The Telangana government is bending over backwards to welcome industrial projects into the nascent state. It launched a policy about a fortnight ago, called the Telangana State Industrial Policy and Self-Certification System, that gives industries a “right to clearance”. All projects under this policy have the right to be assessed within a month of application and any government official causing delays in the process is liable to be penalised. Within just 10 days of announcing it, the government cleared 17 projects worth Rs 1,500 crore, creating 4,000 jobs, it said.
While the Telangana government is thoroughly pleased with the idea, it has alarmed civil rights activists.
Under the new policy, the state has promised a single-window system by which a corporation will have to submit a single application to get clearances from 17 government agencies. The Union government and several state governments have made this promise many times over. Telangana, however, has also set up very tight timelines for approvals. Mega projects with investments above Rs 200 crore will have to be evaluated within 15 days and all other projects within 30 days.
The policy’s underlying mantra of a “right to clearance” is something of a misnomer. “Right to clearance is not a right to blind clearance,” said Jayesh Ranjan, vice chairman and managing director of the Telangana State Industrial Infrastructure Corporation. “I can say no to you but I have to do that also in 15 days.” Telangana Chief Minister K Chandrasekhar Rao has said that the “right to clearance” will be along the lines of the Right to Information.
Not everyone has bought into the analogy or the idea.
“I think it’s an absurd idea,” said Ramaswamy Iyer, former union secretary of water resources and honorary professor at the Centre for Policy Research. “All that you can say is that you need a prompt answer to your proposal, whether favourable or unfavourable, and every citizen is entitled to this.” While the government cannot deny information – or education – to a citizen seeking it, the government can deny clearance.
Corporation is king
What the “right to clearance” does is make no bones about the KCR government’s intent to woo investors. “We felt that the industrialist coming to Telangana, if he is investing and giving jobs to people, deserves a lot of consideration and respect,” said Ranjan. “He is not a favour seeker, he is a favour giver to you.”
The following three provisions are aimed at breaking down the hurdles to business in Telangana.
First, the government will give approvals based solely on an application that is self-certified by the applying company. Secondly, if the government fails to respond to the applicant within the stipulated 15 or 30 days, then permissions to start civil works are automatically deemed given. Third, an official found to be causing delays will be fined Rs 1,000 per day of delay. The fine collected will not stay with the state government but will be paid to the applicant.
When asked if self-certification is enough to ensure that companies don’t violate laws, Ranjan said, “We are very confident that no one will violate when they see that the state is putting so much trust in you.”
Environmentalists have been sceptical of such trust-based certifications. In an analysis of compliance among industrial projects conducted last year, Bengaluru-based Environment Support Group found 10% of factories operating without licences, project managers unaware of required clearances and many others willingly misrepresenting facts.
Ranjan clarified that even though automatic approvals for civil works might be granted, government agencies would inspect facilities and processes for compliance within the year or so that it takes for any industry to start commercial production.
The stiff penalty on officials in charge of approvals begs the question of how likely they will be to turn a blind eye to violations to avoid having to pay up. While the policy is clear about penalties to be imposed on government officials who delay approvals, it does not list the penalties on companies that violate regulations. According to Ranjan, a company must acknowledge in its application the government’s right to take action, including demolition of the company’s facilities, if it breaks the law.
Bigger hurdles than clearance
A “right to clearance” sounds like a positive step, says Asad Wasi, director of the southern regional office of industry association ASSOCHAM, but he will reserve his judgement till he sees how the policy actually works. Wasi feels that even before the new industrial policy was announced large multi-crore projects had no problems being cleared because of government enthusiasm for them. It’s the small factories in places like Nizamabad or Warangal that have to wait for approvals.
According to Wasi, there are bigger impediments to industry. “More than clearances it is the power deficit that is serious and more importantly water,” he said. “Although the policy says 10% of water has been earmarked for industrial purposes, getting water for industry is a huge problem.” The government is trying to solve its power shortage problem with new hydroelectric and solar power works and is considering buying power from its neighbouring states. As of last month, Telangana had a power deficit of 209 million units or 2.5% of the total requirement.
