Picking up the tab for industrial growth

 
Published: Saturday 04 July 2015

NO OTHER region of India has paid a heavier price for India's industrialisation than the Damodar valley, which traverses the poor states of Bihar and West Bengal. Rich in coal resources, the region has been extensively mined for this valuable mineral, which energises domestic hearths and industrial furnaces throughout the country. Locally, numerous industrial projects ranging from coal washeries to steel plants and coal-based power plants have sprung up because of the easy availability of coal.

The ecological burden of all this industrial activity has been borne by the poor of the Damodar valley, who depend heavily on their environment for survival. The Damodar is extremely polluted now, suffering as it does from both industrial effluents and rainwater run-off, carrying mine rejects and flyash from power plants. Even so, many of the villages in the region depend on the river for their drinking water needs and most of the towns get only partially treated and chlorinated river water. The situation, to put it mildly, is awful. There is little monitoring and control and even public sector companies lack concern for ecological protection.

What options does the government have to improve the region's ecology and make life there a little more livable? One option would be to continue developing the region by exploiting its mineral resources, but also investing the massive amounts of money needed for end-of-the-pipe treatment plants. In other words, this option would continue to create pollution, but would invest in treatment plants to control it.

This is an extremely expensive option and even in the West, only a few governments have been able to afford it. Nevertheless, this is the option the Indian government is pushing through its National River Action Plan. It is still not clear how the state and Central governments, which have to share the costs, will be able to raise funds for both capital investment and operational expenses. Damodar valley industries are obsolete and need large sums just for their modernisation. It is unlikely they will be able to generate funds for anti-pollution investments. Given the region's high level of unemployment and poverty, its political leaders, including those clamouring for a new state, are not likely to be perturbed by such issues as quality of life and purity of river waters.

Another solution would be to increase the price of coal so that treatment plants in the region can be financed. A side-effect of this is industry would use coal more efficiently. However, as the government is keen on increasing the use of coal so as to save on the foreign exchange needed to import oil, the price of coal is going to be limited by the prices of other energy sources. Otherwise, the government must have a clear policy to fix the prices of all energy sources so they reflect their total ecological and social costs. But the government, engrossed in restructuring the entire economy, is unlikely to heed the Damodar region's ecological woes.

The demand for coal is expected to increase by leaps and bounds in the next two decades, resulting in ever-greater pressure on the Damodar valley's forests and water resources. There will be equally heavy pressure on the region to continue to subsidise the nation's industrial growth. But in the course of time, the country could very well switch to natural gas, forcing the region to produce coal even more cheaply.

A third solution would be to opt for a totally new form of industrial development that is not as polluting. This strategy would require new investments in industrial plants and skills training. This could result in massive employment in the interim. Here, too, there is no reason to believe the government has the funds to undertake a major industrial transformation.

The Damodar valley's future, therefore, is not only bleak, but is sure to get worse. And, nobody as yet knows of a way out of this dilemma, which is very similar to what most East European countries face today.

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