THEBUSINESSBYTES BUREAU

BHUBANESWAR, MAY 16, 2026

Odisha’s economic rise is perhaps best reflected in a single recent achievement. In March 2026, the state topped the second edition of the NITI Aayog Fiscal Health Index, which assessed Indian states on fiscal performance and governance capacity, enabling evidence-based policymaking. The report identified Odisha as the country’s best-performing state in fiscal health, driven by strong revenues, low deficits, and disciplined public spending. Behind these impressive numbers, however, lies a deeper story — one firmly rooted in the state’s rich mineral economy.

Resources such as coal, iron ore, and bauxite, of which Odisha holds vast reserves, have done far more than fuel industries. They have strengthened public finances and enabled sustained investment in both urban and rural infrastructure. Industry today contributes over 40 percent of Odisha’s economic output, with mining and metals forming its backbone. The Odisha Economic Survey 2025-26 further highlights that the sector contributes nearly 80 percent of the state’s total non-tax revenue.

Against this backdrop, the Sijimali bauxite project, spread across the districts of Rayagada and Kalahandi, assumes wider significance. Awarded to Vedanta through auction in 2023 and currently undergoing statutory clearances, the project represents the next phase of a development model that has already reshaped large parts of Odisha’s economy. As one of India’s highest premium auctioned mines, with an approved production capacity of 9.0 million tonnes per annum, the project is expected to contribute nearly INR 4,000 crore annually through auction premiums, mineral royalties, District Mineral Foundation (DMF) contributions, and other revenue streams.

At the national level too, the significance of bauxite has evolved considerably. Aluminium is increasingly central to India’s energy transition and manufacturing ambitions, with demand rising across sectors such as infrastructure, electric mobility, renewable energy, power transmission, defence, and aerospace. In this context, securing long-term domestic bauxite resources has become strategically important for India’s industrial growth and mineral security.

A closer look at the Sijimali project’s development plans reveals how mineral resources can be sustainably leveraged to directly support socio-economic progress.

The Sijimali plateau is marked by difficult terrain and relatively low soil moisture retention across several stretches — factors that have historically constrained dense vegetation and agricultural productivity in parts of the region. While a section of the project area is classified as forest land, tree density remains sparse across much of the site, with the underlying bauxite layer limiting water percolation. Across the entire mine lease area of nearly 1,549 hectares, fewer than 2,933 trees have been recorded.

Vedanta’s proposed environmental roadmap for the project takes these realities into account. Plans include large-scale afforestation, with more than 22 lakh indigenous trees to be planted within the lease area as well as on degraded land outside it. Together, these interventions aim to significantly expand green cover over time and gradually reshape the ecological profile of the region.

Water availability presents another challenge across the plateau. While rainfall is part of the local climate cycle, retention remains limited, with only a small portion of surface runoff reaching catchment zones. Vedanta’s planned interventions include a network of contour bunds, check dams, and drainage channels extending over several kilometres, designed to slow runoff and improve groundwater recharge by nearly 300 percent in the region. The broader objective is to strengthen local water systems in an area where availability has historically remained inconsistent.

Mining activity in this region will involve surface extraction, as bauxite deposits are relatively shallow and located close to the topsoil — at a maximum depth of around 150 feet, significantly above the 750–850 feet depth at which groundwater is found in the area. Excavation depth is therefore expected to remain limited, enabling progressive restoration of land alongside ongoing mining operations. Mined-out areas will be refilled and afforested in phases, with the long-term goal of restoring complete green cover.

 “Mining today is no longer viewed as a one-time intervention,” a Vedanta spokesperson said. “Our focus is on a lifecycle-based approach where operations, communities, and ecology progress together with long-term outcomes in mind.”

The human dimension adds another important layer to the mine’s development plans. The project’s rehabilitation framework outlines housing, infrastructure, and compensation measures in line with statutory provisions. Eighteen villages fall within the broader lease area, though relocation will be limited to two villages comprising nearly 151 families. Vedanta has committed to resettling these families in newly developed colonies designed to preserve their social and cultural way of life.

Each family is proposed to receive a 2BHK house built over a 0.1-hectare (10 decimal) plot, complete with a kitchen garden in the front and a cattle shed at the rear. Two rehabilitation colonies — one each in Kalahandi and Rayagada — are planned with amenities such as community centres, chaupal, school, dispensary, temple, fair-price shopping complex, veterinary clinic, and even a cremation ground. The rehabilitation framework envisages substantial investment in housing, civic amenities, and social infrastructure, reflecting the project’s long-term resettlement commitment. The company has indicated that the cost of developing each family dwelling could be around INR 2 crore.

Beyond relocation, the larger challenge confronting the region remains one of livelihood security. Agriculture is often marginal due to difficult terrain and poor soil conditions. Practices such as podu chasa — a form of shifting cultivation involving tree burning and seasonal farming — continue as subsistence measures, though they also place pressure on local ecology. Seasonal migration to other states for employment has become a recurring reality, particularly among younger residents.

 “Many of us travel outside for work after the farming season,” said a resident of a nearby village. “If employment opportunities are available closer to home, naturally we would prefer to stay here.”

It is estimated that the mine could generate nearly 1,500 direct and indirect employment opportunities during its operational lifecycle, along with additional livelihoods through logistics, services, and local enterprises.

The distribution of benefits has also been shaped by policy interventions. The project’s annual contribution of around ₹30 crore to the District Mineral Foundation is expected to channel substantial funding into local development, directly benefiting nearby communities. These funds are likely to strengthen access to healthcare, education, drinking water, and infrastructure.

Vedanta has already implemented several developmental initiatives in the region, including Mobile Health Units serving over 50 villages, smart classrooms under the Gyan Jyoti programme, Nand Ghars (modern anganwadis), safe drinking water projects, and women’s livelihood programmes — signalling the company’s long-term engagement with local communities.

Odisha’s top position in the Fiscal Health Index reflects the cumulative outcome of a mining-led growth trajectory in which mineral revenues have supported fiscal discipline and sustained public investment over time. Sijimali forms part of this larger story. It extends an established development model into a region that has long remained on the margins, connecting local aspirations with broader state priorities. Ultimately, the project’s significance lies not merely in the minerals it may extract, but in its potential to link economic opportunity with tangible and lasting development.