English only · Odia translation in progress

Chapter 3: The Mineral Unlock

On the morning of March 20, 1993, the Parliament of India passed a set of amendments to the Mines and Minerals (Development and Regulation) Act, 1957, that would rewrite the economic geography of Odisha more completely than any policy since the Freight Equalization Policy had frozen it four decades earlier. The National Mineral Policy of 1993, announced the same year, opened India’s mining sector to private capital with a single sentence buried in bureaucratic prose: “In the interest of national development, private investment, including foreign investment, should be encouraged in exploration and mining.” The sentence was unremarkable. Its consequences were not.

Within a decade, iron ore production in Odisha began a climb that would not stop for thirty years. Companies that had never operated east of the Vindhyas — Tata Steel expanding beyond Jamshedpur, JSW arriving from Karnataka, Vedanta bringing global capital to tribal hills, JSPL setting up in Angul, Adani entering the auction rooms — turned Keonjhar and Sundargarh into ground zero of India’s mining boom. Production quadrupled between 2000 and 2024. Revenue surged from under Rs 1,000 crore annually to over Rs 22,000 crore. The state treasury filled. The Budget Stabilisation Fund swelled. NITI Aayog ranked Odisha first in the country for fiscal health.

And yet. Keonjhar, which sits atop more mineral wealth per square kilometre than almost any district on the subcontinent, had 94.1 percent of its households below the poverty line in baseline surveys. Odisha produces roughly 28 percent of India’s iron ore but hosts only about 15 percent of the steel capacity that ore feeds. Manufacturing employment has held at approximately 8 percent for decades — unchanged by the mineral explosion, as if the trillions flowing through the ground had no relationship to the economy built on top of it.

This chapter traces how policy unlocked Odisha’s minerals for private capital after 1991, creating an extraction boom that transformed state finances but not the state’s economic structure. The mineral unlock is a lottery story — a massive infusion of wealth that, without institutional discipline to invest productively, became a lifestyle subsidy rather than a foundation for lasting prosperity. The resource curse literature applies, but Odisha’s version is subtler than the textbook: the curse is not corruption or conflict. It is comfortable stagnation.

The Lock That Was Removed

To understand what liberalization unlocked, you have to understand the lock.

Before 1991, mining in Odisha was a controlled affair. The MMDR Act of 1957 placed major minerals under central government supervision. Mining leases required Delhi’s approval. Coal had been nationalized entirely in 1971-73, with Mahanadi Coalfields Limited — a subsidiary of Coal India, headquartered in Kolkata — becoming the sole entity permitted to extract Odisha’s coal. SAIL controlled iron ore mining through captive mines feeding Rourkela Steel Plant. NALCO, a central public sector undertaking, operated the Panchpatmali bauxite deposit. The Industrial Policy Resolution of 1956 had reserved iron and steel, heavy machinery, and key mineral extraction for the state.

Nobody could mine at scale without government permission, and permission was given to entities the government owned.

The Freight Equalization Policy compounded this. From 1952 to 1993, the central government equalized transport costs for industrial raw materials across the country. An entrepreneur setting up a steel plant in Pune paid the same freight for Keonjhar iron ore as one setting up seventy kilometres from the mine in Rourkela. For forty-one years, FEP eliminated the cost advantage that should have attracted processing industries to Odisha’s mineral belt. The minerals left as raw material. They returned, if at all, as finished goods manufactured elsewhere.

The pre-liberalization numbers capture the contained state. Iron ore hovered at 15-20 million tonnes per year. Coal production ranged from 30 to 40 million tonnes. Mining revenue sat below Rs 1,000 crore annually — significant, but subordinate to an agricultural economy that employed over 70 percent of the workforce and contributed 37 percent of GSDP. Odisha was poor, but its poverty had a particular character: it was the poverty of a region whose wealth was locked underground by regulation.

The lock was not designed to harm Odisha specifically. It was designed to serve Nehru’s vision of dispersed industrialization through state control — the commanding heights doctrine that would build steel plants in tribal districts and hydroelectric dams in peasant valleys for the nation’s benefit. But the lock’s effect was to ensure that Odisha’s minerals served national development without catalysing local development. The value chain operated elsewhere. The revenue authority sat in Delhi. The production decisions were made in Kolkata and Ranchi.

When the lock was removed, the explosion began.

