District Zero: (Un)Make in Nabarangpur

WATCH VIDEO: District Zero: (Un)Make in Nabarangpur

The factory is the sole flag-bearer of India Inc. in the 5,291-sq-km district that has 12.2 lakh people, of whom nearly 56 per cent are tribals. The B K Birla group company has an automated plant for manufacturing fibre boards that are used to make furniture, partitions and packing material. The only other industry in Nabarangpur is the smattering of cashew processing units, about five in the district headquarters, all small-scale units that employ about 50 workers each.

Though the Mangalam factory has been in operation for the last three decades — it started off making medium-density fibre boards in 1985 — there is not a single ancillary unit in its vicinity or on State Highway 39, which bifurcates Nabarangpur laterally. And so, when a bearing broke at the factory on August 21, the reinforcement had to be rushed in all the way from Kolkata. “That’s the only option we have in such cases. But there was a problem of alignment with that bearing we got from Kolkata — our staff who gave out the specifications on phone must have got something wrong. We found out only when the bearing reached the factory two days later. A second reinforcement had to be called for and that came only on August 25. We lost nearly five days of production for a broken bearing,” says P Ravi Kumar, senior accounts manager at Mangalam Timber.

The problems are not restricted to ancillaries alone. The gap between demand and supply of trained labour is yawning. Of the 32 students who cleared their two-year electronics-mechanical certificate course last year at the government-run Industrial Training Institute (ITI) in Umerkote, 60 km from Nabrangpur town, only three landed jobs. D K Dalai, a part-time guest instructor at the ITI, knows his students “do not stand a chance” in job interviews, considering that a majority of them are tribals from an extremely backward belt, almost all of them hobbled by lack of confidence, poor communication skills and “weak basic education”.

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Nabarangpur District Collector Rashmita Panda, a 2010 batch IAS officer, admits that the lack of employment avenues is worrying, especially since at least three districts adjoining Nabarangpur are affected by left-wing extremism. “We are working on getting a food processing unit in the district… a maize processing plant,” she says.

The factory’s experience, though, is less than promising. “The industry gets no benefits from the state government. There is no commitment on facilitating the supply of raw materials or skilled labour,” says a Mangalam executive in charge of logistics at the company’s Kolkata headquarters who spoke on condition of anonymity.

Over these years, Mangalam’s patchy fortunes, which include an extended stint with the Board for Industrial and Financial Reconstruction, have mirrored the district’s tryst with industrialisation. As a sign of the tough times, the number of employees at the firm got whittled down from the sanctioned strength of 800-odd to about 600 — 200 permanent workers and 400 casual ones. Most of the employees at Mangalam Timber are from outside the district.

No rail, poor roads
The bleak industrial landscape of Nabarangpur contrasts with the macro picture of industrialisation in Odisha. Overall, the state achieved a growth rate of 8.78 per cent in real terms (at market prices) in 2014-15, unaffected by the slowing national GDP growth.

In recent decades, the state economy has gone through a structural shift — from agriculture to industry and the services sector. But Nabarangpur has signalled a break from that trend, with the district’s footprint in Odisha’s productivity and output map almost invisible.

At Mangalam Timbers, things are looking up, though only just. While MDF boards, Mangalam’s main product, is seeing an uptick in demand, there is the problem of cheaper imports landing in from China, Sri Lanka, Vietnam and Malaysia.

According to the latest estimates in the state government’s Economic Survey, the real per capita net district domestic product (a sign of districts’ growth) in 2010-11 was the lowest for Nabarangpur and the highest for Jharsuguda district.

At Mangalam Timbers, things are looking up, though only just. While MDF boards, Mangalam’s main product, is seeing an uptick in demand, there is the problem of cheaper imports landing in from China, Sri Lanka, Vietnam and Malaysia. “In Nabarangpur, we even have to worry about the yuan depreciation. If cheaper Chinese imports come in, they could have a bearing on our business,” says Kumar, the accounts manager at Mangalam.

