Green Light's On

For some time now, green tape has appeared to replace red tape as the dreaded hurdle to industrial projects. The environment ministry's conditional nod to the $12 billion Posco steel project in Orissa comes as a much-needed signal that industrialisation and green conservation aren't mutually exclusive.

India Inc has welcomed the move, and with reason. The South Korean steel major's foray is billed the biggest single-project FDI in India. The steel sector in particular will gain with boosted output, better product quality and introduction of the latest technology. But the decision has a broader impact as well. Had Posco's plans been nixed after waiting six years to take off, India's image as a high-returns investment destination would have taken a beating.

The RBI recently said a dip in inbound FDI seemed linked to "environment-sensitive policies" and cited gridlocks faced by various projects involving mining, integrated townships and building of infrastructure as having dented investor enthusiasm. When net FDI inflows to India were sliding last year, China, Brazil, Thailand, Mexico and Indonesia saw investments rise appreciably. If fast-growing India, with a domestic demand-driven economy and abundance of skilled affordable labour, has caught the world's eye, any seeming growth-versus-green clash can only stymie the leveraging of its advantages.

Inarguably, we can't blink at violation of laws, be they related to land sales or compulsory afforestation. As Posco's case shows, it's possible for rules to be laid out when waving the green flag. Rules must however be transparent, and stringent within reasonable limits. Rather than be guided by woolly-headed activism, they need clearly enunciated environmental and social aims to effectively protect ecology and livelihoods. While disparate, often contradictory regulations need streamlining within an accessible and universally applicable institutional framework, it's pragmatic to write in the need for case-specific fle! xibility depending on the economic, social and strategic importance of projects pushing growth and creating jobs.

For example, bringing in big-ticket FDI, Posco's been viewed by overseas watchers as a test case of India's business-friendly credentials. A project like Navi Mumbai is key to the future of India's financial capital whose existing airport capacity has reached saturation point. Nuclear power projects are also high priority, given our need to diversify energy sources.

Projects need faster clearances, mandating better Centre-state coordination on issues like forest rights and displacement. Despite environment assessment rules making project appraisal strictly time-bound, tardy decision-making has crippled many plans, be it mining, road-building or port construction.

Finally, India can't delay introducing reformed, market-driven land acquisition norms or unravelling land rights tangles, including by computerising records. Properly compensated and/or rehabilitated, people making way for projects will feel they're stakeholders in development, not its victims.

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