- Infrastructure Bottlenecks?
- What is National Investment Board (NIB)?
- Functions of National Investment Board (NIB)?
- Anti-argument/Objections against NIB?
Infrastructure Bottlenecks?
- Infrastructure= railways, roads, ports, thermal plants etc. that are essential for other economic activities.
- Infrastructure projects worth over Rs 7 lakh crore are pending because environment ministry is not clearing the files.
- Every time a coal miner wants to increase production, he has to get fresh clearance from environment ministry. It is time-consuming. This has led to low coal-output= thermal power plants cannot produce much electricity =grid failure, as we discussed in earlier article CLICK ME
- Another example: If you want to open a thermal power plant, you need to get a file cleared from the Coal Ministry. But to get that file cleared, you need to get environment and forest clearance from Environment Ministry. Even if environment clearance is given, forest clearance may take longer or even ultimately be denied. Thus, some power projects are not executed for several years, even after winning an auction.
- To extract bribes, the corrupt bureaucrats intentionally delay the files.
- But sometimes even honest officials delay the files because of media-sensationalization, NGO-lobbies, CAG-activism, judicial activism, R.T.I activism…they fear if some scam comes out and if their signature is on the approval file, then they’ll get victimized or made scapegoats. So they too avoid taking decisions.
Because of ^these issues,
- There is huge infrastructure deficit (=not enough rails, roads, power stations, electricity output required to get 9% GDP growth).
- Delay in project= input cost increases= indirectly this leads to inflation (price rise)
- Because files are not cleared= production/construction doesn’t start= Less employment opportunities, directly (in the coal mine itself) and indirectly (in some xyz factory that will use that electricity).
- Government is unable to achieve the Five year plan targets. Check this table: Source: Department of Economic Affairs.
What is National Investment Board (NIB)?
Chindu has proposed to setup this National Investment Board.
- At present, the final decision/decisions are to be taken by one or more ministries.
- This is the reason why a truly “final” decision does not emerge for many years, proposal files keep making merry go round from one ministry to another ministry.
- Therefore, the power to take the final decision should be vested in separate board.
- This would be called “National Investment Board”
- Basically it’s a cabinet sub-Committee, chaired by the Prime Minister + FM, Law Minister as its members.
- For granting/refusing FDI- approvals, there is already a Foreign Investment Promotion Board (FIPB). And it has lead to fast clearing of files and boosted investment.
- NIB will provide the same benefits, especially in the infrastructure sector.
- Prime minister has talked about a new phase of reforms unleashing animal spirits. Hunting is a prime example of the latter and it’s high time we created a body that went out and energetically sought investment for India amidst an exciting global jungle.
Functions of National Investment Board?
- At first, NIB will focus on clearing investments project of Rs. 1,000 crore/more in roads, mining (especially coal), power, petroleum and natural gas, ports and railway projects.
- A dedicated secretariat (staff) will support NIB to identify and monitor key projects and sectors.
- In the long run, NIB will serve as an ‘arbitrator’ i.e. If a company feels that its applications for infrastructure projects has been delayed or even rejected by some Ministry or Department without sound reasons, then it can approach NIB for clearance.
- NIB will be to take over the process of granting licences, permissions and approvals whenever the respective ministries fail to act in time.
- Once the final decision is taken by the National Investment Board (NIB), no other Ministry or Department or Authority will be able to interfere with that decision or delay its implementation.
Anti-argument/Objections
- The main objective of NIB seems to shortcircuit or overtake Environment Ministry for granting project approvals. But NIB might end up approving projects that are not good from long-term environmental view.
- Creation of such an entity might lead to lax environmental standards and social safeguards (i.e. problems of displaced families because of a project).
- Government should worry about not just growth but green growth.
- NIB has no constitutional authority and its creation will decimate (wipeout) the role of the Environment ministry
- NIB will turn individual ministries and departments into rubber-stamps.
- Setting up NIB suggests that existing institutions are not functioning properly. But Creating more institutions to fix existing institutions, is like firefighting. The real long-term solution = re-write the office-manuals/ standard-operating-procedures for each ministry to prevent file-delays and the tendency to evade responsibilities.
- Many projects in the railways, coal, telecom, petroleum and power sectors are delayed due to “law and order problem” (=naxalites). NIB is no panacea for this.
- Speedy project clearances and implementation would require solutions at the district administration and state Government levels, where the NIB would not be of help as it will comprise representatives only from central ministries.
