Restore Trust for Economic Growth

Economic Times, October 29, 2012

By Pradeep S Mehta

National Investment Board will cut project delays, but improve governance to regain public trust

At the Earth Summit in June 1992, Cuban leader Fidel Castro spoke for just one-and-a-half minutes as one among 104 heads of governments and states over two days. He made the cardinal point that when we discuss biodiversity, let us not forget the human being.

Castro’s point was simply that public policy should be scripted and executed with people at the core. The current debate surrounding the National Investment Board (NIB) should also be looked at through the prism of creating jobs for people and simultaneously ensuring that the environment does not suffer more than necessary.

Humans, biodiversity and economic reforms have continued to score high decibels in the public discourse since the first Earth Summit. The debate has been mainly on the issue of balance between environment and development, and that is not an easy task. Whenever we have surveyed people, development always scores over environment. Jobs and two square meals a day are of greater importance than living beings dying.

Public policy needs to balance both, because people may not be able to appreciate the need for such balance.

The problem with the current prescriptions in setting up a high-powered NIB is that the potential of hurdles of the environment ministry and tribal affairs ministry will be short-circuited, so that approvals of critically-desirable infrastructure projects can be speeded up without ousting the jurisdiction.

Indeed, we need to cut down the delays associated with project clearances, so that industrial progress can be sustained to create more jobs.

Environmental clearances have been a bane for two reasons: rigid laws and lackadaisical processes. Many of the regulations in our laws are drafted poorly. Consequently, administrators apply the rule book even without thinking of proportionality that is always at a premium in our processes.

In the instant case, the argument is about pre-establishment clearances, and not post-establishment compliances. The same laws also apply to operations, and can be a nightmare.

The problem with the issue also arises from the often irrational opposition by some civil society elements. Even farming has been an intrusion in nature, and the reason was simple. People needed food, and not just relied on wild fruits, berries and animals to meet their needs. Agriculture was discovered and people started encroaching forests and wastelands to grow crops, causing huge loss of biodiversity.

Nature adjusts to these changes as civilisation evolves, and so will the future.

Discovery of the wheel, and now the internet, changed human mobility and communications hugely. The industrial revolution happened following the discovery of the steam engine, and ever since, we have been crossing unimaginable frontiers. Human needs and greed continued to evolve and were often shaped by times and newer discoveries. Therefore, one needs to recognise the dynamics of nature and its interaction with humans.

That said, the NIB needs to recognise that it will need to take a two-track approach to projects. One that will include industries that involve forests and similar sensitive areas, and, second, others that will not need such access. The sensitive ones will require closer and unavoidable scrutiny. Other projects that may not have the same characteristics can be put on fast track.

The government should also appoint an ombudsman to deal with delays, especially where even NIB clearances are held up for some silly reasons, which often happens in our elephantine and turf-ridden system. Involving states in this exercise is a must, which does not appear clearly in the proposals surrounding the NIB.

The other issue that could skew the NIB’s goals is the proposed new Land Acquisition Bill that has just been approved by a GoM. It too, inter alia, has provisions for social impact assessment and environment impact assessment.

Many fear that the Bill in the form that has been cleared by the GoM will not be able to sort out the hurdles in our quest for industrialisation and urbanisation. What about checks on completion of cleared projects and within a reasonable time? After all the efforts put in by the high-level NIBs, if a project does not take off due to the carelessness of the entrepreneur, what will be the remedy available to the government?

Lastly, the issue of people’s confidence in the NIB proposal needs better communication strategies. As it is, people are concerned with myriad problems, and view the government more as a friend of business. This only exacerbates the mistrust of people, whether public policies are being framed and implemented sincerely, for their benefit or not. Their appreciation of the fact that we need to create wealth to create more jobs is not so evident.

Industrial progress is not the only key to creating economic wealth, but there are several other flanking and fundamental areas that need to be reformed. These include, but are not limited to, governance and administrative reforms, and, most crucially, restoring trust of people in government. Only then the NIB proposal will earn people’s confidence.

Should the government also not set in motion a process that can identify and list reform and remedial measures and report to people periodically? The checklist could begin with crony capitalism, corruption in the polity and administrative reforms. Even if we take one step at a time, it can be done.

The author is secretary general of CUTS International

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