Natural resources, development strategies, and lower caste empowerment in India’s mineral belt

Despite having equally vast endowments of natural resources and similar socioeconomic profiles, the Indian states of Bihar and Odisha pursued markedly different development strategies during India’s first decade of economic liberalization. Whereas Bihar turned away from its natural resource sector and adopted policies of social empowerment, Odisha courted private investment in extractive industries and aggressively pursued market reforms. To account for this divergence, we argue that the social composition of political power in each state directly shaped the strategies that leaders embraced towards the natural resource sector and overall development. This paper makes contributions to the writings on natural resources and the political economy of India. We show that the presence of abundant natural resources does not necessarily result in a predictable pathway of sectoral and economic policy outcomes. Instead, social factors can be a powerful determinant of how resource-rich states approach their economies.