It was almost music to the ears of industry when Congress vice-president Rahul Gandhi, speaking at the AGM of Ficci, referred to excessive discretion in environmental laws that delays projects and in turn, restricts growth by substantially delaying employment and stimulation of economic activity, especially in these depressed times. Though environment-related compliance are important and often non-negotiable, there is significant room for improvement in terms of clearance time, predictability and cost in the administration of these rules and procedures.
Ficci members mapped the forest clearance process for large infrastructure projects. It was found that forest clearance files at the state level moved to at least one hundred and fifteen tables before getting cleared—delays at the central level are an extra. The Ashok Chawla Committee on Allocation of Natural Resources noted that 40% of all projects above 40 hectares take more than three years to receive both Stage I (in-principle) and Stage II (final) clearances under the Forest (Conservation) Act, 1980.
Mining projects of area above 100 hectares take, on average, take about 44 months to obtain Stage II clearance. Not surprisingly, despite its high rank as an attractive business destination, India is seen to be a difficult place to operate in.
Gandhi’s observations and expectations are validated if one looks at the experience of many other countries; a few states in India have shown it is possible to cut down on both discretion and clearance time in environmental as well as other laws also.
It is high time that our government examines and reviews all the laws that impact our business environment. We can learn from Mexico which launched The Agreement for Deregulation of Business Activity in 1995 whereby 95% of their regulations were reviewed and revised with an estimated 40% reduction in either their scope or mandate. Within India, states such as Tamil Nadu and Gujarat have taken initiatives like e-governance and consolidation of returns which have made a marked impact by cutting down on procedural time and hassles. They provide for time-bound authorisations through e-files and the file that has exceeded the stipulated days in work-flow is auto-reflected to the next level for processing. Disposal rates of applications have vastly improved as a result of these initiatives.
Our government is also trying to establish an independent regulator, the National Environment Appraisal and Monitoring Authority, which is yet to see the light of the day. The PM has taken note of its importance,