The Explosion

The 1991 economic reforms and the National Mineral Policy of 1993 arrived in the same breath as FEP’s abolition. In theory, this should have been a double liberation: private capital could now enter mining, and the cost advantage of proximity to minerals was restored. In practice, only the first liberation fully materialized. By 1993, India’s industrial geography had calcified over four decades. The factories, supply chains, skilled workforces, and institutional infrastructure were in Gujarat, Tamil Nadu, Maharashtra, and Karnataka. FEP’s abolition did not reverse forty-one years of compounding advantage. It opened a door to a room where the furniture had already been arranged.

What happened instead was a mining boom without an industrial transformation.

The production trajectory tells it plainly. Iron ore, which had been sitting at 15-20 million tonnes through the 1990s, climbed to 30-40 million by 2000-01, then to 70-80 million by 2010-11, and reached 155-160 million tonnes by 2023-24. Odisha surpassed Karnataka and Jharkhand to become India’s largest iron ore producer, accounting for more than half of national output. Coal followed a parallel arc — from 30-40 million tonnes to 239 million by 2023-24, making Odisha the country’s top coal-producing state with roughly 23-25 percent of national output. Bauxite quadrupled to 17.4 million tonnes, giving the state 73 percent of India’s total. Chromite — where Odisha holds 98 percent of India’s reserves — remained a near-monopoly.

The companies arrived in waves. Tata Steel, which had operated in Jamshedpur since 1907, expanded into Kalinganagar with a plant that now produces 3 million tonnes annually and is expanding to 8 million. JSW Steel announced a 13.2 million tonne integrated plant in Jagatsinghpur. JSPL built its 6 million tonne facility at Angul, the largest coal-gasification-based steel plant in India. Vedanta pursued bauxite on the Niyamgiri hills. Adani entered the auction rooms for iron ore and coal blocks. Arcelor Mittal Nippon Steel (formerly Essar) acquired facilities near Paradip. Smaller players — sponge iron manufacturers, pellet plant operators, ferro-alloy producers — proliferated across Jharsuguda, Sambalpur, and the Keonjhar corridor.

Revenue followed tonnage. Mining revenue rose from under Rs 1,000 crore in the mid-1990s to Rs 15,000-25,000 crore by 2020-25. The Odisha Mining Corporation, the state’s own mining entity, posted a net profit of Rs 9,076 crore in a single financial year — 2023-24 — exceeding the total DMF collection of most Indian states. Mining now constitutes approximately 84 percent of Odisha’s non-tax revenue and funds 25-30 percent of the state budget.

The National Mineral Policy of 1993 had recommended “value addition before export.” The recommendation was never enforced. Odisha continued exporting raw ore — and now it exported vastly more of it. The unlock had liberated the minerals without liberating the economy from dependence on them.

The Scramble and the Scam

The explosion was not orderly. When trillions of rupees of mineral wealth become accessible to private capital in a regulatory environment designed for public-sector-paced extraction, the result is predictable. The regulatory infrastructure built for a controlled mining sector — small departments, limited field staff, paper-based monitoring — was overwhelmed by the speed and scale of private entry.

Think of it as a software system designed to handle 100 concurrent users suddenly receiving 10,000. The system does not crash cleanly. It degrades — some requests are processed, some are duplicated, some are lost, and some are exploited through the gaps that overload creates. The mining regulatory system degraded in exactly this way. Permits were processed. Permits were also forged. Ore was extracted legally. Ore was also extracted from adjoining land outside lease boundaries. Volumes were measured. Volumes were also systematically underreported.

The Shah Commission, appointed to investigate illegal mining across India, found the Odisha chapter to be among the most damning. In Keonjhar and Sundargarh districts alone, 22.80 crore tonnes of iron ore had been extracted illegally over a decade — a scam valued at over Rs 59,000 crore. More than 70 companies were implicated, including entities that should have been the regulators: SAIL, Tata Steel, and the Odisha Mining Corporation itself. Of 192 mining leases examined, 176 were within dense forests. Ninety-four lacked environmental clearances. The scale of extraction was so vast and the regulatory apparatus so thin that legal and illegal mining became functionally indistinguishable.

The Comptroller and Auditor General added a different dimension. Between 2020 and 2022, the CAG found that Odisha lost Rs 4,162.79 crore due to systematic undervaluation of iron ore at the assessment stage. The mechanism was straightforward: the average sale price used for royalty calculation was set below actual market realisation, reducing the royalty paid per tonne. An additional Rs 864.45 crore in minor mineral revenue leaked between 2015 and 2022 through classification errors and monitoring failures. The losses are worth stating clearly: even after the 2015 reforms that dramatically improved transparency, the state was losing thousands of crores annually through gaps in the valuation system.

