The government, as reported in The Indian Express yesterday, is not keen on the Ratan Tata-chaired Investment Commission?s suggestion that the PMO lead a committee of government and industry representatives tasked with clearing big projects. Posco?s plan in Orissa and ArcelorMittal?s in Orissa and Jharkhand are the high profile examples. In terms of procedure and appearance, the government has a point. The PMO or indeed any ministry should not perhaps be co-committee members with industry leaders whose projects are held up. Tata is well-intentioned but the way the politics of perception works in this country, any such committee will attract political mud by the bucketful. What is not clear, however, is how the PMO or any other ministry views the costs of such huge delays. It is already apparent that one of the impetuses for Indian capitalists? enthusiasm for outbound investment is the ease of doing business abroad?it is much tougher to set up a greenfield project in India than acquiring a bluechip abroad. Foreign investors setting up big new projects in India are feeling the same way. All told, 30 big private sector projects?investment size of Rs 1,000 crore-plus?backed by Indian and foreign firms are held up. That?s nearly Rs 1,34,000 crore locked up in various disputes and clearances?land acquisition, environmental rules and legal requirements.
It is true, as the Centre says, that land acquisition, the biggest reason behind delays, is a state subject. It is also true that this problem persists even when the state government, as in Orissa, is committed to industrial projects. Activism has played a big spoiler. But truer than this is the fact that the Centre hasn?t helped by sending thoroughly confusing signals on the subject. The Central policy on rehabilitation is in many ways unimplementable. There?s also been no active recognition that the main flaw in the system is that the state to has get out of land acquisition. Instead, it should help create proper land markets, work with states to help small landholders get organised so that they can bargain with the investor better. As for mining concessions that are holding up projects like steel plants, the Centre is basically saying policy clarity will come in its own time. Some big investors may have started feeling they have already spent enough time.