Why India could remain forever poor

If there is one story that contains in it all the reasons why India remains a poor country, it is the story of the Vedanta aluminum refinery in Odisha. Now that economic reforms are back on the government's agenda, it is a story I hope high officials, high-minded judges and busybody NGOs listen to carefully. Why do I tell it this week? Because earlier this month, Sterlite Industries gave notice that they are closing their Lanjigarh refinery because it is bleeding to death. It has lost Rs 2,500 crores trying to stay alive these past two years. When it closes, 6,500 people will lose their jobs in one of India's poorest districts.

On a tour of Kalahandi's villages, during the 1987 drought, I saw poverty so horrific that memories of children dying slowly in barren mud huts remains etched painfully not just in my mind but in my heart. The rains failed that year so the economy based on a single annual crop collapsed and thousands of Adivasi families were forced to live on a diet of birdseed and mango kernels for months. Women started selling babies they could not longer feed.

You would think then, would you not, that if someone was prepared to bring investment to such a desolate place he would be applauded, welcomed with open arms. The very opposite happened and for the wrong reasons. The first people to start protesting against Vedanta were foreigners. Had the refinery functioned on bauxite from the nearby Niyamgiri hills, aluminum could have been produced in Lanjigarh at $1,500 a tonne, instead of the global cost of $2,050. This caused alarm bells to start ringing in the ears of the international aluminum industry and soon powerful foreign NGOs appeared in Kalahandi to stop the project. Greenpeace and Amnesty International are still there supposedly to protect the interests, and sacred hills, of forest-dwelling Adivasi tribes.

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