The “single window” by any other name to promote corporate investment has held a constant allure since the mid-nineties for governments in a hurry to push economic growth.
These windows may reflect the strength of the government’s resolution to ease the path for investors, foreign or domestic, into the El Dorado that is the Indian market. But in a sense, they also represent the rank failure of all the components of the policy process – laws, regulations, bureaucracy, judiciary – to facilitate business in the normal course.
This is the unintended subtext in Union Minister for Environment and Forests Jayanthi Natarajan’s five-page letter of objection to Prime Minister Manmohan Singh to the powers of the National Investment Board (NIB) to clear major infrastructure projects.
Ms Natarajan’s letter makes the broad point that the NIB would help corporations circumvent established procedures and place the interests of large corporations over that of the environment and ordinary citizens.
She is not far off the mark. The NIB, which was proposed by Finance Minister P Chidambaram at a Planning Commission meeting on September 15, is expected to be headed by the prime minister and clear projects above a certain threshold — the cut-off of Rs 1,000 crore or Rs 5,000 crore is yet to be decided. No doubt, the projects worth Rs 40,000 crore frozen in the no-go zones in the jungles of east-central India and Posco’s long-delayed $12-billion steel project in Odisha figure prominently in the thinking behind this new fast-track mechanism.
Though it is yet to be constituted, the NIB appears to be a sort of appellate body in which the ministries of finance and law and justice will participate. It will hear appeals from companies whose projects had been stalled on environmental grounds. Also noteworthy is the fact that the finance minister wants decisions by the NIB to be final and free from interference from other authorities. Naturally, this will impinge on the policy-making powers of other ministries, notably environment and law, so Ms Natajaran is within her rights to complain.
Just months before this came the Prime Minister’s Office’s (PMO’s) extraordinary single-window type intervention in tying coal supplies between Coal India and private power producers. The directive was a stringent one. It required state-owned Coal India to sign fuel supply agreements with these power plants assuring 80 per cent delivery and stringent penalties for non-compliance. The directive followed complaints from some of India’s largest private corporate groups.
This was certainly newsworthy, but it attracted even more attention because of the inconvenient fact that Coal India is a listed company and has a small cohort of foreign investors like The Children’s Investment Fund that rightly pointed out that binding agreements of this kind were against shareholder interests.
To be sure, single windows have taken many forms. The most visible of them is the inter-ministerial Foreign Investment Promotion Board (FIPB), which was set up in the nineties to scrutinise foreign direct investment proposals that do not have access through the automatic route. The upbeat prose on the government website is instructive. “FIPB is mandated to play an important role in the administration and implementation of the Government’s FDI policy,” it says. “It has a strong record of actively encouraging the flow of FDI into the country through speedy and transparent processing of applications, and providing on-line clarification. In case of ambiguity or a conflict of interpretation, the FIPB has always stepped in with an investor-friendly approach.”
Which makes you wonder whether investors cannot rely on “speedy and transparent processing” as a matter of course.
The fact that they cannot is perhaps evident in the galvanisation of the PMO since late last year with the appointment of Pulok Chatterjee as principal secretary in the PMO and now in the NIB. But the ever-subtle Atal Bihari Vajpayee also resorted to a form of single windowship by appointing B C Khanduri minister of roads as a proxy to preside over one of India’s most successful roads programmes.
Given the wildly plural and federal structure of the Indian polity, it is no surprise that the single window approach has had varied impact. It has attracted plaudits in states where industrial bases and infrastructure are established like Gujarat. Indeed, Narendra Modi has positioned himself as the single window for investment so successfully that he is now seen as a possible prime ministerial candidate. It misfired in Andhra Pradesh because Chandrababu Naidu, also a self-appointed single window for investors, misjudged its exclusionary impact on the rural populace — just the way the luckless Buddhadeb Bhattacharjee failed in Bengal.
Most of all, it has had a marginal impact on India’s Doing Business rankings, which still languish in the 130s out of 183 countries. The message, then, is obvious: the single window is a poor substitute for sustained systemic efficiency.
