With Rs 10 lakh cr pending projects and 5 meets, investment panel is a joke

Reviving investment in the country, which is key to kick-starting growth in the economy, is going to be an uphill task for the UPA government. Even the Cabinet Committee on Investment (CCI), set up solely to help improve the ground situation, is fasting turning out to be a big failure.

According to an Economic Times report today, the CCI has met only five times in the last six months, while the number of major projects that are waiting for clearance is 341 and the total investments at stake a dizzying Rs 10.5 lakh crore.

When it was first launched, the CCI had stirred the enthusiasm of investors and media alike with its reported sweeping powers to clear projects in a time-bound manner. Nothing of that sort seems to have happened, noted Forbes India in this article.

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The ET report notes that not just foreign investors, even India Inc is far from impressed by CCI’ performance. Although the government claims to have cleared investments of over $27 billion through CCI, industry bigwigs say a lot more needs to be done if the country wants to dispel doom and gloom sentiment.

“The committee should meet more often than once a month and have a process to review projects that it had cleared earlier and check if they have gotten off the ground,” HDFC chairman Deepak Parekh told ET.Parekh also blamed policy paralysis caused by damaging CAG reports and CBI actions on retired babus, as a major problem.

According to a Barclays research report, while the CCI has cleared projects, there is no clear uptick in activity related to such projects. “We believe that activity/investment related to such projects could remain subdued, given the weak momentum and sentiment in the economy… the CCI clearance, per se, is not the “game changer” the government see it as being,” Barclays said.

What is the government doing?

Recently, Prime Minister Manmohan Singh approved the appointment of Anil Swarup from the Cabinet Secretariat as the head of a panel to identify and help restart the 215 large projects, worth Rs 7 lakh crore that have been stalled for years.

Projects where 90 percent of the land has been acquired, or permissions from a single body are pending, would be taken up on a priority basis. The finance ministry is reportedly doing the preparatory work so that the CCI can clear the issues in a single meeting or two.

Noting that banks have already extended Rs 53,000 crore to these projects, the Finance Minister had said, he wants the bankers to closely work this panel, because it is in their interest that these projects get off the ground as this is their own money that is stuck.

SBI chairman Pratip Chaudhuri claimed that even banks are working towards resolving investment issues.

But, businessmen complain that CCI have pertained largely to public sector investments, though a few processes have been tightened for expediting public private partnerships (PPPs) in ports (by streamlining security clearances of bidders) and highways.

While a finite and reasonable time-bound decision making process is the need of the hour, a Forbes India article rightly notes how could a particular ministry’s powers, say that of the Environment, be usurped by a committee like CCI. It seems that the CCI has no such powers.