A few months ago, we discussed the concept of 'resource curse' twice. First, comparing Chile and Venezuela, and second, Kerala's remittance income.
The principle is simple. When countries or regions are rich in natural resources, they have less incentive to diversify, reform, and chase higher growth. Academia often see India's mineral-rich eastern states of Odisha, Jharkhand and Bihar through this lens.
However, it seems that Odisha might have hit the silver bullet. Its power sector reforms over the last two decades might finally pay off and turn its fortunes.
The First Round of Reforms
In 1999, Odisha privatised all four distribution companies (discoms). The hope was that private players would cut losses and attract investment. It did not work. They inherited weak networks, high theft, and poor payment discipline. A super-cyclone damaged the grid, and the private sector player walked away. The state had to take the companies back.
The root cause was a policy flaw. Before privatisation, the state inflated Grid Corporation of Odisha's asset values two to three times. Gridco's buys electricity from generating companies and sells to discoms. Since Gridco charged discoms based on these values, its annual charges jumped sharply. Discoms tried to pass this to consumers by raising tariffs but couldn't succeed. Tariffs rose, but also power theft and overdue bills. They cut capital expenditure, impacting rural networks. Over the years, discoms even defaulted on Gridco payments.
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Reform 2.0: The Redesigned Model
Despite the first failure, the state didn't walk away from reform. It tried privatisation again around 2017, and this time Tata Power stepped in. Between 2020 and 2021, Tata took charge of all four discoms. The new model had fixed most issues from the past. Here's a comparative analysis of the two rounds:
Network strengthening initiatives, including conductor replacement, new feeders, automation and operational improvements, such as smart metres, energy audits and consumer indexing, reduced losses and arrears while making systems more resilient. The model even sustained severe events like Cyclone Yaas.
Power Connection In Industrial Growth
In the last few years, Odisha's power sector has quietly become the engine behind its industrial growth. More reliable distribution means energy-intensive sectors face fewer outages, cutting operational risk. Lower distribution losses have changed the economics of the grid. Odisha doesn't depend on tariff subsidies, leaving more financial room for welfare and industrial development.
The numbers tell the story. In FY24, Odisha's per capita electricity use was 2,191 kWh (kilowatt-hour). That is 57% above the national average of 1,400 kWh. Between FY20 and FY24, it grew at 9% compound annual growth rate, more than double the 4% all-India rate. The Economic Survey notes that the industrial sector has been driving this rise — a sign that more factories are being built.
In the last few years, various industries have expanded their footprint in East India through Odisha. They include metals, clean-energy manufacturers, EV-material makers, green fuel, lab-grown diamonds, food processing, textiles, electronics, pharmaceuticals, biotech, and port-based logistics.
The state divides power incentives into two groups, viz. priority and thrust sectors.
Priority sectors cover metal downstream units, agro-processing, IT services, speciality steel, etc. These industries pay no electricity duty for seven years, get a Rs 2-per-unit discount, and big reductions on renewable-power costs.
Thrust sectors cover aerospace, defence, automobiles, chemicals, white goods, textiles, etc. They get the same benefits for 10 years rather than seven, plus higher capital support.
Green hydrogen and ammonia receive the strongest package of all: a Rs 3-per-unit discount, a 20-year duty waiver and long-term relief on renewable power costs.
All of this turns Odisha's low-cost electricity into a clear industrial advantage.
Final Take
Reforms are messy, but Odisha shows what happens when you keep at it. The state fixed its power sector piece by piece, even after the first attempt collapsed. It's a lesson for other state power companies that are stuck with high debt, low revenue, and weak networks. Also, it shows us that a resource‑rich state doesn't have to fall into the usual trap. It can rewire the economy.
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.
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