Besides these ‘external’ worries, there are inherent infrastructural constraints that contribute to Nabarangpur’s industrial gloom. For one, the district it is still not connected by rail – giving it the ignominious distinction of being among a handful of district headquarters in the country that are still to be connected by a rail head. That, in some ways, explains the absence of ancillary units around Mangalam.

Without a railway line, it takes seven hours by road to Vishakhapatnam, the nearest big city.

“Our business suffers as finished goods have to move by road. It can take up to 10 days for a truck to get to a distribution centre,” says Kumar. In contrast, neighbouring Koraput district has a sizeable number of small and medium enterprises, including a NALCO smelter and an HAL factory.

Banko Bihari Bissoyi, a journalist in Nabarangpur who has paid a visit to the collector’s office, says, “The fact that the district headuarters doesn’t have a railway line, even 70 years after Independence, is a reflection of the state government’s lack of interest in pushing through development. That itself is a disincentive for industry.”

The road leading to the factory is part of that “disincentive”. Lined on either side by timber-laden trucks, it is a panchayat road but other trucks use it as a bypass, says Promod Kumar Panda, office manager at Mangalam. He says that explains the district administration’s reluctance to repair it. “They want the company to do the maintenance, which doesn’t make practical sense for us,” he says.

The only bright spot is the road from Visakhapatnam to Nabarangpur via Koraput — a large part of it the National Highway and State Highway 39 — which is surprisingly well maintained, despite the heavy rains towards the end of a rather tepid monsoon this year.

Lack of electricity is another challenge. The automated manufacturing plant at Mangalam is dependent on a reliable power connection to produce the fibre-boards. “There are days when at least 15 major trippings happen, each leading to loss of raw material. The company is installing a captive unit now,” says Panda, the office manager.

He claims the situation was better in the past, in the late nineties, when private sector companies — US-based AES Transpower and BSES (now Reliance Infra) — ran the four electricity distribution utilities in Odisha. Earlier this year, the government-run Gridco took over the management of the discoms. “Now, the situation is terrible,” he says.

No labour, newer worries
Labour is another bugbear. At 46.43 per cent, Nabarangpur has the lowest literacy rate among Odisha’s districts while Khorda was estimated to be the most literate at 86.88 per cent, according to the 2011 Census. Despite having an ITI in Umerkote, Panda says hiring good hands continues to be a challenge. “We struggle to get trained hands who can start off on the shop floor right after they join,” says Panda.

Lack of training means accidents. Five years ago, on April 14, 2010, a fire at the hydraulic room of the company’s factory halted more than a week’s work and disrupted about half the manufacturing process. The factory incident was attributed, in part, to the lack of safety compliance.

The looming Naxalite threat in the region too has played a role in keeping industries away. Though Nabarangpur has been largely insulated from the red corridor that envelopes its neighbouring districts in Orissa and Chhattisgarh, there have been stray incidents. In March 2014, an alleged Maoist camp operating in the jungle under the Raighar police station limits, near the border with Chhattisgarh, was busted by security forces.

Mangalam may have withstood these odds, but now there are newer challenges — a growing alarm among locals and activists that the eucalyptus trees, the primary raw material for the boards, is depleting groundwater. “Earlier, tubewells had to only go down to 40-50 feet to get water… now we have to dig up to 150 feet,” says Bissoya, the journalist.

No year for cashew
The story of Nabarangpur’s industrial collapse gets reinforced by the declining fortunes of the handful of cashew processing plants. With cashew rates down, this, undoubtedly, is a bad year for those in the business. That it’s a bad year for cashew, and maize, is corroborated by the drop in loans for motorcycles this year at the State Bank of India’s Nabarangpur branch — down by over 40 per cent, according to a bank official.

Cashew processing in Nabarangpur starts in April, when most of the raw cashewnut comes from neighbouring Andhra Pradesh. The processing broadly goes through five labour-intensive processes — steam roasting, shell cutting, peeling, grading and packing — and all of these involve unskilled labour, something that shouldn’t have been in short supply in Nabarangpur, which has a large tribal population, most of them either unemployed or underemployed. But the biggest problem that these cashew units face is of labour shortage.

