The gradual roll back of the licence raj since 1991 was expected to, among other things, free business enterprises from the shackles of government red-tapism, unleash their “animal spirits” and catapult India into prosperity. The fact that two decades later, the Cabinet will soon consider the establishment of a National Investment Board (NIB) to fast-track clearances of large infrastructure projects suggests that the exercise has not been entirely successful. At one level, the NIB can thus be seen as a practical solution to an issue that has not just leashed animal spirits but also left India a critically infrastructure-deficient state. Given the plethora of clearances and approvals that complex projects require from a bewildering array of ministries and authorities, an empowered standing committee that can provide a single window of approvals certainly makes sense.
The proposal, as put forward by Finance Minister P Chidambaram, suggests that the NIB will be chaired by the prime minister and include ministers from the finance and law ministries. The size of projects that will come under NIB’s purview is undecided — it could vary from Rs 1,000 crore to Rs 5,000 crore. More to the point, Mr Chidambaram has suggested that NIB decisions will be “final” and no interference from any other authority will be entertained. In response, Environment Minister Jayanthi Natarajan has sent the PM a strongly-worded letter of objection. Ms Natarajan has argued that the proposal for fast-track approval does not give a hearing to citizens and other stakeholders who might be affected by the deleterious impact of large industrial projects. It is Ms Natarajan’s duty to raise these issues. India Inc’s performance on environmental parameters certainly leaves a lot to be desired. The trouble is that the performance of the environment ministry since 1991 — long before Ms Natarajan took charge — places her arguments on shaky ground. Even as the control economy was being dismantled, big projects could not escape the environment ministry — often uncharitably described as the last bastion of the licence raj. This ministry’s questionable record in environment protection, however, generated an equal and opposite reaction in Ms Natarajan’s predecessor Jairam Ramesh.
In some senses, the NIB is being seen as the only solution to the Rs 40,000 crore worth of steel, coal mining and power plants that were stalled under Mr Ramesh’s no-go strictures (now lifted) as much as the seemingly insoluble land rehabilitation issues that have kept projects like Posco’s steel mine and Vedanta’s bauxite plant in lockdown. Still, even if it is assumed that the NIB does choose to adopt an all-pervasive open-sesame approach, it is hard to see how it will succeed when so many niggling approvals are required at the state level, not to forget the powerful activism of local politicians like Mamata Banerjee and the Naxalites. In many ways, the NIB reflects the impatience of the current dispensation on Raisina Hill with the glacial pace of India’s progress. But in a complex country like India, as the coal block and spectrum allocation controversies have demonstrated, the fast track can be littered with many hazardous potholes.