Home / Industry / Narendra Modi’s faster green permits seen fuelling growth

Mumbai/New Delhi: Prime Minister Narendra Modi gave Hindustan Copper Ltd environmental clearance to expand mining in Jharkhand less than three months after taking power in May, ending the company’s three-year wait.

“The approval is part of faster decision-making that’s eliminated a backlog of applications for federal green permits," according to environment minister Prakash Javadekar. That implies 298 projects from mining to construction under ministry evaluation as recently as June have been sanctioned, a sign of Modi’s push to cut red tape that stifled investment.

“After the new government came to power the process got expedited and within three months we got the environment approval," K. D. Diwan, managing director of Kolkata-based Hindustan Copper, the only miner of the metal in India, said in an interview on Wednesday. “We still need forest clearances. Given the speed of approvals, we hope to get them in a month’s time."

India’s economy probably grew 5.5% last quarter from a year earlier, the fastest since 2012 as Modi seeks to spur spending on everything from roads to factories, the median estimate in a Bloomberg News survey shows before a release on Friday. The government is trying to overcome hurdles such as slow land acquisition and coal shortages that are stalling $182 billion of projects, even as activists flag environmental risks.

$101 million

Hindustan Copper sought in 2011 to renew and expand copper ore mining to three million tonnes a year from 300,000 tons at the Rakha mine in Jharkhand. The 1 August ministry nod brings a project costing 610 crore closer.

Another beneficiary of the green-permit surge is ONGC Petro additions Ltd, a unit of Oil and Natural Gas Corp., India’s biggest explorer. It got clearance on 3 July for a $300 million power plant in Gujarat state, after applying in 2011.

“Delay is costly," Aloke Kumar Banerjee, finance director at state-run Oil and Natural Gas, said on Wednesday. “The environment approval process for projects needs to be expedited. But I’m not saying the environment should be compromised."

India issued about 420 green permits for mining, industry, infrastructure, construction and power generation projects last year, down from almost 1,000 in 2009. Graft scandals afflicting the previous Manmohan Singh-led government fanned bureaucratic inertia, contributing to the slowdown.

Javadekar’s steps at the environment ministry include beginning a new online system for applications on 29 May, three days after Modi’s inauguration, for transparency and speed.

Dirty air

Javadekar’s predecessor, Veerappa Moily, accelerated clearances earlier in 2014 as Singh sought a pick-up in annual economic growth from near a decade low before general elections.

“We have fast-tracked decision-making," Javadekar told Bloomberg News on 26 August. “Whatever project was on my table, I’ve cleared all projects. He said on 17 July that 298 proposals were pending in the ministry as of 30 June.

For some, a rush to sanction projects poses threats in India, where the World Bank estimates environmental damage costs about 3.75 trillion a year. Outdoor air pollution alone—Indian cities have some of the world’s worst—costs 1.1 trillion in shortened life spans, the bank said.

In one example of the potential risks, families living near uranium mines in Jadugora in Jharkhand have for years seen their children waste away and lose control of their limbs before dying in some cases. State-run Uranium Corporation of India Ltd and the federal Department of Atomic Energy have denied the deformities are linked to the mining.

Dysfunctional

“The system is dysfunctional," said Chandra Bhushan, deputy director general at the New Delhi-based Centre for Science & Environment. “It doesn’t protect the environment, it takes too much time and it breeds corruption. What they are doing is diluting the existing system and simply relaxing it for industries. That’s even worse for the environment."

Two calls to Javadekar’s mobile phone for a response to the claims went unanswered.

Modi’s Bharatiya Janata Party (BJP) swept to the first single-party majority in the lower house of parliament in 30 years after vowing to fight corruption and revive the $1.9 trillion economy.

The benchmark S&P BSE Sensex equity index has climbed 25% this year and the rupee has strengthened 2.2% against the dollar, buoyed by the prospect of a growth revival under a more stable government.

A 5.5% expansion in gross domestic product (GDP) in April through June would exceed 4.6% in the prior quarter and be the fastest since 5.8% in January through March 2012.

Economic Agenda

Modi has eased curbs on foreign investment in the defence and railway industries to woo inflows, and released some rice and wheat stocks to curb a consumer-price inflation rate of almost 8%.

At the same time, he’s encountered setbacks, including failure to get rapid assent in parliament for more foreign-direct investment (FDI) in the insurance industry. India last month also contributed to the collapse of the biggest trade deal in the World Trade Organization’s 19-year history.

Among investments, 210 projects worth 11 trillion remain stalled, with more than 40% facing environmental hurdles, according to the government. While that’s down from $255 billion in May, it’s still equivalent to the size of New Zealand’s GDP.

Modi’s setbacks have raised questions about the prospects for his agenda of reviving economic expansion, as the government nears 100 days in office.

“There’s a gradual pick-up in growth," said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai. “But there’s no magic wand. The government needs to press forward with reforms. Environmental clearances are an immensely important component as they have held up massive projects." Bloomberg

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