Bharat Jhunjhunwala
The Union government has sought to dilute many provisions of the Environment Impact Assessment Notification (EIA Notification) in order to speed up the establishment of factories and mega cities and making of highways. As per the plan, the requirement of public hearing is to be removed for certain projects, the ministry would be empowered to grant post-facto Environment Clearance (EC) to projects that are presently operating without EC, and large numbers of projects such as irrigation and dredging of rivers are to be exempted from obtaining an environment clearance, etc.
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The intention of the government appears to be to help quickly establish mega cities and industries; and enable the speedier completion of highway projects. Plans apart, a prompt EC is however necessary for securing an increase in our GDP. The damage to the environment pushes back our GDP. A large numbers of our High Net-worth Individuals (HNIs) have migrated from India and taken their money with them. One of their grouses has been that the air and water in India are polluted. Thus, establishment of polluting industries may increase GDP directly but can lead to an even greater reduction in GDP due to fleeing of our money. We are also not able to attract tourists despite having the Taj Mahal, the Himalayas, the Ganga and the beaches of Goa because of poor environment.
One of the reasons for the poor state of our environment is that a number of projects meant ostensibly for the increase in GDP are actually bringing about the opposite result. Take for example, the National Waterway No 1 (NW1) being made on the Ganga. The cost of transporting one tone of material over a distance of one km on NW1 is said to be Rs 1.06, against Rs 1.36 by rail. It is said that the NW1 would lead to a saving of 30 paise per ton per kilometer. But we forget that the distance from Haldia to Varanasi by rail is about 800 km, against about 1,300 km by NW1, because the river meanders like a snake while the rail runs in a straight line. Thus, the cost of transporting one tonne of material from Haldia to Varanasi is about Rs 1,370 by waterway and Rs 1,080 by rail, despite the NW1 having a lower per ton per km cost. This project clearly harms the GDP.
More so if we add the loss of dolphins, Hilsa and other fishes, deterioration in water quality, etc.
Yet, the officials of the Inland Waterways Authority of India are pushing the project for obvious reasons that are best left unsaid. At their behest, moreover, the government has sought to allow dredging of the rivers, saying environmental regulation was a hurdle in the GDP growth. The truth is, GDP will increase if such ill-planned projects are stalled. The environmental regulations will do a yeoman’s service to the GDP by stalling such projects. They should be strengthened to help grow the GDP.
One specific area that requires attention is that the costs and benefits of the projects must be assessed dispassionately. At present, the environmental regulations do not require any assessment whether a project is beneficial for the GDP or not. Also, the EIA, which is a precondition for grant of an EC, should be made by an independent agency appointed by the government. At present, the project proponent appoints the EIA Agency. Needless to say, he who pays the piper calls the tune.
Thus, EIAs suppress more environmental impacts than they disclose. For example, the environmental assessment of NWI got done by no less an entity than the World Bank has ignored the fact that the distance is more through the waterways. The third area requiring attention is that an EC should be valid only for a specified number of years. Every project has a “commercial life” built into its financial assessment. The project is supposed to pay back the investment in this period. The hydro-power projects in the United States, for example, are given clearance for 30 years and the Project Proponents are required to obtain fresh EC after this period. The underlying idea is that the Project Proponent has already recovered its investment and it suffers no loss if the project is scrapped.
There is need for reform of the EC process. It needs to be fast-tracked. Projects are hit by the long time taken in the grant of the environment, forest, wildlife, coastal and pollution clearances. The government could make a unified clearance process which looks at all these laws in one go while, at the same time, strengthening these laws.
The other area calling for reform is the interference from the courts. The copper plant of Vedanta has, for example, been closed down by the courts due to the violation of environmental regulations. This has forced the country to import copper, leading to a huge loss. There is a need to take a balanced view on this matter.
That said, there is need for speedy disposal of cases in the courts. The Prime Minister will be well-advised to take steps in this direction. He may meet with the Chief Justice of India to fast-track disposal of case involving economic activities. Secondly, the government should increase the strength of judges in National Green Tribunal, high courts and the Supreme Court by five times so that projects that are truly beneficial for the GDP are decided on speedily.
Thirdly, the number of working days of our courts should be increased. According to one study, the Supreme Court works for 190 days a year; the high courts an average of 232 days and lower courts 244 days. They all should be made to work for 280 days.
Environment protection and GDP go hand-in-hand. The problem lies in the slow working of the government officials and the Judges. We must strengthen the environmental laws and yet ensure speedy implementation of projects to secure an increase in GDP.
The writer is a former Professor of Economics at IIM Bangalore.
