Expect NIB to be game changer for project clearance: Expert

As the parliament gears up for yet another session on FDI in retail, another crucial issue about the National Investment Board (NIB) will also be up for debate. A final decision on the matter is expected on December 6. In the event of some opposition from the environment ministry and ministry of commerce, there is also talk about a bit of dilution of the NIB as compared to how it was originally conceived.

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Vinayak Chatterjee, Chairman of Feedback Infrastructure said the Prime Minister's Office (PMO) is likely to decide on the list of projects to be taken under the NIB and the board might focus on specific projects over Rs 1000 crore. He also added that the amendments recommended for the NIB make it more practical.
Moreover, Chatterjee expects the NIB under the leadership of the Prime Minister to be a game changer in terms of project clearances. Therefore, industry bodies are also in favour of the proposal, he opined. He believes the NIB will focus on projects across all sectors equally.
 
Here is the edited transcript of the interview on CNBC-TV18. Q: Are you also hearing that there might be a certain level of dilution in terms of raising the threshold from Rs 1000 crore to Rs 2000 crore per project just to assuage some of the opposition which may have come in?
A: Not really. I haven’t heard anything about the dilution. It is moving in the right direction because Rs 1000 crore seems to be appropriate. I haven’t heard anything about that figure being raised and the only thing I heard was that Rs 1000 crore projects may not necessarily come to NIB. It is the Prime Minister's Office (PMO) which is going to go through the list of various projects worth Rs 1000 crore and decide which are the ones that require admission to the hospital ward, if I may put it that way.
And that’s a fair statement because every Rs 1000 crore plus project need not be embroiled in tangles of webs. There are some that may have all the clearances and are fine to go. So why should they end up cluttering the agenda of the NIB and wasting its time? I think some practical decisions have been taken and I am actually quite appreciative of the fact that there has been debate going on about how to give it the powers of implementations so that once a decision is taken, nobody questions it.
 
Very rightfully the rules of business of government allow cabinet decisions to have the power of enforceability and implementability which just a committee under PMO does not have. They have taken some good decisions in terms of making it or trying to position it as a cabinet committee, in terms of having the PMO play a key gatekeeper role to only take those projects that really deserve their attention and the pace at which it has moved.
This is one of the fastest changes in policy that I have seen in recent times because Chidambaram first made this suggestion at the National Development Council that met to adopt the 12th plan document or to discuss it. There he made this statement that we should have something like the NIB and I am not sure but, it is not even two months and within two months we are almost looking to have a clearance for a very major step like this. I think it is good for the country.
At a personal level, I think they should call it the NIB rather than calling it a cabinet committee on investment. It has a nice ring about it and does not sound flat. There are too many institutions in this country which are called CCI. So I'd like if they can keep it as 'National Investment Board' and under that within brackets, 'a cabinet committee'. It is chaired by the Prime Minister, there is no doubt.
To address your two points about the resistance, you are perfectly right in your comments that the two pockets of resistance, the stronger one was the environment ministry. The second one was the Ministry of Commerce which felt that there was some overlap of jurisdiction between its role as the anchor for the Foreign Investment Promotion Board (FIPB) which also gives permissions to mega projects and the NIB.
In the whole process my gut feel is that these will be addressed in the cabinet because these are issues that Congress ministers within the cabinet are also raising and I am sure the PM and the others will be able to sort out this difference and get going. To be honest if it works well, it is going to be a very major game changer for the country. I am actually looking forward to the outcome pretty positively. Q: We hear an amended form may come in as early as the December 6. Taking into consideration the point about giving it more powers, I think the industry's concern is whether or not it gets cleared through jurisdictional powers or constitutional powers, will that amended form take note of that?
A: I think so because everybody is rooting for it. To be honest across the opposition, across the country, I really don’t see anybody who is against this proposition. And the government is going the extra mile to see that this institution actually clears the logjam that particularly affects the infrastructure sector. The fact that it has been constituted under the cabinet and the structure of the constitution, the way the government’s rules of businesses are, a decision of the cabinet is supreme. It then is enforceable across various line ministries.
Of course they can't take decisions which are against the law of the country. That is very clear. If there are laws to be changed on environment and others, that task still remains. But a cabinet decision cannot go against the laws of the land, then the parliament has to change the laws. But, within the existing laws, there is enough scope for speeding things up. I shouldn't be too worried about that.
_PAGEBREAK_ Q: There has also been talk that the National Investment Board could be chaired by the finance minister and not by the prime minister. Do you think it is possible and how much of a difference does that make if it were to come about?
A: No. To be honest with you, while I heard about that rumour, I think from the noises that I heard across yesterday and day before, it is very clear that all ministries want a neutral platform and the finance ministry per se, irrespective of who is the finance minister is just considered one more powerful ministry. The popular view is that it should either have been housed in the Prime Minister's Office (PMO) or in the office of the cabinet secretary, which is the cabinet secretariat in order to anchor it from a place where all ministers and ministries have equality.
Therefore, there is no question of the prime minister not chairing it and its anchorage in the cabinet secretariat is a fair decision. But, I do not think that the finance minister is going to chair it. Q: There are some people who believe that finally after the give and take with different ministries, the NIB might be positioned as something which clears 20 to 25 projects to give the investment cycle a push which it needs but, it may not evolve to be a durable structural mechanism that we are all discussing it to be. Do you think it could be that, it is an ad hoc 20-25 projects clearance mechanism rather than a new structure that is put in place?
A: Not at all. The Foreign Investment Promotion Board (FIPB) was created in 1991 and it has turned out to be a reasonably durable institution which has across the last two decades given a slew of clearances to Indian companies and particularly multinationals, from the old days of Pepsi and Coca-Cola to others. It cleared a whole lot of de-license Raj decisions and it is a durable institution.
The expectation is that knowing the complexity of the Indian environment, if there is coordination at the federal level across the line ministries, then coordination at the state capital levels and eventually at the sub state capital levels or the local levels. I think the enormity of the problem is known and every well-wisher of this country understands this problem and therefore, the wish and prayer is that the NIB remains a strong durable institutional intervention mechanism. That will be the hope. Q: In the past the PMO has been clear that their focus remains on power projects especially, for the NIB. Do you think there is any pecking order in terms of which kind of projects they want to address first?
A: Not really. There is no pecking order in that sense. Of course, power is a priority but every sector chief will tell you that there are enough projects in their respective sectors, whether it is airports, ports or roads, which are priority. There are two kinds of task that I envisage as the first task for the NIB. One is to get the logjam cleared for projects which are already in the pipeline or which are stuck and that should be task one. For example, from the confederation of the Indian industry many of us including me have made a point that once the NIB is constituted, it must also take some reform agenda.
For example, everybody knows that the forest and environment ministry is not just for its own sake as we believe, but they are hung strung by a series of historical laws which have built up over the years including Supreme Court and other intervention which have created a very complex web. So, one of the suggestions is that the NIB also takes a look holistically at issues that affect most projects.
Therefore, can they immediately set up a task force to actually clean the slate and come up with a new set of legislations which would be world class and draw the best from the other countries who manage their environment and create a new architecture for environment?
Similarly, we have made a recommendation that NIB must also take up the issue of independent regulation. The three pillars of independent regulation is independence, autonomy and accountability and a new regulatory architecture for independent regulators be created. So, cleaning up the environment issue, the laws, having a new architecture for regulation are also tasks that cut across ministries and sectors. These are horizontals. Who will handle a horizontal? A line ministry cannot.
So, we are recommending that the NIB have two distinct set of functions. One, clear permissions for projects in the pipeline and future projects and two, clear up the arena that allow many more projects to sail through in future without hitting obstacles.