NIB may overrule Environment Ministry on coal, power, roads

The discretionary and even regulatory powers of individual ministries are likely to come under serious attack with the National Investment Board (NIB) led by Prime Minister Manmohan Singh set to assume the role of a super arbitrator over and above merely expediting clearances for major infrastructure projects.

A senior Finance Ministry official told The Hindu that aggrieved companies with strong legal grounds to establish that their applications for infrastructure projects have been arbitrarily delayed or even rejected by the Ministry or Department concerned can directly approach the NIB for clearance.

“This is a frontal attack on the use of discretionary powers by individual ministries. It will go a long way in eliminating red tape, reducing litigation and also bring back investment,” the official said.

According to a Cabinet note prepared by the Department of Economic Affairs (DEA) for presentation this week, the NIB will be constituted as an empowered Standing Committee of the Cabinet under the chairmanship of the Prime Minister, carrying the authority of the government with key Ministers like Finance and Law & Justice as members.

The NIB will be supported by a small dedicated secretariat in the DEA which will identify key projects that require continual monitoring. The initial focus will be on investments upwards of Rs. 1,000 crore in roads, mining (especially coal), power, petroleum and natural gas, ports and railway projects.

The one Ministry that is likely to face the sharp end of the NIB is Environment and Forests, with officials there telling The Hindu they apprehend efforts will be made to overrule them even on projects that do not merit clearance on environmental grounds.

The stated purpose of the NIB will be to take over the process of granting licences, permissions and approvals whenever the competent authorities fail to act in time. This is intended to prevent adhocism emerging from autonomous functioning of ministries and to fix responsibility for inordinate delays in obtaining all the approvals/clearances required for implementation of the project. According to the official, over Rs. 2 lakh-crore worth of projects in just two sectors — roads and petroleum — are stuck for want of statutory and regulatory clearances in different ministries. This is creating a huge infrastructure deficit, with consequent time and cost overruns leading to physical delivery falling short of targets in every Plan period, he noted. (see chart).

According to the Cabinet note, the process of granting/refusing approvals to FDI proposals under the approval route has become quicker after the setting up of the Foreign Investment Promotion Board (FIPB) and the NIB is expected to have a similar beneficial impact on granting/refusing approvals/clearances to key projects, especially in the infrastructure sector.

The NIB will prescribe different time limits for requisite multiple approvals in consultation with the ministries and if they renege on these deadlines, “the authority of the concerned Ministry/Department would stand transferred to the NIB for taking the decision ... under binding rules and regulations ... ,” the note states.

The note traces the inordinate delays in obtaining statutory/ regulatory/ administrative approvals from different ministries/departments to delegated powers enshrined in the Transaction of Business Rules, 1961. The DEA feels it necessary to revisit these to facilitate speedier decision making on the grounds that while the Rules themselves are not the cause of inordinate delay, their application certainly is.

For example, projects require multiple approvals from different decisions of the same Ministry (such as environment, forests and wildlife clearance from the MoEF) and/or approvals that often cut across many departments. Often these approvals/clearances are given sequentially or are dependent upon prior receipt of other approvals/clearances, which can take several years. To illustrate, a power project requires coal linkage from the Coal Ministry. Coal linkage requires environment and forest clearance from MoEF. Even if environment clearance is given, forest clearance may take longer or even ultimately be denied and there are instances where the Department of Forests refers the matter to the National Wildlife Board. Some power projects have been languishing for several years after winning a bid or nomination. Other than approvals/clearances from the Central government authorities, there are issues such as land acquisition, relief and rehabilitation of displaced persons.

Detailed analysis of the delays indicates that there are two basic sets of approvals/clearances which need to be addressed. “The first is regulatory approval accorded under the relevant law as exemplified by the Environment Clearance and Forest Clearance. A time frame may have been prescribed under rules for some of the clearances but delays often occur because of the inadequate administrative arrangements to facilitate/support the procedure for timely grant/refusal of clearance. The second is purely in the realm of administrative decisions, with each step consuming several days or weeks. Closer supervision and monitoring would considerably reduce the time taken for such approvals,” the note states.

The NIB seeks to institutionalise a system which both monitors the multiple avoidable impediments emerging from the Central government ministries/departments while taking necessary action to expedite these approvals.

More In: National | News