It is believed that over sixty-five clearances are required to set up an infrastructure project like a thermal power project. These are required at three different levels - central, state and local. For a company wanting to invest in power generation business, the entire procedure can be very cumbersome. Now imagine a body which is a one stop solution for all the problems relating to execution of projects in the infrastructure sector. Having a single autonomous body that deals with all the project related matters keeps the process simple and tidy.
Considered as one of the many reforms announced by the government in the recent past, the National Investment Board (NIB) is a body that would be headed by the Prime Minister and will have ministers from key ministries as its members. This body is being created to expedite large scale infrastructure projects.
Similar to most of the other reforms, the NIB proposal has come with its set of controversies. For instance, the environment ministry's concern is that the NIB will find it difficult to balance between development and environment. Also, it believes that the body does not possess the domain knowledge to gauge the projects from the perspective of the environment and forest ministries.
Cabinet note - a step forward
The NIB proposal seems to have taken one step forward as the Union finance ministry has finalised a cabinet note for creation of the body. The note states that projects where investment is in excess of Rs 10 bn in sectors such as roads, mining, power, petroleum, natural gas, ports and railways shall be monitored by the board. Also, the board would be empowered to set time frames for ministries to achieve milestones in the projects. And if the ministries fail to complete their tasks - such as grant of licences, permissions, and approvals - on time, the projects will be taken over by the board.
It is believed that investments worth Rs 1.3 trillion are held up for want of one clearance or the other and that nearly 35 out of 89 projects, having an investment over Rs 10 bn each, have not got the environment ministry's nod.
Further, it is mentioned that the NIB would be able to deal with the concerns with the respective representatives of the aggrieved parties to resolve the matter, thereby avoiding a situation of going into litigation, which has become quite common in the infrastructure space in the past few years. For instance, it is believed that Rs 90 bn is yet to be paid to highway work contractors on account of arbitrations with the National Highways Authority of India.
While the effectiveness of this board may be difficult to gauge at this point, we can certainly vouch for its necessity to the Indian economy's long term well being.