The Shah Commission scam and the CAG findings are not stories of individual corruption, though individuals were corrupt. They are stories of institutional mismatch — a regulatory system scaled for one era encountering an economic reality from another. The 1993 policy opened the floodgates. The institutional infrastructure behind those gates had not been rebuilt to handle the flood.

The 2015 Reset: Auctions, DMF, and the Transparency Revolution

On January 12, 2015, President Pranab Mukherjee promulgated an ordinance that would become the most consequential mining reform since liberalization itself. The MMDR Amendment Act of 2015 replaced the discretionary allocation of mining leases — the system under which politicians and bureaucrats decided who got to mine where — with transparent auctions. Competitive bidding. Highest offer wins. The opacity that had fuelled the Shah Commission scam was replaced with a mechanism that, whatever its imperfections, made the allocation of mining rights visible.

The reform also created the District Mineral Foundation — a concept that sounds bureaucratic until you see the numbers.

Under DMF, mining leaseholders are required to pay a percentage of their royalty into a district-level fund dedicated to the welfare of mining-affected communities. Pre-2015 leases pay up to one-third of royalty; post-2015 leases pay 10 percent. At least 60 percent of DMF funds are mandated for “High Priority Areas” — drinking water, healthcare, education, environment — in mining-affected areas. The intent was clear: the communities bearing the environmental and social costs of extraction should receive direct compensation from the extraction that affected them.

The accumulation has been staggering. Odisha’s cumulative DMF collection stood at zero in 2015. By June 2023, it had reached Rs 23,120 crore. By October 2025, it crossed Rs 34,052 crore — the highest of any state in India, and it is not close. Keonjhar district alone has collected approximately Rs 8,840 crore, making it the highest-collecting district in the country. Sundargarh follows with Rs 5,000-6,000 crore. Angul, Jajpur, Jharsuguda — every major mining district has accumulated thousands of crores in a dedicated fund that did not exist a decade ago.

To put this in perspective: Rs 34,052 crore is larger than the entire annual budget of several Indian states. It is more than the combined GDP of the ten smallest countries in the world. If Keonjhar’s DMF fund were a company, its accumulated corpus would place it comfortably in India’s top 500 firms by reserves.

And here is where the lottery analogy becomes precise. Lottery winners who invest their winnings in productive assets — education, businesses, diversified portfolios — compound the windfall into lasting prosperity. Lottery winners who use the winnings to fund consumption — a bigger house, a nicer car, recurring lifestyle expenses — find that the money runs out, and what remains is a lifestyle they can no longer afford.

Odisha’s DMF sits closer to the consumption end of that spectrum. Only 50-55 percent of DMF funds have actually been spent. Even Keonjhar, with its Rs 8,840 crore collected, has deployed approximately Rs 3,000 crore over seven years. The unspent portion sits in accounts, earning modest interest, while the communities it was meant to serve remain among India’s poorest.

Of the funds that are spent, a significant portion flows to roads, buildings, and water supply infrastructure — necessary but not transformative. The CAG has flagged persistent diversion of DMF funds to non-mining areas and urban centres, violating the mandate to serve mining-affected communities. The 60 percent earmark for “High Priority Areas” is observed in aggregate accounting but blurred in practice: a road built near a mining area benefits the broader population, not specifically the tribal hamlet whose water source was contaminated by overburden.

The governance structure explains why. DMF funds are supervised by the District Collector and controlled by a governing council. Mining-affected communities — mostly tribal, mostly poor, mostly in villages with intermittent electricity and no internet — have minimal voice in spending decisions. They are the intended beneficiaries of a fund governed by people who do not live with the consequences of mining. The structure resembles a trust fund where the beneficiary has no access to the trustee’s meetings.

This is not an argument against DMF. Before 2015, mining-affected communities received nothing directly — royalties flowed to the state treasury and were spent at the state’s discretion, with no earmark for the people living next to the mines. DMF is a genuine advance. But the gap between what DMF collects and what it transforms is the gap between a policy that moves money and a policy that moves power. The money has moved. The power has not.

The Royalty Paradox

The royalty regime governing Odisha’s minerals is a study in contradictions.

