India Inc hopes CCI works, land Bill clears House

Written by fe Bureau | New Delhi/Mumbai | Updated: Dec 15 2012, 06:54am hrs
With the Cabinet on Thursday clearing the proposal for constituting a Cabinet Committee on Investment (CCI) to fast-track large infrastructure projects along with the Land Acquisition Bill, India Inc is hopeful that the government would give the required push to make the first work effectively and ensure that the second doesnt face roadblocks in Parliament.

Since the setting up of the CCI is an executive decision, the Cabinets decision is final and the government only needs to ensure that it works effectively and doesnt end up like the Cabinet Committee on Infrastructure that it has replaced. However, the Land Bill needs to be passed by Parliament and industry hopes for its smooth passage though it has some reservations on it. Further, land being a state subject, it remains to be seen how far the different state government are willing to go in following the guidelines set by it.

Industry captains FE spoke to expressed mixed reactions. While some expressed disappointment since the CCIs mandate is seen to have been watered down from what the original proposal entailed when it was referred to as the National Investment Board (NIB), there was also hope that since the PM is chairing it, the mechanism would be effective. Earlier, the idea was that the body would work as an agency that can overrule line ministries and also act as an appellate authority against their rulings. However, the Cabinet has approved a structure where it would work as a coordinating agency with no powers to overrule line ministries or act as an appellate body.

This has clearly disappointed Vinayak Chatterjee, chairman of Feedback Infra. The CCI does not have overriding powers. The power still lies with the line ministries and, therefore, if the line ministry says no, this body cannot override the decision nor can it entertain an appeal. The appeal has to be made to the line ministry, he said.

On land acquisition, Chatterjee said more clarity is required though the effort is laudable. In terms of provisions, I personally welcome the government trying to get its hands around a very difficult subject called land acquisition. However, there are two aspects of fine print which I am still unclear about. The first is the entire implementation of the resettlement and rehabilitation (R&R) package. The second issue is public purpose. Within the infrastructure sector, we have got government infrastructure and we have got public-private partnership (PPP) infrastructure. I am not clear where public purpose will fall in, he said.

Rahul Bajaj, chairman, Bajaj Auto, expressed optimism. I have not seen the details of the announcement. I only hope that this committee will take a decision if required by overruling individual ministry and not just coordinate between ministries. Hope the recommendations of the Cabinet Committee on Investment will be accepted by the Cabinet, he said.

RC Bhargava, chairman of Maruti Suzuki India, offered a nuanced view. It is the laws which needs to be looked at. If the laws state that such and such clearances are required before according a final approval to a project, whether it it is NIB (the National Investment Board, as the CCI was proposed to be called) or CCI, it cant do a thing. If the intent is to change the law, that can be done whether it is NIB or CCI, he said.

On the Land Bill also, Bhargava had a practical point. The industry can argue that one would need to take approvals from more people now, but the increase of mandatory consent from 67% to 80% is not really a make-or-break issue. The idea is to ensure that one person shouldnt hold up an investment asking a much higher price, and in such cases the government should intervene. The basic purpose of the Bill is that you buy land through private negotiations, but afterwards it should not be caught in litigation. While buying land you should know the price, because if the court decides to increase it later to compensate farmers, the investments may get unviable.

Venu Srinivasan, chairman and managing director of TVS Motor, is hopeful on CCI but critical of the Land Bill. It (CCI) is a very positive move and will give a major fillip to infrastructure. I dont think it has been watered down much. With the PM pushing this, no ministry can delay things beyond a point. It will eventually help speed up things, he told FE. However, Srinivasan did not exude the same optimism regarding the Land Bill. "It would make things a little difficult for large projects like auto and power plants as in India land holdings are already very fragmented. The government is doing a balancing act from a social equity point of view, he said.

Adi Godrej, chairman of the Godrej Group, said the key lies in execution. Its a very good move. Many investment projects are now held up in different ministries. This move will accelerate the approvals of investments projects. If it is executed well, I think it will be very good for the country.

TV Mohandas Pai, chairman, Aarin Capital Partners, welcomed the move to set up the CCI but had strong reservations on the Land Bill. The CCI is good and I hope it works and escalates the clearances process. As for the Land Bill, it is neither good for the farmers nor industry because it will create a new kind of land mafia and intermediaries will emerge who will become land consolidators. The most important thing is to empower farmers by giving title to land and that itself is unclear. The government has to ensure a fair process and a higher compensation to farmers. Moreover, who will ensure the 80% approval