Cabinet approves setting up of National Investment Board

Is renamed Cabinet Committee on Investment and will be headed by prime minister

By Soundaram Ramanathan
Published: Friday 14 December 2012

The Union Cabinet has cleared way for setting up of National Investment Board (NIB). It has been renamed as Cabinet Committee on Investment (CCI) and will be chaired by prime minister and comprise members from various ministries.

“The Cabinet has given an in-principle approval to the committee on December 13. It will take a week’s time to decide on its members and function. We will put up the details on our website by next week,” says K L Sharma, joint secretary in the Cabinet secretariat.

The idea to set up NIB comes from the CAG report which was released in May this year on allocation of coal blocks and augmentation of coal production. It recommended setting up of a body on the lines of the Foreign Invest Promotion Board (FIPB) as a single window to grant the necessary clearances such as mining leases, mining plan, forest clearance, environmental management plan and land acquisition for accelerating commencement of mining. The idea was then picked up by the expenditure department of Union finance ministry. The ministry alleged that green clearances are holding up the country’s infrastructure development and growth. It favoured setting up a national investment board for taking decisions on environmental and forest clearances of projects in case the Union Ministry of Environment and Forests (MoEF) fails to do so within a stipulated time frame. 

Then in October, minister of state for environment and forests, Jayanthi Natarajan, wrote to Prime Minister  Manmohan Singh expressing concern over setting up of such a body. She pointed out that according to a note on NIB, circulated by department of expenditure, the body was to set deadlines for granting clearances which includes environmental clearances, for ultra mega projects of Rs 1,000 crore and above.

The project proponents could approach NIB if they were aggrieved by the decision of MoEF. But the note failed to recognise the right of appeal of an ordinary person to the board if aggrieved by the project. She also mentioned that the changes in the environmental clearance procedure would have far-reaching consequences on the way the ministry runs. Natarajan noted that the ministry in no way has ever stalled projects and had granted environmental clearances to as many as 181 coal mine projects in the 11th Five Year Plan that will double the coal output to 583 million tonnes.

According to the Centre for Science and Environment (CSE), a Delhi-based non-profit, till March 2012, the MoEF has granted clearance to an astounding 217,794 MW of thermal power capacity—40,000 MW more than what has been proposed till 2017.

“We must ensure that the newly approved body does not start bulldozing environmental governance systems in the country,” said Chandra Bhushan, CSE’s deputy director general.

When the matter came up for discussion in Parliament in November, Union finance minister P Chidambaram, clarified that the board will only monitor projects having more than Rs 1,000 crore investment and help the concerned ministries take a decision. “If there is a delay, then it is a delay of the government; where there is a decision, it is the decision of the government. We cannot look upon government as compartments. While the government functions as ministries and departments, it is ultimately the government which is responsible. I am sure the whole House will agree with me that the government has to expedite decision-making and expedite implementation of projects,” he added.

Meanwhile, Leo F Saldanha, coordinator of Bengaluru-based non-profit, Environment Support Group said the Cabinet decision is undemocratic, “This is an ultimate arrogance and stupidity of politician's will which has come true. The board is patently undemocratic, anti-federal, counter-intuitive and an extremely dangerous proposal and it militates against the national interest, compromises good governance, and imperils our cherished constitutional legacy," he said. On the other hand, the Federation of Indian Chambers of Commerce and Industry (FICCI) president R V Kanoria welcomed the decision. "This will send a strong signal to the investors that government is willing to assist the industry through reforms and by further improving the business environment. At a time when our economy and manufacturing sector have slowed down, this single decision will act as major stimulus for the economy. Given the size and diversity of a democratic country like India, there is a need for an institution which has the ability to get things done in a time bound manner."  

Meanwhile, MoEF has put an office memorandum on its website stating that if violation carried out by a stakeholder before the grant of environmental clearance is brought to the notice of ministry at any stage then it would take strict action. When asked about the same, P B Rastogi director in the ministry said, “We want to clarify more on pollution issues and that is why we have issued the memorandum. It is clear enough to understand the reasons.”

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