The Telangana government is gung-ho about its “right to clearance” but others are worried about the necessary checks and balances. “I think it is a very dangerous thing to do because you cannot confer on corporations the right to despoil the environment, displace people, etc,” Iyer said. “How can you do that when it affects other people’s rights?”
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While the Telangana government is thoroughly pleased with the idea, it has alarmed civil rights activists.
Under the new policy, the state has promised a single-window system by which a corporation will have to submit a single application to get clearances from 17 government agencies. The Union government and several state governments have made this promise many times over. Telangana, however, has also set up very tight timelines for approvals. Mega projects with investments above Rs 200 crore will have to be evaluated within 15 days and all other projects within 30 days.
The policy’s underlying mantra of a “right to clearance” is something of a misnomer. “Right to clearance is not a right to blind clearance,” said Jayesh Ranjan, vice chairman and managing director of the Telangana State Industrial Infrastructure Corporation. “I can say no to you but I have to do that also in 15 days.” Telangana Chief Minister K Chandrasekhar Rao has said that the “right to clearance” will be along the lines of the Right to Information.
Not everyone has bought into the analogy or the idea.
“I think it’s an absurd idea,” said Ramaswamy Iyer, former union secretary of water resources and honorary professor at the Centre for Policy Research. “All that you can say is that you need a prompt answer to your proposal, whether favourable or unfavourable, and every citizen is entitled to this.” While the government cannot deny information – or education – to a citizen seeking it, the government can deny clearance.
Corporation is king
What the “right to clearance” does is make no bones about the KCR government’s intent to woo investors. “We felt that the industrialist coming to Telangana, if he is investing and giving jobs to people, deserves a lot of consideration and respect,” said Ranjan. “He is not a favour seeker, he is a favour giver to you.”
The following three provisions are aimed at breaking down the hurdles to business in Telangana.
First, the government will give approvals based solely on an application that is self-certified by the applying company. Secondly, if the government fails to respond to the applicant within the stipulated 15 or 30 days, then permissions to start civil works are automatically deemed given. Third, an official found to be causing delays will be fined Rs 1,000 per day of delay. The fine collected will not stay with the state government but will be paid to the applicant.
When asked if self-certification is enough to ensure that companies don’t violate laws, Ranjan said, “We are very confident that no one will violate when they see that the state is putting so much trust in you.”
Environmentalists have been sceptical of such trust-based certifications. In an analysis of compliance among industrial projects conducted last year, Bengaluru-based Environment Support Group found 10% of factories operating without licences, project managers unaware of required clearances and many others willingly misrepresenting facts.
Ranjan clarified that even though automatic approvals for civil works might be granted, government agencies would inspect facilities and processes for compliance within the year or so that it takes for any industry to start commercial production.
The stiff penalty on officials in charge of approvals begs the question of how likely they will be to turn a blind eye to violations to avoid having to pay up. While the policy is clear about penalties to be imposed on government officials who delay approvals, it does not list the penalties on companies that violate regulations. According to Ranjan, a company must acknowledge in its application the government’s right to take action, including demolition of the company’s facilities, if it breaks the law.
Bigger hurdles than clearance
A “right to clearance” sounds like a positive step, says Asad Wasi, director of the southern regional office of industry association ASSOCHAM, but he will reserve his judgement till he sees how the policy actually works. Wasi feels that even before the new industrial policy was announced large multi-crore projects had no problems being cleared because of government enthusiasm for them. It’s the small factories in places like Nizamabad or Warangal that have to wait for approvals.
According to Wasi, there are bigger impediments to industry. “More than clearances it is the power deficit that is serious and more importantly water,” he said. “Although the policy says 10% of water has been earmarked for industrial purposes, getting water for industry is a huge problem.” The government is trying to solve its power shortage problem with new hydroelectric and solar power works and is considering buying power from its neighbouring states. As of last month, Telangana had a power deficit of 209 million units or 2.5% of the total requirement.
The Telangana government is gung-ho about its “right to clearance” but others are worried about the necessary checks and balances. “I think it is a very dangerous thing to do because you cannot confer on corporations the right to despoil the environment, displace people, etc,” Iyer said. “How can you do that when it affects other people’s rights?”
