Chidambaram’s proposal to fast track projects approved after renaming

After the Environment Ministry’s vociferous objections to a National Investment Board (NIB) which could assume some of its authority, the Union Cabinet on Thursday approved a renamed and watered down version of the original proposal, creating a new Cabinet Committee on Investment (CCI) to expedite decisions on infrastructure and manufacturing projects over Rs. 1,000 crore.

The new CCI will be chaired by Prime Minister Manmohan Singh and include administrative Ministries as members. The Committee will prescribe time limits for decisions on approvals and clearances and will then monitor the process to ensure that those deadlines are met. It could review cases which face delays, and facilitate the removal of bottlenecks in the process.

However, controversial references to the mega-investment body’s possible intervention in the case of “failure” of concerned Ministries to observe the stipulated time frame, even going so far as to “call unto itself the power of the Ministry concerned” have been deleted from the proposal.

When the NIB proposal was originally mooted in October, Environment Minister Jayanthi Natarajan had strongly protested such clauses in a letter to the Prime Minister. “This concept is unacceptable. The NIB has no constitutional or legal authority to decide upon the failure of any Minister,” she wrote. “If any decision of the Minister for Environment is overruled by the NIB, who will answer to this in Parliament?”

After the Cabinet approved the revised proposal on Thursday, Ms. Natarajan said: “All our concerns have been addressed.”

The very change in name is a concession to those concerns. While the Finance Ministry argued that NIB has a “brand name which can enthuse investors…in the current situation of gloom and general cynicism”, the Cabinet chose to play it safe and make the announcement of yet another sub-committee.

It also dissolved the existing CCI – Cabinet Committee on Infrastructure – allocating its responsibilities between the new CCI and the Cabinet Committee on Economic Affairs.

While the original proposal had cast the NIB as an appellate body – with over-riding decision-making powers – the version approved by Cabinet makes it clear that the CCI’s primary role will be to urge nodal ministries to fast-track clearances.

At the Cabinet meeting, both Ms. Natarajan and Rural Development Minister Jairam Ramesh reportedly asked for clarifications regarding a clause which gives CCI the power “to take decision regarding specific approval/clearance for an unduly delayed project, if deemed necessary”. However, both the Prime Minister and Finance Minister P. Chidambaram categorically said that any decision on clearing or not clearing a project is up to the nodal ministry alone, according to a source at the meeting.

The Finance Ministry had argued that delays in clearances, especially in key sectors such as power, coal, roads and rail, and oil and gas, were slowing down economic growth. Challenging claims that the Environment Ministry was holding up key projects, Ms. Natarajan’s letter to the PM had warned that NIB’s powers would “be used for the benefit only of large investors, but not ordinary people, local citizens and stakeholders dedicated to preserving environmental integrity.”

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