ORISSA'S BJD PARTY PROMOTES STATE INTERESTS AND

UNCLAS SECTION 01 OF 02 KOLKATA 000189

SENSITIVE
SIPDIS

DEPT FOR SCA/INSB

E.O. 12958: N/A
TAGS: PGOV ECON IN
SUBJECT: ORISSA'S BJD PARTY PROMOTES STATE INTERESTS AND
DISADVANTAGED COMMUNITIES

REF: A. KOLKATA 67

B. 08 KOLKATA 330

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1. (SBU) Summary: CG travelled to Orissa in June to congratulate
Chief Minister Naveen Patnaik on Biju Janata Dal's (BJD)'s best
electoral performance since the party was formed in 1997. The
impressive performance of the regional party in the 2009
parliamentary and state elections validated the party's decision
to break with its erstwhile National Democratic Alliance ally,
the Bharatiya Janata Party (BJP). Without its 11-year old ally,
the BJD won 14 of 21 parliamentary seats and 103 of the state's
147 assembly seats. The BJD capitalized on voters' disaffection
with the central government and promoted state-centric policies
and programs supporting economically disadvantaged populations.
Patnaik also courted women and minority communities and
projected a clean image as an effective leader. CG met with a
range of senior political leaders, government officials,
journalists, tribal community representatives and international
NGOs to prepare this report.

Secret of Success: Win Over the Disadvantaged


2. (SBU) According to BJD's chief election strategist, Raja
Sabha MP Pyari Mohan Mahapatra, BJD's populist policies, such as
heavily subsidized rice, clinched the elections for the BJD.
Even BJP National Vice President Jual Oram acknowledge and
privately speculated that the BJD won over 50 percent of voters
through the food subsidy programs, despite the fact that the
majority of the subsidy was paid by the central and not state
government. Mahapatra explained that Patnaik strategically
targeted disadvantaged communities, including women, tribals and
scheduled castes through various development schemes. For
example, the state government provided subsidized loans for
self-help groups supporting approximately 4.8 million women.
The state provided special training for members of local tribes,
representing 22 percent of the state's population, to help them
enter the work force. He credited BJD's increase in vote-share
(from 27 to 39 percent) to Patnaik's personal popularity and the
public's admiration for an unprecedented "translucent," less
corrupt administration. According to journalists, Patnaik's
public outreach master-stroke was sending a recorded message by
telephone to voters urging them to vote for him, with many
recipients believing that Patnaik has personally make the call.
They later received a thank you call after the elections.

State versus National Interests


3. (SBU) Mahapatra expressed dismay that while Orissa has the
second largest mineral resources in the country, it is still one
of India's poorest states. He blamed national policies for
depriving Orissa of a fair share of mineral royalties and
limiting industrialization in the state. He complained that by
subsidizing freight shipments and building central government
processing facilities in other states, the national government
shifted the economic benefits Orissa should have earned to other
more politically influential states. Mahapatra explained that
BJD used the public perception that the central government,
regardless of the party in power, did not support Orissa
economically, to gain voter support. State Congress President
K.P. Singh Deo acknowledged that as a national party Congress is
hampered by having to adopt a broader perspective in its
economic planning.

Go Slow on Industrialization


4. (SBU) Both Mahapatra and the young U.S.-educated BJD
parliamentarian Bijayant Panda emphasized Patnaik's go slow
approach to industrialization and tough negotiations with
investors as another reason voters supported BJD. Panda
highlighted Patnaik's insistence on coupling mineral rights with
agreements to build in-state production facilities. When asked
about rumors that South Korean steel firm POSCO planned to leave
Orissa with its proposed USD 12 billion green field steel plant,
Mahapatra welcomed POSCO's departure claiming that the deal was
not good for the state. Local resistance to land acquisition in
Jagatsinghpur has stymied the project with little progress since
its announcement in 2005.

BJD-BJP Split Inevitable - Politically Expedient, No Common
Ideology


5. (SBU) Mahapatra told CG in a highly candid interaction that
his party decided to part ways with the BJP "the day the
alliance was forged" (Reftel A). He claimed that the BJP-BJD
marriage was one of political expediency without a common
ideological basis and formed simply to allow the BJD to develop
as a party. He confirmed that while differences between the two

KOLKATA 00000189 002.2 OF 002


partners over the 2007-2008 violence in Kandhamal (Reftel B)
contributed to the break, BJD was prepared to end the political
alliance once it had enough votes to defeat Congress in state
assembly elections on its own. In talks with BJP state leaders,
it was clear that BJD's withdraw from the alliance in March 2009
took them by surprise and they speculated that the timing was
intentional to allow them little time to prepare for the
following month's elections.

Comment


6. (SBU) Patnaik, like Bihar Chief Minister Nitish Kumar,
appears to be using the same tools to gain and sustain power -
focusing on state instead of national issues, courting
disadvantaged groups and highlighting good governance. While
immensely popular and influential in Orissa, the BJD will have
little influence in Parliament since it is neither allied with
the government nor the main opposition party. An overt alliance
between the BJD and the Congress is difficult since Congress
leads the state opposition. Given the BJD's surprise departure
from the BJP alliance, it is unlikely BJP will forgive and
forget anytime soon. With Patnaik's personal contacts among the
Congress elite, however, there is a good chance BJD will
indirectly support the United Progressive Alliance in exchange
for benefits for the state. BJD's greatest challenge now will
be to find the funds to sustain its expensive populist measures
while at the same time wooing the private sector to develop the
state in a more inclusive manner.
PAYNE