BUSINESS
12/02/2019 2:33 AM IST | Updated 12/02/2019 9:30 AM IST

How Modi Weakened Green Laws To Aid Real Estate Lobby

PMO pushed to shift environmental clearances from Union ministry to unqualified local municipal bodies, aiding the real estate lobby.

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Prime Minister Narendra Modi (R) gestures to the World Bank President Jim Yong Kim (L) to sit while meeting him in New Delhi in July 2014. Kim was on a three-day visit to India.

Prime Minister Narendra Modi’s office pushed to overturn a decade’s worth of environmental law and regulations, putting the health of millions of Indians at risk, to aid the real estate lobby and improve India’s ranking in the World Bank’s Ease of Doing Business Index, HuffPost India can establish.

While the Bharatiya Janata Party-led regime’s diverse policy measures to dismantle environmental safeguards have been documented over its five-year tenure, this is the first blow-by-blow account — relying on previously undisclosed documents obtained under the Right to Information Act —to illustrate precisely how the Modi government made seemingly innocuous changes to India’s elaborate laws and regulations in the building construction sector to achieve its aims.

Crucially, this account establishes how these changes originated in the Prime Minister’s Office (PMO): Prime Minister Modi was personally informed of these changes, and his favourite bureaucrats pressed their colleagues in the Ministry of Urban Development and the Ministry of Environment and Forests to ensure the changes were rammed through in time for the World Bank’s Doing Business team to include them in their annual reports.

Some of the policy changes, the documents indicate, may have been influenced by India’s apex body of private real estate developers, the Confederation of Real Estate Developers’ Association of India (CREDAI). These changes, the National Green Tribunal (NGT) later ruled, “cannot stand the scrutiny of law”.

Neither the PMO nor CREDAI responded to requests for comment. This report will be updated if and when they respond.

In a nutshell, Prime Minister Modi’s obsessive quest to get India ranked as one of the World Bank’s top 50 most convenient countries to do business in, meant his office pushed for the so-called streamlining of building bye-laws and environment clearance processes. This resulted in the dilution of safeguards meant to curb air and water pollution caused by large-scale building construction projects.

At the PMO’s bidding, the Environment ministry gave up its power to grant environmental clearances for mega-construction projects like malls, offices, residential apartments, and gave it to local municipal bodies — institutions with no scientific expertise or resources to carry out prior assessment of the adverse environmental impact likely to be caused by large projects.

These changes were made through a notification passed by the environment ministry in two stages in 2016: a draft notification in April that year, followed by a final notification in December 2016.

This decision, the NGT subsequently noted, was taken without conducting any scientific studies to assess its likely impact on the urban environment. The 2016 notification sought to overturn an older subordinate legislation— known as the Environmental Impact Notification of 2006, which imposed more rigorous compliance standards, according to environmentalists.

The vital need for such safeguards is evident from the fact that 14 of the 15 most polluted cities in the world are in India, according to  a 2018 World Health Organisation report. In 2017, a rigorous two-year study published in Lancet found that more people died of pollution in India than anywhere else in the world.  A scientific research paper published in Lancet in December 2018, and backed by the Modi government’s health ministry, said one in eight deaths in India could be caused due to air pollution. The construction sector, the NGT order itself notes, emits 22 percent of India’s total annual carbon-dioxide (CO2) emission. CO2 is a greenhouse gas and contributes significantly to global warming and heat waves which adversely affect public health. 

The PMO’s eagerness to ease conditions of doing business for the builders to ensure a jump in the World Bank’s controversial global ranking system, paid off in part: India rose 65 ranks over four years despite lacklustre private investment, demonetisation, a poorly implemented Goods and Sales Tax regime, and the worst rate of unemployment in 45 years.

The PMO’s eagerness to ease conditions of doing business for the builders to ensure a jump in the World Bank’s controversial global ranking system, paid off in part: India rose 65 ranks over four years despite lacklustre private investment, demonetisation, a poorly implemented Goods and Sales Tax regime, and the worst rate of unemployment in 45 years.

Last year’s jump from a rank of 100 to 77 occurred specifically because India’s individual rank for World Bank’s construction permits indicator saw a “dramatic improvement” from 182 to 52.    

Yet, the move to ease building permits was struck down by the National Green Tribunal (NGT). These changes, the tribunal noted, would “lead to severe environmental impacts.”

“The Government must decide if it wants to improve its ranking before a Bank or endanger the lives of its citizens due to lax environmental norms,” said Ritwick Dutta, an environmental lawyer who successfully argued against these measures at the National Green Tribunal.

“What is the use of improved ranking in ease of doing business if the people are sick and dying because of air pollution and poor quality water?” Dutta asked. “India today may figure in the top 100 in ease of doing business, but then it ranks at the bottom at 177 out of 180 countries in terms of environmental health.”

Senior IAS officer C K Mishra, who is the Secretary of the Ministry of Environment, Forests and Climate Change, strongly contested the assertion that his ministry had favoured big business at the cost of the environment.

