Environment minister Jairam Ramesh can now claim he was right. When his ministry nixed the approval for the alumina project of Vedanta this summer, several reports said it was an informal agreement with the Orissa government to save the Posco project instead. He had denied it then but events now seem to vindicate him. Except that he has added to the trouble of Prime Minister Manmohan Singh to make global investors believe India has gotten over an implementation hump.
As the 21st century completes a decade, the Indian politico-administrative leadership has still to learn the art of managing the eco-system of project management. Bloopers like Commonwealth or Posco are a reflection of the response of a government in drift to the challenges a maturing democracy is bound to throw up.
The problem is, therefore, of under-governance. In the last two decades, just as the economy has hugely diversified, it has also spawned a huge expansion of interest groups. The environment movement is one example of that expansion, just as labour and human rights are other manifestations. These and other groups demand a say in the management of projects begun by the government, the corporate sector or just about anybody else in the country. These projects could be hard manufacturing plans like Posco or Singur or even those like the creation of soft infrastructure like the UIDAI project, which, too, has created a strong line-up of detractors. This is inevitable.
In such a medley of conflicting interests keen to punch holes in the execution of the project, it is primarily the government that must show expertise in managing the expectations that build or bully the projects. In OECD countries, some of these roles have been adopted by the large corporations, but in India the government?s overarching role makes it the primary agency to carry it out. But rare is the government agency or ministry in India that has taught itself this craft.
Not learning this skill has serious consequences as the unravelling Posco case shows. The environment sector is a fine example of that mismanagement. India has not signed the emission norms at Copenhagen but it has overcompensated by drafting a set of environment laws, so strict that even public sector companies like GAIL cannot build their pipelines in several stretches. Several of GAIL?s projects are stuck in the ministry?s environment impact assessment section. Re-opening a set of clearances given to Posco in 2007 in such circumstances was asking for trouble. As the subsequent events show, it brought no credit to the current government?s image or that of any other other agency involved.
Instead it has opened a partisan line that can be exploited by subsequent governments to re-open clearances given by the current government in, say, the Western Ghats for questioning. In the process, we get the spectacle of a kangaroo court-type treatment of a project that the Centre and the Orissa government projected as India?s largest ever FDI, a few years ago. The next in line of fire could be either the Dhamra project, again in Orissa, or the greenfield steel plant, again of the Tata group, in Jharkhand.
Despite the postscript to the report by her eponymous committee, Meena Gupta?s dissent note and her subsequent letter to the environment minister might not be enough to save the project. Either the Forest Advisory Committee overrules the majority opinion of the
Gupta Committee, opening another Pandora?s box or acquiesces with the majority. This certainly means curtains for the 12 million tonne steel plant that promised about $12 billion of FDI. It is nobody?s case that an industrial project will pass muster in complying with all the rules for setting them up, but the problem, as we have said, lies elsewhere.
The list of projects that have hit the dust in the past few years in this process is an instructive one. They all had the requisite clearances in their pocket, but still came up short on other grounds. The UPA government?s flagship project, NREGA, has also run aground in places due to lack of project management skills.
A favourite phrase among senior government officials is that letting such opposition flourish is often beneficial for the eventual development of a project. ?It is like letting out of steam.? This line of thought has played havoc with the timelines for completing the projects and what is even more unpleasant, of late, it is the government that has begun to run out of steam. Since the various interest groups typically coalesce around the marquee projects, the inability of the government in project management becomes even more stark.
The problem, in short, is one of implementation. For instance, within the last year and a half, the environment ministry has cleared 106 projects from the 685 applications. That is almost one out of every seven applications. Exclude the ones that were running aground in any case and the record does not look terribly bad. But the ones most noticeable will be the ones that didn?t make the cut, and all of these are the large ones. Posco joins that league.
The implications of bad management are serious. Mismanagement creates an invitation to run with the second best options. Thus, while the West Bengal government is still flailing about for any and all sorts of investors for a petrochemical project where the Nandigram episode occurred, the Posco story could see a similar fallout.
?subhomoy.bhattacharjee@expressindia.com