India plans environmental clearances regulator

Asia's third-largest economy is one of the world's fastest growing. But Prime Minister Manmohan Singh's government has walked a tightrope balancing the need for more factories, roads and power plants with protecting the environment and the livelihoods of hundreds of millions of rural poor.

Hundreds of projects were held up under the former Environment Minister Jairam Ramesh, who was recently moved to a different ministerial portfolio. Major domestic and foreign investors, such as UK-based miner Vedanta or South Korea's POSCO, came under scrutiny. "We hope to establish an independent regulator, the National Environment Appraisal and Monitoring Authority, soon," Singh told a conference.

"This authority could lead to a complete change in the process of granting environmental clearances. Staffed by dedicated professionals, it will work on a full-time basis to evolve better and more objective standards of scrutiny."

Singh's administration has appeared to be shrugging off months of near policy standstill, having been hampered by a barrage of corruption scandals that stymied decision making and effectively shut down parliament.

Reforms such as opening the supermarket sector to foreign direct investors have regained momentum. Singh also plans to introduce keystone legislation such as on land acquisition in the next parliament session, which was supposed to start in July but has been delayed to August.

Ramesh had championed an environmental clearance regulator as being more effective in unpicking the conflicting interests of industry and environmental concerns. The Supreme Court also recommended its introduction while judging the merits of a mining project in the mineral-rich northeast.

Its recommendations would still go to the ministry for final approval, but those in favour of such a regulator say it would narrow a perceived conflict of interest that comes by letting the environment ministry both assess and approve a project.

Before Ramesh came to his post, the ministry had often been seen as a rubber-stamp authority that did not put projects under serious scrutiny.

Ramesh was replaced earlier in July by Jayanthi Natarajan. Natarajan is likely to be more flexible towards industry to help power the Indian economy, although she is unlikely to make a clean break with Ramesh's tough stance.

Copyright Reuters, 2011