“We are not diluting anything, we are simplifying things,” Mishra emphasised in an interview with HuffPost India.

Yet this “simplification”, HuffPost India found, did not find any purchase in the NGT, which termed the Modi government’s specific policy measures as “dilution” after they were challenged by civil society groups.

The PMO sets the ball rolling

The Modi government started working on improving India’s doing business rankings soon after it came to power. In July 2014, official documents accessed under the Right to Information show, the Prime Minister’s Principal Secretary Nripendra Misra began holding meetings to discuss specific measures as well as a “concrete strategy” to “move up” the country’s rank.

On 15 November 2014, S. Selvakumar, a director-ranked official in the PMO, sent a notice about a top-level meeting to be chaired by Misra on 22 November 2014 to discuss the “issues relating to the ‘Ease of Doing Business’ in India”. The notice was sent to secretaries of 13 ministries as well as the Reserve Bank of India’s Governor, who was asked to nominate one of his deputy governors to attend. The revenue secretary was asked to invite the chiefs of both the Central Board of Excise and Customs and Central Board of Direct Taxes.

 “Concerned ministries are also requested to complete the tasks as indicated or to give definite strategy and timeframe for their completion,” Selvakumar wrote.“It is also requested that each ministry may put up a team to specifically attend to these issues in a proactive and positive manner.”   

Each ministry was given a checklist of time-bound tasks, based on 10 indicators the World Bank evaluates whilst calculating its annual Doing Business rankings. One of these indicators related to ease in obtaining a construction permit.

According to the World Bank, the ideal number of  bureaucratic procedures to give construction permits is eight or fewer. In India, at the time, this number was 33. Therefore, the government focused on reducing the number of steps required for builders to get clearances from different government agencies at the central, state and municipal levels.

Selvakumar’s meeting notice asked the urban development ministry to streamline this process by April 31, 2015 by creating a simplified model building bye-law that each state could tweak to account for local factors.

The environment ministry was tasked with streamlining environment clearances, ensuring that project proponents could file online applications for environment clearance, and was told to introduce an online portal with a Composite Application Form (CAF) by April 30, 2015. The CAF was intended to reduce paperwork for builders.

On 4 March 2015, Selvakumar sent another notice to the same set of officials with a more specific list of tasks. Under a sub-head marked, the World Bank indicator of ‘Dealing with Construction Permits’, both the urban development and environment ministries were asked to amend the relevant “acts/rules/bye-laws” to facilitate “delegation of powers to municipal bodies”.

The urban development ministry was also asked to ensure rationalisation of procedures, resolve interdepartmental issues with central agencies such as the Delhi Development Authority (DDA), and the Delhi Pollution Control Committee (DPCC) and “create one stop-shop” in coordination with “state/central/autonomous bodies” to “delegate powers at municipal bodies.”

In plain English, this meant powers of regulation once held by central agencies and departments were to be given to local municipalities — bodies with no resources or independence to implement these regulations.

In early 2016, three policy changes were announced after elaborate discussions between the PMO and the two ministries. The aim of these changes, the Modi government’s press releases made clear, was to improve the ease of doing business for the construction sector.

The first of these announcements, by the urban development ministry on 18 March 2016, was the ‘Model Building Bye-Laws 2016’ for all states and union territories. These model Bye-laws were adopted for the national capital by the Delhi Development Authority and published four days later on March 22, 2016.

The reason for these changes, a press note quoted then urban development minister Venkaiah Naidu as saying, was “to improve the ease of doing construction business in the national capital as desired by the Prime Minister’s Office.”

On April 29, 2016,  the environment ministry announced a draft notification to amend the 2006 Environment Impact Assessment (EIA) notification. Public comments were invited, and a final version of this notification was published 10 months later on 9 December 2016.

The 2006 EIA notification, as noted earlier in this article, is a landmark piece of legislation that required that projects with a built-up area of 20, 000 square metres and above be put through a rigorous impact assessment process before environment clearance had been granted.

PRAKASH SINGH via Getty Images
File photo of labourers working in an under-construction building as smog covers the capital's skyline in New Delhi on November 2, 2016. A scientific research paper published in Lancet in December 2018, and backed by the Modi government’s health ministry, said one in eight deaths in India could be caused due to air pollution.

Implications of the policy measures 

Taken together, these changes by the urban development ministry on the one hand and the environment ministry on the other, enabled the integration of building plan approvals with environment clearances at the level of municipal corporations for large-scale construction projects such as malls and residential complexes.

Prior to this change, large-scale construction projects with a built up area of 20,000 square metres and above needed permission from two state-level expert committees: the State Expert Appraisal Committee and State Environment Impact Assessment Authority (both committees were set-up by the environment ministry). Small-scale projects did not require such elaborate clearances from the environment ministry.

