Policy inertia, coupled with stalling of projects due to delays in environment clearance and land acquisition, has slowed investment and trimmed the GDP growth rate from 9.3% in FY11 to decade’s low of 5% in FY13 and 4.6% in H1 of FY14. The investment cycle, however, may see an uptick in the coming months with the government speeding up stalled projects. After Prime Minister Manmohan Singh constituted the project monitoring group (PMG) in June, about 120 projects with investments worth close to Rs 4 lakh crore have been cleared.
Another 230-odd projects are pending clearances. Anil Swarup, head of PMG and additional secretary at the cabinet secretariat, tells Raj Kumar Ray that a lot more needs to be done to ensure investments start picking up so that the GDP growth gathers momentum. Irrespective of whoever comes to power in 2014, Swarup feels the panel is likely to continue functioning as a facilitator for clearing stalled projects.
The PMG was constituted in June. What’s the status in terms of number of stalled projects referred to the cell and how many of them have been cleared so far?
Let me explain the mechanism. Anyone who is facing a delay in project has to submit the details on PMG’s portal. We have 12 sub-groups that meet periodically (three of these every week) with representatives from the respective ministries and industry (the concerned company).
We hold meetings with all the stakeholders ? line ministries, company involved and even bankers ? to resolve the issue. We have created a platform where attempts are made to resolve issues through process of consultation with various stakeholders. PMG doesn?t take a decision. We are facilitators. In case the issues are not resolved at the level of these sub-groups, they are taken up by the concerned ministries to the cabinet committee on investment (CCI). That’s the protocol.
We started with about 70 stalled projects in June-July. That number has gone up to about 388 now, involving investment of close to Rs 16.98 lakh crore. Of the total cases referred, the PMG along with CCI and CCEA have facilitated clearance for 120 projects, involving a total investment of close to Rs 4 lakh crore. About 20 projects were dropped, no action can be taken because the matter is either subjudice or are of the nature that they cannot be taken up by the PMG (such as allocation of domestic gas). We are now left with around 226 projects, entailing a total investment of close to Rs 10.44 lakh crore. The sub-groups feel about 24 projects can be referred to the CCI for clearances.
There has been criticism that despite being cleared by the PMG and the CCI, there have been delays in final clearances from some ministries such as defence or environment.
While considering issues for the purpose of resolution, the mandate is clear, no procedure should be bypassed, no law should be bypassed. We seek a time-frame from the line ministries for taking a decision. In most of the cases, they do provide a time-frame and live up to their commitments. However, there were cases when they didn’t. The sub-groups create a pressure for a timely decision and it seems to be working.
We also provide some different perspectives to facilitate resolution of issues. Let me give you an example.
The ?Aerocity project comprising a number of hotels got stuck because of security reasons ? one side of the hotel was overlooking the airstrip and a couple of hangers in the international airport and that posed a security threat. The only way out suggested ?by the security agencies was to block the windows on that side of the hotel, which would have made the project a non-starter. This came up before us on July. We presented a case that if the PM is considered secure behind a glass while addressing the nation from the Red Fort on August 15, why can’t similar glass be put on the windows of the hotel rooms facing the airstrip. Accordingly, it was suggested that bullet-proof glass can be put instead of blocking the windows. This helped resolve the crisis and one of the hotels (The Marriott) was opened for tourists on November 22.
In fact, we have had discussions with the CII and Ficci to set up small groups to look at ways to simplify and cut down delays in various procedural issues, especially those pertaining to various clearances.
There are many issues that are stuck at state government levels. How do you tackle those?
Since June, I have travelled to 16 states ? six states twice over ?to help resolve the problems of stalled projects in those states. The issues (delay in projects) relate both to Central ministries as well as the state governments. We have evolved a protocol where the team from the Centre visits each such state where there are issues to be resolved. Some states even call district collectors for discussion as issues such as land acquisition are handled at that level.
Will the PMG continue in its present form if there is a change in baton at the Centre?
The delay in projects is a major problem across India irrespective of whoever is in power in a state. In fact, we have received information that five states are willing to set up similar cell like the PMG to handle cases below Rs 1,000 crore of investment. Rajasthan and Bihar have already set up such an institution. Gujarat has sent a team to understand the software that is being used by the PMG to facilitate resolution of issues. Maharashtra and Andhra Pradesh have also taken a decision to set up similar cells. In next six months, about 16 major states will have a project monitoring cell. The software, which we use, can be used by the states as well and the two systems can be integrated for better coordination.
Do most of the projects that come up at PMG pertain to private sector?
It’s a mixed bag. We have got requests for redressing public, private and public-private partnership projects that were stalled. But yes, approximately 70% of the stalled projects are from the private sector.
Banks are unwilling to lend more. How do you plan to resolve that?
Our initial mandate was to resolve issues. We are now looking at the next stage as well. We are now also monitoring whether the decisions taken either by CCI/CCEA or the respective ministries are being implemented. For example, in the power sector we look at whether fuel supply agreements have been signed or not. Of the 78,000 megawatt for which a decision was taken by the CCEA, FSA has already been signed for 70,000 MW.
A decision has also been taken to follow up on the actual investment taking place on the ground. Though the portal for the purpose will be that of the PMG, the task has been assigned to the department of financial services The idea is to follow up a project to ?its logical conclusion. Necessary software has already been prepared. On December 5, the PMG will have a meeting with the concerned ministries to get the process going. After all clearances are given it is assumed that the investment will take place. While it’s in the domain of the company on why they are not investing in a project, we will attempt a follow up on that as well.
If a bank declines to fund a project, we can’t do anything about it because it is a financial decision. However, we have a banking sub-group to look at whether the company needs further facilitation. Recently, we have facilitated a company to get a corporate debt restructuring (CDR) package after deliberation with 20 bankers.
Will this initiatives especially with bankers help arrest the NPA surge in the industry?
If a project runs into problem, which has been a case for many companies, it is bound to be reflected in the NPA levels. The fallout of faster project clearance will obviously help banks reduce NPAs.
Raj Kumar Ray