MCQ
Which of the following statements are correct, regarding the Proposed National Investment Board?
- It’ll be headed by the Finance Minister.
- It’ll deal with granting/refusing the FDI in retail, aviation and power-sector.
Answer choices:
- Only 1
- Only 2
- Both 1 and 2
- None
The answer is (d). Headed by PM. For FDI NIPB is there.
Sir correct me if I m wrong plz..
is it d
Sir plz explain how to Bank work in economy and share market work
yes i also think the same the answer is d
@To the four friends above,
Yes answer is (D).
Tricky Question but a good one…
(d)is the correct ans.
Again nice article sir :) :)
@ alok…i think it is not NIPB,but FIPB…and ofcourse ans is D…thanx
thank you sir for such a good article.
Informative article.Thanks Mrunal.
I have one question does NIB includes clearance of the Foreign investment for ex where should POSCO like companies should go in future for approval is it to FIPB or NIB it seems to create more confusion and may be we can have one more committee or board to be headed by MADAM JI :-)
One more question for all that will it also overturns the jurisdiction of PESA act and can it be question by states for federalism thing in case a state govt intiates some investment directly in their part
Good One.. really you are doing a nice Job here..we will be always thankful to you for all this..
.
>1000 crore projects requires large land acquisition.wat can b conflicting issues likely to b raised by min.of rural development???
plz write an article what China have done with its currency and why there is alwayz a issue in U.S. mainly to drag China to WTO. In recent campaigning for us president election we have also seen this as a major issue of debate..kindly help to understand this issue in deep
Thank you.
answer is d
sir i have done BBA from IILM COLLEGE LODHI ROAD,delhi which awards degree from BRADFORD UNIVERSITY,UK.Is this degree recognised by UPSC and am i eligible to appear for CSE on the basis of this degree?pls help sir..i shall be very grateful to you.
depends, is your degree recognized by UGC or Distance learning council of UGC? if yes then no problem.
otherwise follow the advice given here
http://www.indianofficer.com/forums/8879-indian-administrative-service-eligibility-bachelors-degree-us.html#post26601
Thank you again sir.Studies become interesting when u explian. :)
Im the Infrastructure bottleneck=> 3 button => CLICK ME not working
BTW, great explanation..
use this link
https://mrunalmanage.wpcomstaging.com/2012/08/econo-electricity-grid.html
and thanks for notifying.
really a informative and interesting article………..thanx sir :-)
both options 1 and 2
pls. write an article on FIPB.
n what is the difference between Board & Commission ??
Sir cn u provide some material on indian economy?
hi mrunal ….
can you plz explain the concept of weighted mean used in NPPA..and why it got rejected ?
sir plz tell about participatory notes.
Very good piece of info sir!
will it be only for Infrastructure sector or for other sectors as well?
and will it include all investments from India and abroad or only indian investment?
thanks
Satyendra
it’s d sir good information sir
Adding to what has ben exaplined above the CCEA has cleared the proposal of setting up Cabinet committe on Investment (CCI).
Cabinet Committee on Investment (CCI) is the new avatar of National Investment Board (NIB).
Key Features
1. PM will head this committee and will also decide its constitution.
2. Its mandate is to fast-track/expedite the nod to mega infrastructure projects in notified sectors worth Rupees 1000 crores and above.
3. It will identify projects in notified sectors and will prescribe time-limits for approvals required for such projects.
4. It will be up to individual ministries to approve projects, but where there are delays, the new panel will have the authority to intervene (It will not, however, be able to overturn any decisions made by the Environment Ministry).
E.g. – If a ministry has to give approval, say within a 30 day window period and if the ministry does not give some sort of a response by that point in time, it will then be taken over by the Cabinet Committee on Investment to take forward.
5. Project monitoring and review of implementation of delayed projects in notified sectors also forms part of its mandate.
6. The panel will have ministers in charge of infrastructure sectors as its members and the committee will help with inter-ministerial differences with respect to infrastructure projects.
EFFECT OF CCI
The biggest contribution that would happen because of this new framework is that the decision-making will become more predictable. This means that timelines will be drawn for each kind of approval from different ministries. It is not just environment. It could be water resources, roads etc. The timelines will be drawn up and within these timelines the ministries will take the decisions. It could be approval, rejection based on merit and there is no interference with that. Once the timeline is breached then the Cabinet Committee on Investment would call for such projects to be brought before it and then give appropriate directions in terms of disposal of these applications.
I appreciate your input