India charges the highest iron ore royalty rate in the world: 15 percent ad valorem, meaning 15 percent of the assessed sale value of every tonne extracted. Coal royalties stand at 14 percent. These rates, set by the central government under the MMDR Act, are significantly higher than global comparisons — Australia charges 5-7.5 percent for iron ore, Brazil charges 3.5 percent. By this measure, India captures more per tonne in government take than the world’s other major mining jurisdictions.

But the comparison is misleading in a specific way. Australia’s 5-7.5 percent royalty applies to a jurisdiction where BHP achieves operating profit margins of 54 percent and Rio Tinto’s Pilbara operations run at 67 percent margins — because Australian iron ore is high-grade, close to port, and extracted at enormous scale with minimal processing needed. Australia chose not to build a domestic steel industry. It chose, deliberately, to be the world’s most efficient raw material supplier and to capture value through corporate taxation on mining profits, personal income tax on high mining salaries, and the economic multiplier of a mining services sector that employs 250,000 people and exports $25 billion in services annually.

Odisha’s 15 percent royalty applies to a jurisdiction where the state has no power to set the rate, no corporate taxation authority over mining profits (that is the Union’s domain), and no mining services export industry. The state captures 15 percent of ore value through royalty, plus DMF and other levies, amounting to roughly 8-12 percent of the final steel value when you trace the ore through the entire chain. Compare that with Norway, which captures 78 percent of petroleum value through a combination of royalties, special petroleum tax, and equity participation through its state oil company.

The structural problem is not that the royalty rate is wrong. It is that royalty is the only significant tool Odisha has. The state cannot set corporate tax rates on mining companies — that power belongs to the Union. It cannot control export policy — trade is a Union subject. It cannot mandate that a specific percentage of ore be processed within the state — no such regulation exists at either Union or state level, and the “value addition before export” recommendation in successive National Mineral Policies has remained exactly that: a recommendation.

On July 25, 2024, the Supreme Court delivered a ruling that partially addressed this structural imbalance. In Mineral Area Development Authority v. Steel Authority of India, the Court held that states have the constitutional power to levy taxes on mineral-bearing lands, separate from royalties. The ruling distinguished between royalty (compensation for minerals extracted, governed by the MMDR Act) and tax on mineral-bearing land (a state’s sovereign power under the Constitution’s taxation provisions). The decision was potentially transformative — it gave mineral-rich states a new fiscal instrument independent of central control.

Whether Odisha will use this instrument, and how, remains to be seen. The ruling is recent. Implementation requires state legislation, administrative machinery, and the political will to impose additional levies on an industry that is also the state’s primary revenue source. The mining lobby is powerful. But the 2024 ruling represents the first significant expansion of Odisha’s fiscal sovereignty over its own minerals in decades.

The Announcement Economy

If mining policy governed what came out of the ground, industrial policy was supposed to govern what happened to it afterwards. Odisha’s Industrial Policy Resolutions — issued in 1980, 1992, 2001, 2007, 2015, and 2022 — trace an arc of increasing ambition and increasing generosity with incentives, set against a background of stubbornly unchanged outcomes.

The IPR of 1992, the first post-liberalization version, aligned with the national reform agenda and opened the door to private investment. The 2001 version focused on mineral-based industries. The 2007 version expanded to IT, food processing, and textiles. The 2015 version added private industrial parks and environmental provisions. The 2022 version, the most comprehensive, offered capital investment subsidies of 25-30 percent for mega projects, power tariff subsidies, employment cost subsidies, and tax exemptions for up to twenty years.

Each iteration offered more. Each iteration assumed that sufficiently generous incentives would attract the processing industries that would transform extraction into manufacturing. And each iteration produced the same pattern: large announcements at investment conclaves, followed by modest ground-level implementation.

The pattern has a name in Odisha’s policy vocabulary: the announcement economy.

Make in Odisha 2016 generated investment commitments of Rs 22,507 crore. Make in Odisha 2018 produced announcements of Rs 4.19 lakh crore in investment intentions. When the accounting was done, Rs 15,917 crore had been formally committed — a conversion rate of approximately 3.8 percent. Utkarsh Odisha 2025, the latest iteration under the new BJP government, generated announcements of Rs 16.73 lakh crore in 593 projects. The cumulative actual investment received between 2016 and 2023 was Rs 1.853 lakh crore — substantial in absolute terms, but a fraction of announced intentions.

