Approve, then disapprove

Going by newspaper reports of the allotment process for land in Noida, a Delhi suburb that lies in neighbouring Uttar Pradesh, it is no surprise that UP's new chief minister should want to take a fresh look at all the allotments made during her predecessor's tenure. Similarly, going by the closeness of the previous regime to industrialists like Anil Ambani, two of whose projects got approved by the state, it is tempting to look hard at them too""though, judging by what Mr Ambani's company has said, the chief minister may have bungled in alleging that its special economic zone (SEZ) is not in accordance with the stipulations laid down. However, the real issue goes beyond this specific point, and is whether Chief Minister Mayawati, indeed any chief minister, has a more transparent system in place for evaluating bids and awarding contracts for industrial and infrastructure projects. If she does not (and remember that her last government had to face charges of favouritism and non-transparency), it is entirely likely that the next chief minister will want to re-look at projects that she now clears. No administration can function in this manner, and the likely result is that it will frighten away fresh investment. Indeed, the British tradition is that one minister cannot ask to see his predecessor's files""the department secretary will deny him access.

It is not just projects in Uttar Pradesh that are in trouble. Going by the warning issued by Investment Commission Chairman Ratan Tata, large infrastructure/industrial projects whose value totals $60 billion are in danger of getting derailed. To put this in perspective, $60 billion is equal to a sixth of the annual investments made in the country in a year. Some of the endangered projects, such as the Posco steel plant in Orissa, have been in limbo for over a year for want of land, though Posco has changed its design as many as 60 times in order to reduce the land required from 5,000 acres to 4,000 acres""according to the company, just 450 families are affected by the land it requires. There is clearly a limit after which the group's patience will snap and it will pull out of the country.

Posco is just one in a series of projects that are stuck for want of adequate land; the violence at Singur and at Nandigram (both in West Bengal) are recent examples of what happens when land is being acquired for industrial projects. While a Group of Ministers has tried to resolve this thorny issue by saying that neither the Central nor state governments should help any project acquire land, Posco can point to the difficulty that its officials get kidnapped while trying to negotiate with villagers. In other cases, such as the British Gas-ONGC project, the chairman of the Investment Commission has complained that the ministry of petroleum is interpreting policy in a discretionary manner. In the case of Mukesh Ambani's investment in the Krishna-Godavari basin, the government of Andhra Pradesh has been flexing its muscles for a while, threatening that it will not allow the company to evacuate the gas from offshore, via the state, unless it gets a part of the gas. In other words, while no one denies that India has become more attractive to investors, far too many large projects are getting mired for one reason or another. The danger is that the proposed investment will not eventually materialise.