Unlike economists, politicians, especially in a democracy, have no choice but to deal with the people. The chief minister of Orissa, Naveen Patnaik, faces a politician’s challenge of making a major economic venture acceptable to the people. The steel project proposed to be built by the South Korean firm, Posco, in Orissa could truly be a momentous happening. Estimated to cost Rs 52,000 crore, it would be the biggest foreign direct investment in India. The proposal is clearly a testimony to the faith that India has been able to inspire among investors around the globe. But the dilemma that Mr Patnaik faces reflects a mismatch between this faith and the people’s perception of the benefits from such economic enterprises. The reason why Posco chose Orissa for the project is obvious. The state’s reserves of good-quality iron ore have also attracted several Indian steel firms. But if the Posco project has not made much progress in the past two years, it is because the people who would be displaced by it are not convinced about its benefits to them. It is a truism that natural resources do not create wealth unless they are put to economic use. Orissa’s grinding poverty only illustrates this.

Persuasion, rather than force, is the only option available to Mr Patnaik. He can draw his lessons from the events at Nandigram in West Bengal, where a proposal for a chemical hub had to be abandoned by Buddhadeb Bhattacharjee following violent mass protests against it. But both the Centre and the state governments should ask themselves why the common people are getting increasingly worried, rather than enthused, about big investment proposals. For long, governments ignored the people’s anxiety about losing their land and livelihoods to large industrial ventures. The protests at Nandigram, Jagatsinghpur and elsewhere in the country have forced New Delhi to recently draft a relief and rehabilitation policy. Even the Supreme Court has frowned on attempts by governments to acquire farmers’ land in the name of “public good” and hand it over to private entrepreneurs. While there is reason to be optimistic about the country’s gross domestic product reaching nine per cent, the seamier side of development can no longer be overlooked. Mr Patnaik has to be inventive in order to win over the sceptics. It is not an easy task, but the cost of not trying can be very high.