as one of the fastest growing states in the country. In fact it stands right behind Bihar and Gujarat as the fastest growing state of India in the year 2012. What’s more important is the fact that it has gained goodwill as one of the most preferred destination for investment by investors across the world.  The state’s image as an investor friendly destination has helped it in getting lots of projects of late. However what most companies putting in funds in the state are concerned about is the basic infrastructure which still has lots of distance to cover!

According to data available with the planning and co-ordination department, odisha lacks sufficient infrastructure to cater to the needs of the industrialists, investors and common man which is depriving the state of huge amount of potential returns. Rail density inOdisha is only 15km per thousand square kilometer which is far below the national average of 20km. Similarly the national highways constitute only 2% of the total road network and handle about 40% of the traffic on road. Although odisha stands above national average when it comes to postal density, it falls flat in respect to tele-density (the number of telephone connections per 100 people).the number of  phone connections in the state was 43.92 lakhs in 2010-2011 with cell phones constituting 75% of total connection.

Getting back to the roads in the state, odisha enjoys better position as far as road density ( total length of all roads per 100 sq km) is concerned. The extent of rural road connectivity in Odisha , though is better than the national average, it is way below satisfactory limits. With 62% all weather connectivity roads and the state government trying for a growth rate of 9% growth rate in road connectivity to rural areas, this is certainly going to increase.

All the afore mentioned factors are indicators of  the basic infrastructure facilities of a state and as can be seen Odisha’s performance in the sector is not that commendable. Though the state government has started taking initiatives , it will be a while before things turn up. The odisha government has decided to pump in close to Rs 1 lakh crore in infrastructure development of the state in the 12th five year plan. This is done with an aim to boost tourism, hospitality, IT & ITeS , energy and higher education sector. The state is also aiming to set up a platform for the local entrepreneurs by providing robust infrastructure facilities to the MSME sector.

Industry bodies and economists are of the opinion that if the State Government is able to translate the plan into reality in infrastructure development, it would be able to take odisha to the status of the most developed state in the country.

2012 – Industrialization In Odisha: Started with a bang ended in a whimper

The year 2012 started on for Odisha with positive note as one of the fastest growing states in the country. There was rapid inflow of capital into the state’s economy. However as the year closed, the euphoria created died down with several projects facing roadblocks for factors like land acquisition and environmental degradation.

Works in 14 Proposed Special Economic Zones in Sambalpur,jharsuguda,ganjam,Khurda,Jajpur,jagatsingpur,kendrapara and Cuttack could not be started or carried forward .  Similarly the proposed alumina park at Angul by NALCO and the downstream park by Jindal Steels at Kalinga Nagar in Jajpur district remained non starters. However the biggest jolt to the industrial sector came during the month of December when Vedanta Aluminum Ltd (VAL) decided to shut down its refinery at Lanjigarh citing shortage of bauxite.

Industrial Slowdown

Industrial Slowdown In Odisha in 2012

The multi crore coal block allocation and mining scams also took its toll on the industrial climate of the state. But the worst hit was the port sector. The ports of Odisha which depended mainly on the export of iron ore saw a sharp decline as a result of the scam in mining sector. Another jolt came to the port sector when L&T decided to divest its stake in the the Dhamra Port Company Ltd in the face of irregularities and scams.

Labor unrest also managed to draw attention among many industrial units in the year 2012. The most notable was the  strong protests by the trade unions of Nalco on the decision of the center for divesting 12.5% stake in the Public limited company. Similarly the  Management of the Birla Tyres, a unit of Kesoram Industries was forced to shut down their manufacturing unit at chhanpur near Balasore several times due to labor unrest.

In June there was labor unrest at oil refinery project site of the Indian Oil Corporation ltd ( IOCL) in paradip when CISF ( central industrial Security Forces) jawans opened fire injuring five contract laborers. There were similar labor issues with the Jinadal Steel and power units in Angul.

On a whole, the year that had started on  a promising note for the state ended in whimper. However with industrial growth picking up and the business environment showing signs of recovering, there are symbols of revival around the corner in the year 2013!

