Conditional clearance given to Posco?s $12-billion steel project is Orissa is yet another singnal of a sobering of the environment minister Jairam Ramesh who seemed to take an uncompromising stand against many big industrial projects which are seen as crucial to sustain the India Growth story. Ramesh?s apparent rethink, however, is also perceived to be a sign of change of stance at the high-level of the Congress party, besides being influenced by the widespread anxiety over sagging morale of investors in the economy.
The minister’s change of heart in the growth versus environment story over the last few weeks has been quickly lapped up by the corporate sector looking at clearance for their respective projects. In fact, within minutes of the Posco clearance, officials from Vedanta, whose bauxite mining project in Orissa had been nixed by Ramesh a few months ago, expressed optimism that the cancellation of their project would be revisited as well.
?We are hopeful that clearance will be given for expanding the capacity of our alumina refinery from present one mtpa to six mtpa,? Mukesh Kumar, president and COO, Vedanta’s alumina refinery, said in Lanjigarh, not specifically mentioning the Nyamgiri hills as a source of that raw material. Vedanta chief Anil Agarwal had earlier met with Ramesh over the issue after waiting for more than six months for a hearing.
Ramesh?s change of heart has clearly manifested in the previous few decisions that environment ministry has taken over the last few weeks. After playing hard ball over the green clearances, he has backtracked and accorded clearances to the Navi Mumbai airport project and the controversial the Lavasa township near Pune being put together by Hindustan Constructions Company. There is also strong indications of a thawing towards Vedanta that has been hit the hardest with its mining project suspended and question mark over its expansion of alumina facility in Orissa.
Sources say that while cleavages between the environment ministry and the Prime Minister?s Office had been apparent for sometime especially with regard ?no-go? areas for mining, recent set backs in the economy especially a perceived flight of Indian infrastructure capital from the country has affected a change of heart in the highest levels of the Congress party.
?Recent RBI reports on the economy has detailed this phenomenon well, not only that, general alarm bells have been ringing within the Congress party for some time about the tarnished ?India growth story?,? said a top source in the party.
A lot of corporate are jittery over the recent string stand taken by the environment ministry that has put question mark over projects worth billions of dollars. ?Posco project is one of the largest FDI proposals in the country. Its success would help in bringing many more big ticket foreign investment projects into the country. It should not be held hostage to regulations without merit,? said an official in a private sector steel company.
?We are hoping that this sets a precedent that helps both domestic and overseas investment,? he said.
Mining, steel, power, cement projects have been hit the hardest in last few months as these require large tracts of land for undertaking their operations. Power sector that has faced music from Ramesh over his categorisation of coal bearing areas into `go and no go areas’ now sees light at the end of the tunnel with government constituting a GoM resolving the issue. This categorisation has blocked coal mining potential of 660 million tonne, enough to fire over 1 lakh MW of additional power generation.