On Thursday, the Union environment ministry struck down the six-fold expansion plan of Vedanta’s aluminium unit in Orissa, citing violations of laws.
Earlier this week the majority view of a committee set up by the ministry was to revoke initial clearances for a steel plant being built by South Korea’s Posco in Orissa because of violations of green laws. These are just two among many such instances.
The question mark over the future of the $12-billion (Rs 53,000 crore) project by Posco comes two months after UK-based Vedanta Resources saw its $1-billion (Rs 4,500 crore) bauxite-mining project in Lanjigarh, Orissa, getting axed. A central government-appointed committee found the mining giant had violated laws concerning environment and forests.
Several other projects were cancelled and suspended by the Centre this year. These include the Rs 3,600-crore Renuka Dam project in Himachal Pradesh, the Bhaironghati and Pala Maneri hydroelectric projects on the river Bhagirathi in Uttarakhand and the Maheswar dam project in Madhya Pradesh. Some of these projects had been approved by the same Union environment ministry.
Although some experts see this as a subtle shift in the way tribal rights and environmental issues are being handled now, others feel that politics plays a role in the sanctioning and scrapping of such projects. The latter builds on the fact that all of the projects that have been shadowed are in non-Congress states — Orissa, Himachal Pradesh, Uttarakhand and Madhya Pradesh.
Coincidence or politically motivated?
In August, Congress General Secretary Rahul Gandhi visited the Niyamgiri Hills, where Vedanta had planned to mine bauxite, to join the protesting Dongria Kondh tribe and proclaimed himself as their “sipahi” (soldier) in Delhi. This came two days after permission for the project was scrapped.
“There could be some political motivation in projects related to mining because they concern tribal rights and displacement,” said Pratap Bhanu Mehta, president of the Centre for Policy Research, a Delhi-based think tank. “It’s hard, however, to talk about motivation behind construction of big dam projects because right now government policy on big dams isn’t very clear.”
The Bharatiya Janata Party (BJP) feels that so far the Centre has had a softer stand on large-scale projects in Congress-ruled states.
“It’s worth asking why so many previously approved projects are suddenly getting cancelled,” said BJP spokesperson Prakash Javadekar. “We have no tolerance for those who violate laws but why are projects in Congress-ruled states not getting stopped?”
Some states have communicated their concern to the Centre. Madhya Pradesh Chief Minister Shivraj Singh Chouhan had written to the Prime Minister, seeking intervention after work on the Maheswar dam was stopped in April.
In Uttarakhand, after work on the Bhaironghati and Pala Maneri dams was stopped, Chief Minister Ramesh Pokhriyal wrote to the environment ministry asking it to also stop work on National Thermal Power Corporation’s Loharinag Pala dam on the same river — the Bhagirathi. The ministry later stopped work on that project too, citing environmental concerns. The Congress denies any political bias in the decisions made.
“A look at the funding by the Centre to states will reveal that not only has it increased during the UPA years but also it has increased for many non-Congress states. Why should we do this if we wanted to favour Congress-ruled states over non-Congress ruled ones,” said Manish Tewari, spokesperson Congress. “Environment Minister Jairam Ramesh has also pointed out environmental threats by projects in Congress-ruled states.”
If Posco’s project is axed, will it hurt Brand India’s image?
Posco’s 12-million-tonne steel project in Orissa is the largest foreign direct investment that the Indian government has approved to date. The uncertainty over it does not augur well for global investors’ confidence in India, especially at a time when FDI inflows are on a slide. The FDI inflow of $16.7 billion in the first seven months of 2009 came down by 25 per cent to $12.5 billion for the same period of 2010.
Anjan Roy, economic advisor, Federation of Indian Chambers of Commerce and Industry (FICCI), said: “The scrapping of one or two projects, which could have adverse impact on the environment, is not likely to affect FDI into the country.” Some experts feel that scrapping projects that are breaking the law might benefit India in the long run.
“If the cancellation of these projects leads to stricter implementation of laws, institutionalisation of the process by which projects are sanctioned, and greater transparency, then it would help rather than hurt India’s image abroad,” said Mehta.
Winds of change
“Political undercurrents could be well present in some cases but the fact is that livelihood issues and environment concerns can’t be ignored by any party in power,” said Vipul Mudgal at the Centre for the Study of Developing Societies (CSDS) in Delhi.
The government is talking about making locals a stakeholder in these projects.
“The protest movements against these projects have become huge people’s movements over the years and now there is some hope that they will get what has long been due to them,” Mudgal added.