The gap between announcement and reality is not unique to Odisha. Every Indian state’s investment conclaves produce inflated numbers. But the gap matters more for Odisha because of what it represents: each announcement cycle reinforces the narrative that transformation is happening, which reduces the political urgency to address why it is not. A headline reading “Rs 16.73 lakh crore announced at Utkarsh Odisha” creates the impression of an industrial revolution. The reality of 8 percent manufacturing employment, unchanged for decades, tells a different story.

The IDCO — Odisha’s industrial development corporation — operates 116 industrial estates covering 10,900 acres. For comparison, Gujarat’s GIDC operates 200-plus estates. Tamil Nadu’s SIPCOT manages 50 industrial parks covering 48,926 acres. Scale matters in industrial ecosystem development because clusters create agglomeration effects — supplier networks, shared infrastructure, knowledge spillovers — that individual factories cannot generate. At one-fifth the scale of Tamil Nadu’s industrial infrastructure, Odisha’s estates are not creating the ecosystem conditions under which processing industries naturally cluster.

The deeper failure is conceptual. Each IPR treats industrial development as a matter of incentive design — the right combination of subsidies, tax breaks, and land concessions will attract investment. This approach works when the binding constraint is the cost of doing business. It does not work when the binding constraints are structural: insufficient skilled workers (68 percent of university faculty positions are vacant), inadequate power for heavy industry, thin supplier networks, and the absence of the mid-sized firms — the 50-to-500-employee enterprises — that form the backbone of manufacturing economies.

Consider the analogy from startup ecosystems. Offering generous tax breaks to attract startups to a city works only if the city also has engineers to hire, universities producing research, venture capital firms providing follow-on funding, and a critical mass of companies creating the knowledge spillover environment in which startups thrive. Tax breaks without ecosystem are subsidies into a vacuum. Odisha’s IPRs have been increasingly generous subsidies into a thin ecosystem. The incentives attract individual large projects — IOCL’s Rs 35,000 crore Paradip Refinery, Tata Steel’s Kalinganagar expansion — but they do not generate the ecosystem of hundreds of mid-sized suppliers and service firms that constitute genuine industrialization.

Manufacturing employment at 8 percent — decade after decade, IPR after IPR, conclave after conclave — is the verdict.

The Fiscal Fortress

If the mineral unlock failed to transform Odisha’s economic structure, it succeeded spectacularly at one thing: making the state financially rich.

Odisha’s fiscal position by 2025-26 is, by any Indian standard, extraordinary. The NITI Aayog Fiscal Health Index 2025 ranks the state first nationally, with a score of 67.8. The debt-to-GSDP ratio is among the lowest in India — Odisha is one of only three states (alongside Gujarat and Maharashtra) below the recommended 20 percent threshold. The interest-payment-to-revenue-receipts ratio has dropped from 6.2 percent in 2020-21 to 2.6 percent in 2024-25. Revenue surplus is consistently maintained.

The Budget Stabilisation Fund, designed to buffer against commodity price volatility, has grown to an estimated Rs 20,890 crore as of March 2025. It is held in a dedicated account administered by the Reserve Bank of India, making it one of the few such instruments among Indian states. When iron ore prices dip, the BSF provides fiscal breathing room. When they surge, surplus revenue feeds the corpus.

These are genuine achievements. Compare with Jharkhand — carved from Bihar in 2000, the same year Naveen Patnaik took power in Odisha, with comparable mineral wealth. Jharkhand’s multidimensional poverty index stands at 28.82 percent against Odisha’s 15.68 percent. Multiple chief minister changes, episodes of President’s Rule, and no equivalent of OSDMA or the Budget Stabilisation Fund. Jharkhand is the resource curse without institutional discipline. Odisha is the resource curse with it.

But the fiscal fortress reveals a specific pattern when you examine what the wealth has not built. Mining contributes 84 percent of non-tax revenue. The state’s fiscal health depends on a commodity whose long-term trajectory is uncertain. Green hydrogen-based direct reduction could reduce demand for virgin iron ore. Carbon border adjustment mechanisms in the EU may impose costs on carbon-intensive steel production that uses Odisha’s coal. India’s own infrastructure build-out, which currently sustains steel demand, will eventually plateau. The Budget Stabilisation Fund, at Rs 20,890 crore, is Norway’s Government Pension Fund Global operating at roughly 0.3 percent of the scale, designed for fiscal smoothing rather than productive investment, with no binding spending rule and no structured growth mechanism.

