Environment minister Jayanthi Natarajan may have objected to the creation of a National Investment Board (NIB) for its potential to undermine her ministry, but the finance ministry has no doubt that the biggest hurdle to investors right now is posed by Natarajan?s ministry.
In an internal note meant to be a precursor to a full-fledged Cabinet note prepared before Natarajan wrote to the Prime Minister against the idea of NIB, the finance ministry?s department of economic affairs had cited environment clearance (EC) and forest clearance (FC) as ?best-known examples? of regulations impeding decision-making process.
?Although there is a mandated time frame for each clearance (EC and FC), delays occur because of unsatisfactory administrative arrangements in place to support the procedure for granting or refusing clearances,? the DEA note said.
In a letter to the PM, Natarajan had strongly defended her ministry’s position. The ministry, she said, had given clearances expeditiously but projects were pending as clearances are still unultilised. She said her ministry gave EC clearances to 181 coal projects in 11th Plan and gave 113 coal mines permission to divert 26,000 hectares of forest land for industrial purposes.
Justifying the NIB, the finance ministry cited a situation: ?a power project requires coal linkage. Ministry of power (consults) ministry of coal. Since coal linkage requires EC and FC clearance, the coal ministry (passes the buck) to the MoEF. (And in the MoEF), even if EC is given, FC may take longer and might ultimately be denied…?
?Sometimes, the department of forests points to the National Wild Life Board. There are power projects that are languishing for several years after winning the bid or the nomination for establishing the power project.?
The finance ministry is not alone in blaming the environment ministry for project delays. In a recent report, the Comptroller and Auditor General (CAG) of India too cited delayed green nods hindering coal production. The power, coal and road & highways ministries have also identified delays in EC and FC clearances as the biggest challenge to take infrastructure projects forward.
?One recent example of how the environment ministry deals with its clearance process is the clearance given by a group of ministers (GoM) to coal mining projects of Reliance and Aditya Birla Group-Essar combine at Chhatrasal and Mahan recently. Though the GoM clearance came almost five months ago, the environment ministry is yet to notify it,? said a government official.
The DEA note said it was not easy to fix responsibility in the case of delays as ministries functioned autonomously. But this was causing huge infrastructure deficit with physical achievements falling short of the targets in each successive plans.
The government plans NIAB as a body directly supervised by the PM and having representation from key ministries including the finance ministry as members. This would be a sub-committee of the cabinet and would carry authority of the government.
It would provide for accelerating and time-bound grants of various licenses, approvals, permissions to projects of over Rs 1000 crore as a mechanism to be triggered in case of failure of the competent authorities to act in time to take decisions.