Last month, the government said it would set up an all-powerful umbrella body called the National Investment Board (NIB) to fix the chronic delays in implementing key infrastructure projects.
The government hopes that the board will be the final word on clearing any big infrastructure project worth more than $190 million — including railroads, power, steel, roads and ports. The plan would affect billions of dollars in initiatives that have been plagued by delays in winning approval, a labyrinthine process that requires multiple clearances from agencies responsible for the environment, land and relocating displaced people.
But the proposal is already running into criticism from officials handling issues of environment and from tribal groups who fear that an all-powerful super-cabinet for investment will override their authority.
The troubles point to Singh’s fragile control over his own colleagues. At a deeper level, the proposal has triggered fears among officials and activists that the government’s new urgency to arrest industrial slowdown may end up trampling many environmental and community displacement safeguards. They worry that it may undermine a system of checks and balances within the government that were designed to weigh competing priorities of environment, growth and traditional livelihoods.
After letting economic growth slip and fiscal deficit mount in the past two years, Singh’s government finally shook off its slumber and announced a slew of economic decisions since September to revive investor confidence.
Singh’s biggest worry is the sorry state of India’s infrastructure, where a number of domestic and foreign investments are stuck.
Among the many big-ticket projects that are stuck are a $12 billion project to manufacture steel by the South Korean company Posco, which has not acquired land yet; and an iron ore mining project by the European company ArcelorMittal, which has been waiting for forest department approvals for the past two years, stalling its nearly $12 billion steel plant.
A draft proposal for setting up the investment board was circulated among officials last month. It says that infrastructure projects face “inordinate delays” in procuring multiple approvals from different departments working autonomously.
As currently planned, the board would be chaired by Singh and have key infrastructure, finance and law ministers as members. The proposed board will scrutinize the working of other ministries that decide on granting or refusing approvals to investors and will help simplify rules. It will also step in to decide quickly if a ministry takes too long to grant approvals to a project. Investors can appeal to the board if their projects are stuck at various departments, as well.