Norway’s fund works because it is paired with a fiscal rule: the government may spend no more than 3 percent of the fund’s expected real return annually. This creates a self-reinforcing cycle — the fund grows in good years, spending is constrained in all years, and the corpus compounds over decades into a post-oil endowment. Odisha’s BSF has no such rule. It is a buffer, not an endowment. It smooths revenue volatility without building a post-mineral productive base. The state is saving prudently while the ground beneath the savings is being emptied.

I should be honest about my uncertainty here. Whether commodity markets will shift dramatically in the next 10-15 years is something I cannot predict with confidence. India’s infrastructure demand may sustain iron ore prices for longer than climate-transition models suggest. The coal transition may be slower in South Asia than in Europe. But the structural observation holds regardless of timing: fiscal health built on extraction is inherently temporary. The question is not whether the mineral wealth ends, but whether Odisha will have built something else before it does. Current policy does not suggest a plan for that transition.

The Pattern: Extraction Without Transformation

Read together, these policy strands — the 1993 liberalization, the Shah Commission revelations, the 2015 auction reform, DMF, the royalty structure, the industrial policy resolutions, the fiscal position — tell a single story. Odisha unlocked its minerals. The unlock generated enormous wealth. The wealth improved state finances and funded welfare. It did not transform the productive structure of the economy.

The pattern has a name in development economics: the resource curse. But Odisha’s version is not the textbook resource curse of Nigeria or Venezuela, where mineral wealth funds kleptocracy, conflict, and institutional collapse. Odisha’s institutions have not collapsed. Its fiscal management is exemplary. Its democratic processes are intact. The Shah Commission scam was large, but the response — auctions, DMF, enhanced monitoring — was genuine. The state is not failing.

It is stagnating.

The distinction matters because it determines what kind of intervention is needed. A failing state needs emergency measures — anticorruption drives, institutional rebuilding, crisis governance. A stagnating state needs something harder: a deliberate decision to disrupt a system that is working well enough. When poverty is declining, healthcare is expanding, fiscal health is India’s best, and per capita income is converging toward the national average, the political argument for structural transformation — “why risk what works?” — always defeats the argument for it — “but it could work so much better.”

This is the resource curse as comfortable stagnation. The minerals produce revenue. The revenue funds welfare. The welfare wins elections. The elections produce governments committed to the same model. No single actor — not the state government, not the mining companies, not the beneficiaries, not the political parties — has an incentive to change a system that serves their immediate interests. The extraction continues. The transformation does not follow.

The DMF numbers crystallize it. Rs 34,052 crore collected. Mining-affected communities — the tribals of Keonjhar, the Adivasis of Sundargarh, the forest dwellers of Koraput — remain among India’s poorest. The money moves through their districts without transforming their lives because the institutional mechanisms to convert revenue into productive capacity — skilled workers, local enterprises, processing facilities, community-controlled investment — do not exist. The money funds consumption: roads, buildings, water tanks. It does not fund transformation: technical institutes, incubators, processing cooperatives, the institutional infrastructure that would allow mining-affected communities to participate in the value chain rather than simply receive compensation for being affected by it.

The fiscal fortress is real. What it is fortifying against is the wrong risk. The risk to Odisha is not a cyclone or a fiscal crisis. It is the slow, comfortable depletion of a non-renewable asset without building the renewable capacity — human, institutional, industrial — that would outlast the ore.

What Would Have to Change

I want to be specific about what “transformation” would actually require, because the word is used so loosely in policy documents that it has lost its meaning.

Transformation would mean that a tonne of iron ore leaving a mine in Keonjhar is more likely to become steel in Odisha than outside it. Currently, the state produces roughly 155-160 million tonnes of iron ore and has about 20-22 million tonnes of crude steel capacity — meaning the vast majority of ore leaves for processing elsewhere. Closing this gap would require 30-50 million tonnes of additional steel capacity within the state, at a capital cost of Rs 1.5-2.5 lakh crore, taking seven to twelve years to build. I believe with roughly 60 percent confidence that this is achievable by 2040 if policy is deliberately reoriented. What would have to be true for this to be wrong: if global steel demand contracts sharply due to material substitution, if India’s infrastructure cycle peaks before 2030, or if energy costs in Odisha remain uncompetitive.