“Despite the lack of employment in these parts, labourers simply does not turn up for work. Until some years ago, at about 7 am in the morning, they would be knocking on our doors to be picked for the day’s work. Now, we send a vehicle to pick them up, but very few agree to come. We spend Rs 500 on the vehicle,” says Prabash Pradhan, owner of Mangala Cashew Industry. Mangala is one of the 12 large cashew units in the district, of which five are in Nabarangpur town. Nearly all of them face labour shortages.

Across the state, labour constraints in the agriculture sector have mirrored the Nabarangpur experience. In 2014-15, the agriculture sector contributed about 15.4 per cent of the GSDP of Odisha, which traditionally has been an agrarian state. Industry and service sectors contributed about 33.4 per cent and 51.2 per cent of the state’s GSDP. The shift to services and industry has helped Odisha bring down its poverty rates from 57.20 per cent in 2004-05 to 32.59 per cent in 2011-12, according to data from the latest state Economic Survey for 2014-15.

Owners of the cashew units blame government doles for the lack of interest among tribals to take up work in Nabarangpur’s cashew factories. “They get 30 kg of rice at Re 1 and if there are three ration cards in a family, that makes it 90kg. That a lot of rice. So they don’t have to work,” says Pradhan.

A year ago, Pradhan shut his ‘poha mill’ after he found it difficult to get the five labour hands needed to run it. Erratic electricity added to the problem. “Without electricity, the rice that is soaked in water (to make poha) gets ruined. It’s tough to run a business like that.”

Workers are paid according to the amount of cashew they process. They get about Rs 15 a kg and make about 250 a day. For the largely tribal workforce, though, there are more appealing choices. “This (cashew processing) is a seasonal business. We prefer working in the fields where there’s work to be done round the year,” says 31-year old Diganto Jani, who used to work in a cashew mill earlier.

For the cashew unit owners, though, it’s a double whammy of sorts. Apart from the labour shortage problem, there is the added issue of taxes. “There’s a 4 per cent VAT and a 1 per cent entry tax on inputs coming in from outside the state. We get about Rs 3,500 per 10 kg·, excluding labour wages and electricity. That’s not enough to keep this business running. I’ll soon have to decide if I should close the cashew unit too, like my poha mill,” says Pradhan.

The SBI e-corner has cut down transactions at the branch by half.

A happy transaction: an SBI e-corner

India’s poorest district may not typically qualify as the setting for the launch of a tech-heavy banking solution. But that’s just what the State Bank of India’s é-corner’, which opened late last month, is about. Inside the é-corner, which is right next to the bank’s Nabarangpur branch, is a cash machine that accept deposits up to Rs 49,000, an automated teller machine and an internet kiosk where-passbooks can be updated and money transfers done.

The SBI ‘e-corner’ is the first such facility in the larger ‘undivided Koraput’ region — comprising Kalahandi, Bolangir and Koraput or KBK. Nabarangpur was part of Koraput until 1992, when it was carved out and made into a separate district. In just the first two days of the launch of the é-corner, the main branch recorded a drop in daily transactions – down to about 550 transactions a day from the earlier 1,000.

“This could be because of the é-corner,” says A Patnaik, manager, loans, at the SBI’s Nabarangpur branch, adding that the idea was to get “high-value customers”, especially cashew unit owners, transporters and maize cultivators, to use these machines. S P Majhi, a paddy cultivator and an advocate, is one of them. Among the “high-net-worth individuals” of Nabarangpur, Majhi, who also owns a PDS shop, is waiting in line to enter the e-corner. “I can come here whenever I want, after I finish my business and am free for the day. I like that convenience,” says Majhi.

Nabarangpur has 12 nationalised banks, three private banks and one rural bank – a highly competitive banking scene for a district such as this. An SBI official says that with the e-corner, they hope to appeal to younger customers who, he says, are enamored by private sector banks. “The proliferation of banks is because Nabarangpur is a district headquarter. SBI’s e-corner is the first in undivided Koraput and is a product innovation that others are likely to follow,” says Collector Rashmita Panda.