There has been much discussion about bringing the GDP growth on track and the need for expediting infrastructure projects in this regard. At the Planning Commission Meeting to approve the Twelfth Five Year Plan, last month, there were concerns about the implementation of such projects because of the delay in the grant of environment and forest clearances. In this context, there has been talk of setting up a singular body that will grant approvals for large infrastructure projects. News reports suggest that the government is considering forming a National Investment Approval Board (NIAB). The NIAB will be responsible for expediting the clearances for mega project proposals above a certain financial threshold. The Board would be headed by the Prime Minister and will have the authority to provide the ‘final decision’ on investment projects. According to news reports, the NIAB will be the final decision making body. The Ministry of Environment & Forests (MoEF) has raised concerns that this would create ambiguity in the current process of granting clearance for projects. While the formation of the NIAB is still being deliberated and discussed, it would be relevant to understand the process that the MoEF follows before granting clearance to a project and look at data on number of clearances granted and pending. The MoEF has developed certain processes to examine the potential environmental impact of new projects or expansion of existing projects. These are contained in the Environment Impact Assessment Notification, 2006. This notification empowers the Expert Appraisal Committees (EAC) to review the environmental impact of projects. The EAC carries out a combination of these steps depending on the classification of the project:
The MoEF considers the grant of environmental clearance to development projects in terms of the provisions of EIA Notification, 2006. From July 13, 2011 to July 12, 2012 the MoEF has given environmental clearances to 209 development projects. For a sector wise break up see Table 1. Table 1: Number of Environment Clearances Accorded
| Sector | No. of projects accorded EC |
| Industry (Steel & Cement) |
88 |
| Thermal Power |
29 |
| River Valley and Hydro-electric |
6 |
| Coal Mining |
29 |
| Non-Coal Mining |
25 |
| National Highways |
32 |
| Total |
209 |
Source: “Environmental Clearance accorded from 13.07.2011 to 12.07.2012”, MoEF A total of 593 proposals are pending for environmental clearance as on August 13, 2012.[i] It remains to be seen how the process of granting clearances as established by the MoEF will be reconciled with the expedited process of the NIAB.
[i] MoEF, Lok Sabha, Unstarred Question no. 637, August 13, 2012,
Last month, the Pension Fund Regulatory and Development Authority (PFRDA) issued revised guidelines for the registration of the Pension Fund Managers (PFMs). These guidelines are for the PFMs to manage the National Pension System (NPS) in the non-governmental and private sector. See here. The NPS was implemented in 2004 for all government employees and later extended to the private sector in 2009. The guidelines bring about the following changes in the NPS:
Although NPS was made accessible on a voluntary basis to non-government employees and those working in the private sector since 2009, the subscription to the schemes under NPS was lower than expected. In August 2010, a committee was set up under the chairmanship of Mr. G.N. Bajpai to review the implementation of NPS in the informal sector. The Committee noted that since NPS was opened to the general public there were only 50,000 private sector subscribers until May 2011. According to the Committee, the low subscription was due to the low-to-negligible distribution incentive to the PFMs to distribute the different schemes to the subscribers to invest their funds. The Committee thus recommended that PFRDA should consider revising the structure of the NPS so as to increase subscription. It suggested making the fee structure dynamic for PFMs. The Committee had also suggested that there should be some revision in the bidding as well as the selection process for the PFMs to increase competition and thereby incentivise them to distribute the schemes. These changes, as suggested by the Bajpai Committee and now notified by the PFRDA, are different from the original design of the NPS. The Old Age Social and Income Security (OASIS) Report of 2000, which had initially suggested the establishment of pension system for the unorganised sector in the country, had recommended a low-cost structure for the pension system. The Report had stated that the choice of PFMs should be based on a bidding process where the lowest bidder should be made a PFM under the NPS. The rationale for the auction base for the PFMs was that it would provide a system to the subscribers whereby they could make investments for their old age by paying a minimal fee. A set uniform fee was meant to eliminate the large marketing expenses which would ultimately get passed on to the subscibers. In addition, the intent behind keeping the fund managers from the distribution and marketing of the schemes was to prevent any mis-selling (misleading an investor about the characteristics of a product) that may happen. Recent newspaper reports have raised doubt if these new rules would help in increasing the penetration of the NPS in the markets. However, the chairman of PFRDA, Mr. Yogesh Agarwal, in a recent interview explained that it was important to bring about changes in the structure of the NPS. According to him a scheme which was mandatory for the government sector could not be expected to perform as well in the private sector (where it is voluntary) without any changes made to its structure. He also stated that the NPS should be able to compete with other financial products such as insurance and mutual funds in the market. See here for the PRS Legislative Brief on the PFRDA Bill, 2011. Notes: The seven PFMs are LIC Pension Fund Ltd., UTI Retirement Solutions Ltd., SBI Pension Funds Pvt. Ltd., IDFC Pension Fund Management Co. Ltd., ICICI Prudential Pension Funds Management Co. Ltd., Kotak Mahindra Pension funds Ltd., and Reliance Capital Pension Fund Ltd..
