Govt plans to give NIAB more powers

Written by Subhash Narayan | Sunny Verma | New Delhi | Updated: Oct 17 2012, 05:58am hrs
The government is planning an overhaul of transaction of business rules to empower the proposed National Investment Approval Board (NIAB), which is meant to fast-track decisions concerning big projects. This means the NIAB will have overarching powers, obviating "mandatory consent" of ministries including finance, law and personnel & training in approving any large infrastructure project.

Government sources said this would drastically reduce the time taken in approving or rejecting a project. It would a major relief to Corporate India planning investments and would help the government realise the objective of boosting the investment rate and capital formation.

In a note being prepared for consideration of the Union Cabinet, the finance ministry's department of economic affairs cited the need to amend the business rules for NIAB to function effectively.

Currently, ministries and departments give various approvals under authority granted through the Transaction of Business Rules, 1961.

The key rule to be amended is Rule 4, which says: When the subject of a case concerns more than one department, no decision be taken or order issued until all such departments have concurred or, falling such concurrence, a decision thereon has been taken by or under authority of the Cabinet.

It is often difficult for all departments to concur on any particular project proposal. Rejection by even a single department can put the entire project in limbo.

The government plans to overcome this regulatory challenge by empowering NIAB.

The finance ministry's draft note says that these rules often lead to inordinate delays in approving projects. While the Transaction of Business Rules themselves should not be the cause of inordinate delay, it is our experience that the manner in which the said Rules have been understood and observed leads to inordinate delay, the ministry's note on NIAB said.

The note adds: It is, therefore, felt necessary to revisit the present arrangement regarding the Allocation of Business and Transaction of Business and either amend or supplement the Rules to facilitate speedier decision making in the case of critical projects, particularly infrastructure projects.

The changes would allow NIAB to dispose a matter pertaining to a particular ministry as if the said business has ben allocated to it in case where the administrative ministry fails to adhere to a stipulated time frame.

"A model similar to NIAB already exists in the form of Foreign Investment Promotion Board (FIPB). FIPB has helped in accelerating the process of giving approvals to FDI proposals and same could be expected from NIAB for infrastructure projects," said a government official.

The government plans NIAB as a body directly supervised by the PM and having representation from key ministries including the finance and environment ministry as members. This would be a sub-committee of the cabinet and would carry authority of the government.

Recently, the environment ministry has written to the prime minister objected to the creation of NIAB, saying, this would take away from the ministry's discretionary powers vital for environmental sustainability.

It would provide for accelerating and time-bound grants of various licenses, approvals, permissions to projects of over R1,000 crore as a mechanism to be triggered in case of failure of the competent authorities to act in time to take decisions.