By Rajesh Kumar Singh
NEW DELHI, Nov 12 (Reuters) - India's boldest attempt in two
decades to sweep away the remnants of the "License Raj" permit
system that has crippled infrastructure development has fallen
victim to the very scourge it was designed to defeat.
A proposal for a government panel chaired by Prime Minister
Manmohan Singh to fast-track major infrastructure projects and
boost a flagging economy seems to have stalled amid bickering
between the finance and environment ministries over its powers,
and an apparent reluctance to proceed without consensus.
The dispute underscores the fears of investors and business
leaders that New Delhi's new-found reformist zeal could be
undone by a lack of governance and political will to drive
further economic liberalisation.
The brainchild of India's new finance minister, P.
Chidambaram, the proposed National Investment Board (NIB) was
expected to win swift passage through the cabinet last month.
But it has yet to make it on to the weekly agenda.
Investors and economists say the NIB should be a top
priority for the government given the regulatory delays holding
up projects worth nearly 2 trillion rupees ($36.8 billion) in
the road, power, coal and mining sectors alone.
"NIB, NIB, NIB," Rajiv Lall, managing director of
infrastructure financing firm IDFC Ltd told Reuters on
the sidelines of a World Economic Forum meeting last week, when
asked what reforms the government needed to carry out next.
The NIB aims to provide a single-window clearance for large
projects that today are bounced from one ministry to another for
various approvals, a process that can some times take years.
However, the Environment Ministry opposes the NIB, fearing
that it will not only undermine its authority but also weaken
the system of checks and balances within the government.
"This current proposal is completely unacceptable as it will
decimate the role of individual ministries in taking responsible
decisions," Environment Minister Jayanthi Natrajan said in a
letter to the prime minister that was leaked to media.
The ministry has blocked several high-profile industrial and
infrastructure development projects. Natrajan's influence comes
from her perceived closeness to Sonia Gandhi, the powerful chief
of the ruling Congress party, who favours populist policies.
The tussle reflects India's struggle to balance the need to
foster economic growth with a desire to protect the environment.
Poor infrastructure is often cited by economists as one of the
biggest obstacles to more robust economic growth.
A typical infrastructure project requires clearances from 19
federal ministries and on an average 56 permissions on issues
ranging from the environment to defence. The whole process takes
up to 24 months.
Now, the NIB faces a similar set of bureaucratic hurdles.
"Any decision to take place which has implications for a
very large number of ministries, you need to have
inter-ministerial discussions and create a consensus," said
Arvind Mayaram, economic affairs secretary at the Finance
He said a decision could be taken within three weeks.
Government officials said the prime minister's office had
asked the Finance Ministry to revise the proposal after failing
to broker a compromise between the two ministries.
"We are hopeful that it will eventually get resolved. They
(the Environment Ministry) seem to have misunderstood the
structure," said a Finance Ministry official, declining to be
named. "They should understand that the interests of the country
are far more important than the concerns for their turf."
The Environment Ministry declined to comment.
The turf war between two ministries reinforces a frequent
criticism of Singh - that he has poor control over his
ministers. Such squabbles in the past forced him to defer
important decisions related to the economy and national
"I hope the same fate does not fall to my proposal for a
National investment Board," Chidambaram lamented recently.
(Additional reporting by Manoj Kumar and Matthias Williams,;
Editing by Ross Colvin and Robert Birsel)