India's Big Green Wrecking Machine
Minister for Environment Jairam Ramesh is hostile to economic development.
It would be easy to dismiss Jairam Ramesh as a buffoon. The Indian minister for environment and forests likes to talk big, as when he recently declared that driving SUVs was "criminal" and called for "a penalty on the type of cars you don't want to see on the roads." This week he fulminated against the affluent American lifestyle and those Indians who aspire to it.
Considering the fondness of Indian politicians for cruising around in SUVs and partying in their villas, it's doubtful the government will act on these particular pronouncements anytime soon. But Mr. Ramesh continues to use his office to do serious economic damage. No industry can afford to be cavalier when the minister has them in his sights.
Mr. Ramesh's ministry, which awards and rescinds environmental clearances in an arbitrary manner reminiscent of the "license-permit raj," has held up dams in India's northeast as well as power plants and highways around the country. On Monday he finally withdrew his opposition to a new airport for Mumbai after raising objections for over a year. In the last month, panels appointed by Mr. Ramesh have recommended revoking permits for South Korean steel giant Posco's $12 billion project in the eastern state of Orissa, the largest ever overseas investment in India. This comes a full five years after the firm signed an agreement with the Orissa government to set up its plant.
Similar treatment was meted out to Vedanta Resources, which was ordered in August to stop mining bauxite in Orissa. State officials had given the go-ahead, which is crucial to the operation of the company's nearby refinery. The environment ministry decided that sacred land of primitive tribal groups had been violated. As a result, a $1 billion investment is in jeopardy.
Mr Ramesh is sometimes held up as India's first environmentalist minister of environment. Last month, he even set up a separate green court to punish polluters, making India only the third country in the world (after Australia and New Zealand) to implement such an idea.
But it's increasingly clear that what Mr. Ramesh is pushing is hostility to economic development. This represents a fundamental split within the Congress Party between Prime Minister Manmohan Singh, who advocates private sector growth, and Sonia Gandhi, who embodies the Nehru family tradition of statism. For now, the political power-brokers are tolerating Mr. Singh, whose reforms have helped lift millions of Indians out of poverty. But the risk remains that Congress will revert to its socialist ideology and the Jairam Rameshes in the cabinet will sabotage the country's growth.
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