Transformation would mean that DMF funds are controlled by mining-affected communities, not administered on their behalf by district collectors. This is not a technical reform. It is a power redistribution. The current structure — fund collected locally, decisions made centrally — mirrors the colonial extraction pattern at the district level. Genuine community control would require elected DMF governance bodies with tribal representation proportional to affected population, independent auditing, and community veto over spending decisions. No government has proposed this because it would create autonomous power centres in mining districts that are currently governed through the state’s patronage network.

Transformation would mean that industrial policy stops being an incentive design exercise and becomes an ecosystem construction project. Tax breaks attract individual factories. Ecosystem construction — SIPCOT-scale industrial parks, polytechnics producing processing-specific skills, supplier development programmes, research partnerships between NIT Rourkela and local industry — creates the conditions under which factories create more factories. The difference is between planting a tree in a desert and building a forest. One requires a subsidy. The other requires a system.

Each of these changes is technically feasible. None requires technology that does not exist or resources that are unavailable. What they require is a willingness to disrupt a system that is, by every conventional metric, succeeding. And that is the mineral unlock’s deepest legacy: it made Odisha rich enough that the argument for structural change became almost impossible to win.

The next chapter turns from extraction to welfare — the architecture of social protection that the mineral revenue funded. The Welfare Architecture examines how KALIA, BSKY, Mission Shakti, and Subhadra built a genuine safety net that improved tens of millions of lives, and why that safety net simultaneously removed the political imperative for the economic transformation it was meant to support.

Sources

Cross-references to SeeUtkal series

Government and institutional sources

  1. Department of Steel and Mines, Government of Odisha — mining revenue, mineral production statistics
  2. DMF Odisha portal (dmf.odisha.gov.in) — district-wise collection and expenditure data
  3. Indian Bureau of Mines — mineral production statistics, state-wise breakdowns
  4. Comptroller and Auditor General — audit reports on mining revenue undervaluation (2020-22), DMF fund utilisation, minor mineral revenue leakage (2015-22)
  5. Shah Commission (M.B. Shah Commission of Inquiry) — illegal mining in Odisha, Keonjhar and Sundargarh findings
  6. NITI Aayog — Fiscal Health Index 2025, Multidimensional Poverty Index 2023
  7. Odisha Finance Department — Fiscal Strategy Paper 2025-26, Budget Stabilisation Fund data
  8. Reserve Bank of India — State Finances: A Study of Budgets 2024-25
  9. PRS Legislative Research — Odisha Budget Analysis 2024-25, 2025-26
  10. Ministry of Mines — National Mineral Policy 1993, National Mineral Policy 2019
  11. MMDR Act, 1957 (as amended in 2015, 2021, 2023) — legislative text
  12. Supreme Court of India — Mineral Area Development Authority v. Steel Authority of India (2024)
  13. Odisha Mining Corporation — annual reports 2023-24
  14. IDCO — industrial estate data, investment facilitation statistics
  15. Make in Odisha / Utkarsh Odisha — investment conclave data (2016, 2018, 2025)

Academic and research sources

  1. Firth and Liu, Cornell University — Freight Equalization Policy and regional underdevelopment
  2. Pulin B. Nayak et al., The Economy of Odisha: A Profile (OUP, 2016)
  3. Felix Padel and Samarendra Das, Out of This Earth: East India Adivasis and the Aluminium Cartel (Orient BlackSwan, 2010)
  4. Acemoglu, Johnson, Robinson, “An African Success Story: Botswana,” in Rodrik ed., In Search of Prosperity (Princeton, 2003)
  5. Einar Lie, “Learning by Failing: Norway’s Stumbling Road to Petroleum Wealth,” Scandinavian Economic History Review (2018)
  6. Ross, Michael L., The Oil Curse: How Petroleum Wealth Shapes the Development of Nations (Princeton, 2012)
  7. Frankel, Jeffrey A., “The Natural Resource Curse: A Survey,” NBER Working Paper 15836 (2010)

Journalism and reporting

  1. Down to Earth — “M.B. Shah Commission: Odisha’s mine of scams exposed”
  2. Business Standard — “CAG exposes diversion of DMF funds” (2026)
  3. Mongabay India — “Odisha diverts DMF funds to urban areas”
  4. Sambad English — “OMC among top 5 mining companies in India” (2025)
  5. The Wire — coverage of MMDR amendments and auction system
  6. Scroll.in — mining governance and tribal displacement reporting
  7. LiveLaw — Supreme Court 2024 ruling on state taxation of mineral-bearing lands
  8. The Hindu BusinessLine — Make in Odisha and Utkarsh Odisha conclave coverage