'No-Go' shadow on Rs 40,000-cr investment

The environment ministry's controversial 'No-Go' policy has ensured the fate of investments worth Rs 40,000 crore (Rs 400 billion) already made in the three critical infrastructure sectors of electricity, steel and cement hangs in balance.

This forms around 7.5 per cent of India's projected investment of Rs 5,28,316 crore (Rs 5,283.16 billion) in overall infrastructure during the next financial year and over a fourth of the Rs 1,59,000-crore (Rs 1,590-billion) investment to be made in the electricity sector alone in 2011-12, the terminal year of the current Plan period.

This comes at a time when the government has identified slackening infrastructure investment as a major impediment to meet the over 9 per cent gross domestic product growth target for the economy.

"Up to Rs 40,000-crore (Rs 400-billion) investment is stuck due to the No-Go issue. "This is the amount that has already been invested by companies in projects linked to coal blocks impacted by the No-Go policy," said a senior official from the Planning Commission.

"Individually, a few companies have invested between Rs 4,000 crore (Rs 40 billion) and Rs 5,000 crore (Rs 50 billion).

"While some of these companies had invested in the blocks allotted to them, others had invested in the linked end-use projects, or both," he added.

The Planning Commission is the government's apex policy advisory body and monitors five-year Plan targets.

"It is not possible to quantify the overall impact on Eleventh Plan's investment targets but there would definitely be some hit if the issue is not resolved on a priority basis," he said.

With coal blocks allotted to over two dozen companies -- including NTPC, Coal India, Hindalco, Essar Power and Adani -- now falling under the No-Go zones, the private sector's contribution to infrastructure investment could be jeopardised.

In the power sector alone, timely commissioning of 50,000 Mw of capacity has become doubtful owing to the No-Go classification.

This includes projects to be commissioned both in the eleventh and the twelfth Plan periods.

A committee to look into the issue, headed by Planning Commission member B K Chaturvedi, has recommended 'appropriate preference' for companies whose projects are held up due to the No-Go criterion.

The coal ministry, too, has floated a Cabinet note to push for freeing blocks and reduce the widening demand-supply gap in coal.

A decision on the matter is likely to be taken by the Union Cabinet this week.

Overall, 203 coal blocks with reserves of over 600 million tonnes have been stuck due to the No-Go criterion.

Under the controversial policy, the government has already classified the companies that were allotted coal mines before the No-Go classification in two groups.

Category-A companies have made significant investments in coal mining projects and are required to be given alternative blocks. Companies that have not made major progress in coal blocks have been placed in Category B.