On Sunday, quietly and with the minimum of fuss, the process of land acquisition for Posco’s steel project in Odisha began again, after a break of more than a year. It is far from clear what, if anything, this delay achieved, other than forcing investors to lose money, depriving locals of the cash that acquisition would bring them, and further souring India’s steel output, employment and investment climate. This followed an extensive series of delays in which the Union government set up no less than three committees to examine those displaced, while the state government – whose responsibility it was to evaluate how many people were displaced, as the Union environment and forests ministry later accepted – insisted that there was no need for delay. It is good news that work has started on the Rs 54,000-crore steel plant; after all, elsewhere in Odisha, Vedanta shut its aluminium refinery at Lanjigarh on December 4 after it was rendered uneconomic by the Centre’s decision to revoke permission for bauxite mining at Niyamgiri, and Hindalco’s project at Mali Parbat is also under a cloud.
These two narratives coming out of Odisha are a stark reminder that the government cannot afford the sort of stalemate that emerged from the first meeting of the Cabinet Committee on Investment, or CCI, this weekend. The CCI reportedly failed to reach agreement on whether the defence ministry could clear further work on natural gas blocks in the Bay of Bengal; it did not even take up other stalled projects, especially those in the power sector. Of course, the United Progressive Alliance government has still not passed a transparent land acquisition law. Meanwhile, the downstream efforts of an inability to get clearances done on the ground continue to bite. Bharat Heavy Electrical Limited’s order book continued to contract; Crompton Greaves reported three per cent (annualised) higher orders in the first three quarters of 2012-13, compared to 13 per cent last financial year. This is mirrored by the noticeable decline in the number of weekly and monthly meetings of leading banks’ credit appraisal committees and the forecast that corporate loan growth this year is likely to drop to single digits from 21 per cent in 2012.
The government has, for the past six months, talked a good game. International investors have been mollified with some laudable decisions including the opening up of the retail sector to foreign direct investment, increasing railway passenger fares after a gap of 10 years and switching over to market-linked diesel prices for bulk users with the commitment to raise its retail prices every month to eliminate under-recovery by oil marketing companies. Not without reason, the impression has gone around that India is finally open again for business. However, numbers from the real economy are nowhere near as sanguine. The years-long paralysis, which has caused the shutdown of plants such as Vedanta’s, will require more than talk to shake off; it will require some ministries, such as environment and defence, to retreat further, and quickly, from long-held positions. The first step must be to ensure that at least some land acquisition processes proceed quickly, without any violence. They must be accompanied with credible, visible and large transfers to those being dispossessed, so that civil society and those living on the fringes of other large projects are reassured that the government has had a change of heart about high-handed acquisition. Meanwhile, the prime minister and finance minister must no longer allow members of the Cabinet to stall clearances; the point of the CCI was to thrash out such issues openly, rather than postpone them.
