FE@CAMPUS MASTERMIND: Response by Ravi Shah to question for Jan 14-20
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Yes, I believe Investments in India will pick up once environmental clearances start coming through.
The environmental clearance process is required for 39 types of projects and covers aspects like screening and evaluation of the upcoming project.
Industrial projects located in any of the following notified ecologically fragile/sensitive areas would require environmental clearance irrespective of the type of project:
Religious and historic places
Coastal areas rich in mangroves, corals, breeding grounds of specific species
National parks and sanctuaries
National lakes and swamps
Areas of scientific and geological interest
Defence installations, specially those of security importance and sensitive to pollution
Border areas (international)
This coupled with delays occurring because of unsatisfactory administrative arrangements, in place, to support the procedure for granting or refusing clearances is slowing the growth of India and scaring away investors.
In a recent debate on this issue our PM remarked that the Forest Conservation Act had emerged as the new "licence-permit-quota raj".
In a recent situation cited by the Finance Ministry regarding a power project, it stated that a power project requires coal linkages. The ministry of power consulted the ministry of coal. Since coal linkage requires environmental clearances, the coal ministry passed the buck to the MoEF.
Sometimes, the department of forests points to the National Wild Life Board. There are power projects that are languishing for several years after winning the bid or the nomination for establishing the power project.
Another situation arose when the GMR Group walked away from the 555-km-long Kishangarh-Udaipur-Ahmedabad National Highway project due to delays in approval of necessary environment clearance for one of the tunnels along the highway.
The power, coal and road & highways ministries have all stated that Environmental clearances are one of the biggest challenges to taking an infrastructure project forward.
An investor is someone who allocates capital with the expectation of a financial return.
An Investor invests money after considering many factors such as his R.O.I. (Return on Investment), the time period required and the probability of the investment being successful.
Environmental clearances create uncertainty. Investors fear the very real possibility of their investments not bearing fruit as their environmental clearances may not be granted, or they may take many years to be granted or the many ministries may have internal problems with each other which may create a deadlock between them. This is why investment in India will pick up once environmental clearances start coming through Once environmental clearances start coming through the growth of infrastructure which is to be created by the government for Industries will increase. The power sector will be able to gain access to more reserves of energy and fuel industrial growth even more.
Once environmental clearances start coming through, we will also see better utilization of currently reserved land, its conversion into Special Economic Zones, this will in turn increase the investments into the Software and IT sectors.
In conclusion I feel that once approval of environmental clearances start coming through in an easier and more timelier manner We will begin to see better utilization of currently unused Land, faster development in the power sector, Roads sector and Infrastructure sector .This I feel will create an atmosphere that will help investments in India to pick up.
Fergusson College, Pune
(This entry is part of our FE MASTERMIND contest. The views expressed in this article are personal and not that of the newspaper.)
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