File picture of a mine in Odisha

Bhubaneswar, Aug. 5: Odisha is facing the consequences of an economic downturn made worse by a multi-crore scam hitting the mining sector.

Lack of mining activity has adversely affected all sectors of state’s economy including transport and industry. Emblematic of the present crisis is the decision of DTDS Travel and Tour Planner Private Limited, a Bangalore-based company, to close down its air service between Bhubaneswar and Calcutta barely two months after it was launched.

The company’s sales manager, east, Shyamal Chakra-borty, said: “We had launched the service with great hopes. But there seems to be no business and we were forced to cancel our regular service. However, if someone wants to charter a plane, we are ready to offer our services.”

The service had been launched with an eye on tapping the potential created for short distance flights by the mining boom in the state a few years ago. The flights between Bhubaneswar and Calcutta had been planned with stops in Rourkela and Jamshedpur, both close to the mining belt of Sundergarh and Keonjhar.

But there are no takers for the service now. “We found it hard to get even four passengers for a flight,” Chakraborty said.

Sources in the government said the situation was unlikely to improve in the near future with only 124 of the state’s 600 mines in working condition.

An official said that the remaining mines were forced to stop operations following a statewide crackdown that began in July 2009 after a multi-crore illegal mining scam surfaced. The stoppage of activity in these mines had left thousands unemployed, including those working at the hotels and eateries that used to flourish in the belt.

Sudhir Nayak of Keonjhar has been forced to sell one of his four trucks at a throwaway price because there was no business. “My other three trucks are standing idle and now the banks are after me. I am playing a hide-and-seek game with them because I am unable to repay my Rs 19 lakh loan that I had taken to buy the trucks,” he said.

With Nayak out of business, the people he had employed as drivers and helpers are also looking for jobs.

Around 20,000 truck operators who lived on the mining business in Keonjhar have been badly hit. Luna Mohapatra, another transporter, said even roadside eateries, whose customers were mainly truck drivers and helpers, had been forced to down shutters.

Admitting that recession had hit the state, finance secretary Jugal Kishore Mohapatra said revenue collection had plummeted by around five per cent. While the growth rate of tax collection in the first quarter of the current financial year should have been 20 to 21 per cent, it had slipped to 15 per cent.

For the current financial year, the state government has set itself a target of collecting Rs 12,000 crore in taxes. However, it may be hard to achieve considering that last year it had fallen short by at least Rs 500 crore against a target of Rs 10,000 crore.

Industrial growth, too, seems to have slackened with big projects facing major hurdles. While the Rs 52,000-crore Posco steel project is making no headway, Vedanta Aluminium Limited’s expansion plans have gone into a limbo.

However, Vedanta chief operating officer Mukesh Kumar said: “We have been hit not so much by the recession as the government’s red tape.”

He said though the company had invested Rs 45,000 crore in the state, it did not get adequate support from the state government. “We have neither got the bauxite mines nor the coal linkages. Besides, the state government forced us to pay for water, which we are actually not using,” he said, adding that industries could not grow unless the government created an industry-friendly climate.

Statistics indicate a slowdown on the industrial front. Though the government has signed 90 memorandums of understanding for setting up industries including 50 steel and 30 power projects, only 35 have so far gone into production and that too, partially. No major projects have been taken up during the last one year.

On the other hand, with the decline in iron ore exports since last year following a government crackdown on the mines, Paradip port has also been badly hit. In the first quarter of the current fiscal (April-June), the port handled six million tonne of cargo as compared to 13 million during the corresponding period of the last financial year, said the port’s traffic manager, Kishore Kumar Sahu.

The port, which handled 54.2 million tonne of cargo last year, has set itself a target of 63 million tonne this year. But given the recessive trend of the economy, that may be hard to achieve.

No work has been initiated on the 14 proposed special economic zones in Sambalpur, Jharsuguda, Ganjam, Khurda, Jajpur, Jagatsinghpur, Kendrapara and Cuttack districts.

The proposed alumina park of the National Aluminium Company in Angul, the downstream park by Jindal Steels at Kalinga Nagar in Jajpur district and another at Parjang in Angul district remain non-starters.