Flowers provide Excellent Employment Opportunities to many In Odisha

Floriculture

Floriculture in Odisha

A surge in the demand of flowers and a huge gap in its supply has opened doors of opportunity for entrepreneurs in odisha who are prospering by taking on to floriculture like never before.

The local markets are able to cater only to 10-12% of total flower requirement in the state and Odisha has to depend heavily on the neighboring West Bengal and AndhraPradesh for meeting its appetite of flowers. West Bengal accounted for 75% of flower supply in odisha markets. In fact the businessmen from West Bengal are making a moolah by doing brisk business in the state. As the time of festivals come, the demand for flowers jump by 20-30% . Apart from this the marriage season accounts for large demand of flowers.

The business on New Year last year was to the tune of Rs 10 crore. With the new year around this time, the traders are expecting business close to Rs 15 crore. Sensing opportunities in this sector, the local entrepreneurs have started entering the market. A private group began gerbera and rose cultivation on four acres at Ugratara, located nearly 50 km from Bhubaneswar, supplies over 5,000 gerberas to the Bhubaneswar florists every day. A gerbera flower is sold at Rs 10 to Rs 12 per piece in the capital city of Bhubaneswar— almost double of what is spent on growing them.

Interestingly the biggest market for flowers in Odisha is in its capital city. Bhubneswar has around 135 florists and nearly 2,000 people are engaged in the business in the city. It is estimated that the flower business in the capital city is around Rs 50 crore annually and is growing by over 30%. The flower traders in the city procure marigold, tube rose and rose from Calcutta. However, the exotic flowers such as lilium, orchids and carnation arrive from Bangalore, Pune, Hyderabad and Delhi. Lotuses come from the Anshupa Lake near Athgarh in Cuttack while basil and other flowers for offering to deities come from villages on the outskirts of Bhubaneswar.

Sensing the opportunities in the area, the state government has also started encouraging farmers in the state to take up floriculture in a big way. The government has identified Bhubaneswar, Cuttack, Puri, Rourkela, Sambalpur and Berhampur areas for encouraging floriculture. Already Rs 1.5 Crore has been spent in developing the flower market of Berhampur. Apart from this, the government is providing cold storage units for preserving the flowers for a longer duration and refrigerated vans for transporting the stock from far-off places. Most importantly, the horticulture department is giving 50 per cent subsidy to start projects in floriculture. And this is what is drawing many businessmen into this industry.

An engineer from Tangi near Cuttack who incidentally was the first in the state to go for large scale floriculture project in a patch of 4 acre land says he is making around Rs 25,000 per month on an  acre  of land. A rose produced in his farm which costs Rs 2 is sold at Rs 10 to Rs 15 in the capital. Similarly gerberas that cost Rs 1.50 to be produced are sold at Rs 10. Encouraged by the returns, he is mulling cultivation of Dutch Roses which can be exported to Dubai, Singapore and other countries.

Indeed, sky is the limit for enthusiasts who have taken a plunge into this sector and for those who have not known about this, the time is right to make a start.

 

Exports blue of Odisha

Exports from odisha

Exports from odisha

The sailing is not getting smoother for the Odisha Government on Exports front. The global slowdown coupled with deceleration in the domestic manufacturing markets is taking a heavy toll on the state’s export sector.

Data released by the Directorate of Export Promotion and Marketing reveal that the exports from the state have shrunk at 5.6% at Rs 16,139 crore in 2011-2012 compared to Rs 17,099 crore in the previous fiscal. This is in fact the first time since a decade that exports have dipped for Odisha. Back in 2001-02 exports from the state stood at Rs 2,382.33 crore and it kept on growing each year.

The steepest fall was noticed in case of exports of engineering chemical and allied products which nosedived from Rs 612.62 crore to Rs 151.69 crore. Though export of metallurgical products surged from .26 million tons in 2012-11 to .76 tonne in 2011-12, the earnings from export of metallurgical products fell marginally.

