Clear the air

The Posco clearance should start a new chapter in the environment ministry too.

The Posco steel plant in Orissa,which was supposed to produce 12 million tonnes a year,was a headline project by any standard. Thus,when the Union environment ministry put it on hold last year,it wasnt just a body blow to Orissas efforts to create non-farm employment and to get moving on using its resources effectively. It had an effect far beyond Orissas and Indias borders,as investors began to worry about the quality and reliability of regulation. The manner in which the re-appraisal was announced only intensified those fears; highly visible grandstanding about what should have been a simple regulatory decision merely fed into fears that arbitrariness had crept into the process of environmental clearances in

India. Now,several months on,comes news that the environment ministry has issued a conditional clearance for the project. The plant will go ahead,as long as technical specifications are met. This is a welcome movement: industry should know that environmental regulations are meant to be followed,and the ministry,importantly,should remember that it is supposed to enable compliance,not de-industrialisation.

The implications of the report will be carefully studied. But,as the RBI pointed out in its latest quarterly review,when explaining why foreign direct investment in India had dipped precipitously,a hint of arbitrariness has immense power to harm the India growth story. It makes difficult the task of convincing industry and locals that the government is serious about development. In some sense,theres too much speculation that surrounds environmental regulation today. Regulation is a matter of bits and pieces,of enforcing the fine print not of making grand gestures.

It is to be hoped that,post-Posco,the independent institutional structure that enforces green regulations will be strengthened,so that the confusion and doubt that has set in over the past year or so,hampering investment and growth,dissipates.

Indeed,the environment ministry must now visibly set out to ensure projects meet environmental requirements,instead of appearing to look for ways to re-open them simply for the sake of doing so,if not to in fact stop them from going ahead. And we need strong institutional structures,not arbitrariness. Fair,independent committees would be a good place to start.