New Delhi: Prime Minister Manmohan Singhon Thursday eased the norms for transfer of government land for specific projects to speed up the construction of roads, ports and other infrastructure in Asia’s third largest economy.
The new rules are likely to accelerate the development of infrastructure projects in sectors such as roads, railways, civil aviation and ports that are required to boost economic growth, which had slowed to a nine-year low in the quarter ended 31 March at 5.3%, hurt by a slowdown in investments.
The Prime Minister’s Office (PMO) said in a note that the easing of land transfer norms will benefit infrastructure projects that the government is building in partnership with non state-owned firms by doing away with the requirement of a cabinet nod for some.
“Requiring cabinet approval for each PPP (public-private partnership) project meant adding a few months to complete the processes for securing cabinet approval,” it said.
The move follows decisions such as streamlining security clearances for power and other infrastructure projects taken since 7 June when the Prime Minister held a meeting to set infrastructure targets for the 12th Five-Year Plan.
Most PPP projects, though, are large, and will need cabinet nod after being cleared by the PPP approval committee, said a government official who declined to be named.
Sector experts still welcomed the move, saying the process of getting a cabinet nod was a major factor of delays in infrastructure projects, particularly in roads and railways.
“The PMO’s decision will make it possible for the ministries concerned to give permission for projects quickly and will have a positive impact on PPP projects,” said S.K. Goel, chairman and managing director of India Infrastructure Finance Co. Ltd. “Road projects have seen the maximum delays due to slow clearances.”
Vinayak Chatterjee, chairman of Feedback Infrastructure, a consulting and engineering services firm, too, said the additional conditionality of cabinet nods significantly delayed projects under PPP as well as by public sector units. “The announcement will remove significant bottlenecks,” he said.
The PMO also said the Railway Land Development Authority will not need cabinet nod to transfer railway land, though it will continue to be governed under existing policies and norms of the railway ministry and the government. The authority develops vacant rail land for commercial use and generating additional revenue. Indian Railways has about 40,000 ha of vacant land, according to the Railway Land Development Authority website.
Samir Kanabar, partner, infrastructure practice, Ernst and Young Pvt. Ltd, said the PMO’s decision was significant as not many PPP projects, especially railway projects, were progressing because of this regulatory hurdle.
In early 2011, the government had imposed a ban on transfer of government land to any entity, except in cases where land was to be transferred from one government department to another. Departments that required alienation of government land through lease, licence or rent for a project had to seek specific cabinet approval.
Goel said only government-owned land is being freed as per the current notification. Ministries such as railways and road transport own vast tracts of land and can now take decisions for quick clearances of land transfer. However, this is not applicable for defence and forest land, he said.
An environment ministry official who didn’t want to be identified said the PMO order will not apply to environment or forest clearances. “The Forest Rights’ Act, the Forest Conservation Act and the Environment Protection Act will continue to function. The statutory process of the government will be followed,” he said.
M. Murali, director general of the National Highways Builders Federation, said highway projects that have a rail overbridge component will benefit from the relaxation as getting land for this will not require cabinet nod. Nearly 70% of highway projects have railway overbridge components, he said.
Aman Malik, Asit Ranjan Mishra, Liz Mathew, Neha Sethi, Remya Nair and Shubham Shivang contributed to the story.