Similarly the export of mineral products declined by 5.89% in 2011-12 at Rs 9,257.42 crore as against Rs 9,836.84 crore in 2010-11. Export of marine products from the state also registered a slight decline  from Rs 541.47 crore to Rs 521.34 crore. All other items of exports from Odisha like agricultural and forest produce, handloom and handicrafts, gems and jewelries have taken a beating.

The only silver lining is the export of software products from odisha which registered an increase of 12.79% from Rs 1,254 crore in 2010-11  to Rs 1,414.78 crore in 2011-12.

The reason ascribed to the downfall is the prevailing gloom in global markets which has directly affected the demands.At a time when the entire nation is affected by the slowdown, it is but natural that exports from Odisha also nosedive. But compounding to Odisha’s misfortune was the decision of the state government to ban the export of oron ores following the mining scam. This apart from leading to a dwindle in exports have hit the ports badly. Similarly the agri exports from the state have taken a dip owing to the economic turmoil in the European nations. The Turmeric and ginger from Kandhamal which are high in demand in the European countries for example have gone down this year.

However things would be back to normal in coming days  as ongoing projects under the Development of Export Infrastructure and Allied Activities (ASIDE) scheme would be completed soon.Ongoing projects under the scheme include Ites/Bpo towers, establishment of World trade center in Bhubnaeswar, Auto Park at Mania village in cuttack and Haridaspur-paradeep broad gauge rail link . Other upcoming projects include the aluminum park at Angul and an incubation center at Info Valley at Goudakashipur.

Experts believe that once completed, these projects with active promotional activities by the government will be able to push the exports for the state and Odisha would be able to stage a remarkable comeback.

 

Bhubaneswar – Top 10 Emerging Business Destinations of India

Bhubaneswar

Bhubaneswar - Rising Business Destination of India

The growing might of odisha in the Economic horizons of the country is slowly getting recognized. After having topped the charts among various cities of the countries on different parameters, it is time for yet another achievement.

A recent report by Cushman & Wakefield, the world’s largest real estate services firm along with GIREM, which deals with infrastructure area in future cities have jointly identified Bhubaneswar to be among the “Top 10 Emerging cities in India”.

The findings of the  study which began on the year 2010 and took  48 cities of the country into its sampling has been published recently and rates Ahmadabad as the most promising  business destinations of India.  Cities following Ahmadabad in order of ranking are Vishakapatnam, Bhubaneswar, Chandigarh, Coimbatore, Jaipur, Kochi, Indore, Nagpur and Vadodara .

The report uses various metrics for its findings that include factors such as demographics, physical, social and real estate infrastructure, current level and scope of economic activities and government support and initiatives in determining the growth potential of the cities.

Ahmedabad attracted nearly 39 per cent of the total investments announced for these cities since 2010, followed by Visakhapatnam at 32 per cent and Vadodara at 13.5 per cent. Bhubaneswar comes next by attracting an investment of 11.2%. Apart from notching up a place in the top owing to investment it received, Bhubaneswar has got mentioned in the  report for all together different reasons which goes on to accentuate the rising prowess of the city. The report highlights the availability of quality talent pool across disciplines and specializations in Bhubaneswar, availability of lowest electricity costs in the country and significant presence of IT/TeS sector as prime reason for it being propelled to being one of the cities of the future of the country. Apart from the aforementioned things, activities such as agriculture, mining and metal production are allied sectors that provide a balanced growth to the capital city of Odisha.

The report also highlights the potential of the two cities of Bhubaneswar and Cuttack developing into a 720 sq. km integrated Urban conglomeration including Khurda, Jatani and Choudwar within the city precincts.

Mr.Sanjay Dutt, Executive Managing Director, Cushman & Wakefield India quoted that the emerging locations represent the possible growth trajectory that India’s economy will follow in the next few years. And if his words are taken into account, the future looks especially bright for Bhubaneswar!

mentioned below are the parameters of doing business in a city and how Bhubaneswar ranks overall among other cities of the Country

Ease of Doing Business Rank of Bhubaneswar Among Other Cities of India
Starting a Business      3
 Dealing with Construction Permits      5
Registering Properties      8
Paying taxes     17
Trading Across Borders      1
Enforcing Contracts      5
Closing Business      5