Under the new regime, builders could get both the building plan approvals and environment clearances for their large-scale construction projects approved from their respective local municipal corporations, which were expected to set up their own environmental cells.

These cells replaced the environment ministry’s expert committees but were designed to be under the municipal corporations. This arrangement, the NGT said, created a “conflict of interest” as these environmental cells could be influenced by municipal corporations in a way that the ministry’s committees could not have been.

Worse, this bouquet of changes also exempted building projects from the consent to operate and consent to establish provisions of the Air (Prevention and Control of Pollution) Act, 1981 and Water (Prevention and Control of Pollution) Act, 1974  that provided crucial protection to homeowners. Dutta, the environmental lawyer, explained that putting builders under the purview of these two acts, along with the Environment Protection Act, 1986, gave homeowners an opportunity to approach the NGT,  if the builders violate environment clearance conditions.

For example, all buildings must have green space and adequate parking. Most often, the green spaces are compromised to build additional structures. In such a situation, the residents can approach the NGT,” Dutta said. “Similar is the case with waste water treatment, solar lighting which are required to be installed but rarely done. By ousting the jurisdiction of the NGT and Air Act and Water Act, the builders are free to do what they want and the residents will be at their mercy.”

Dutta noted that the real estate sector was being handed a free pass at a time when the air in India’s cities was almost unbreathable, and the water was highly toxic.What is unfortunate is the fact that the changes in the EIA regime were brought about at a time when there is a severe air pollution crisis in India,” Dutta said. “At a time when we need stringent laws on air pollution, the Government chose not to apply the provisions of the Air Act to the construction sector.”

C K Mishra,  the environment secretary, told HuffPost India that the ease of getting construction permits was a happy byproduct of a necessary overhaul of bureaucratic procedures of his ministry. “Ease of business is rarely a basis. It is an outcome,” Mishra said. “When you issue a notification, you issue it so that you find that the process that was being followed is not required. So you simplify that. That results in ease of doing business.”

The vision and direction of these changes, Mishra confirmed in response to a question, came directly from the Prime Minister’s office. “They have been the guiding force. Certainly,” Mishra said.

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Modi held a review meeting about Ease of Doing Business with top cabinet ministers and officials on December 13, 2018 in the PMO.  

Modi gets Naidu’s help

Under Prime Minister Modi’s benevolent gaze, urban development minister Venkaiah Naidu and his ministry appear to have played a significant role with the enthusiastic cooperation of the then environment minister Prakash Javadekar in laying the grounds for what became known as the “December 2016 notification” — the proposed subordinate legislation to replace the 2006 EIA notification mentioned before.

Official documents and interviews with bureaucrats both indicate this.

“If you look at my ministry, we pillar ourselves on various other ministries,” environment secretary CK Mishra told HuffPost India. “What we do is for other ministries. If we are doing something relating to cities and buildings, it’s for the urban development ministry.”

On February 15, 2016, Naidu, who is now the Vice President, wrote to Javadekar, thanking him for sending a letter on February 8, 2016, which discussed a proposal with a ‘framework’ to ‘streamline’ the environment clearances for building and real estate sector.

Informing Javadekar that the top mandarins of the urban development and environment ministries held a meeting on February 11, 2016 to discuss the proposal, Naidu wrote in his letter that, “My ministry supported the proposed framework for integrating environmental clearances with the permission to construct buildings.”

Further, in the letter accessed by HuffPost India, Naidu wrote, “It is hoped that this will immensely help the real estate business as a landmark step in Ease of Doing business by ensuring the environmental concerns related to construction of buildings addressed through different stipulated conditions laid down for different sizes of buildings.”

“This will also facilitate in improving the country’s ranking in Ease of Doing Business, which is dream of our honourable Prime Minister to make efforts for bringing the country in top 50 rank in the world,” Naidu continued.

Once the draft building bye-laws were ready, Naidu said, the environment ministry could issue its own notification. This way, the transfer of power to grant environment clearance from the environment ministry to the local municipal bodies would be complete.

Naidu’s ministry released the draft bye-laws on March 18, 2016 after elaborate discussions with states. The Delhi Development Authority, which reports to Naidu’s ministry, adopted this framework quickly on March 22, 2016.

On April 29, Javadekar’s ministry followed suit, issuing the draft notification and opening it up for the legally mandated public consultation. People were asked to send in their objections and suggestions within sixty days. The final notification was issued in December.

An internal, hand-written note by an environment ministry official about finalising the notification, dated 9 August 2016, indicates that Naidu kept Modi updated about the progress in implementation of the controversial proposals.

“This issue has been discussed for last one year. It has been discussed in PMO, and several round of meetings were organised at the level of Hon’ble Minister, MoUD. Hon’ble Minister has also written to Hon’ble Prime Minister on the subject,” an environment ministry official, who signed off as Manoj on the note, wrote.

“This issue has been discussed for last one year. It has been discussed in PMO, and several round of meetings were organised at the level of Hon’ble Minister, MoUD. Hon’ble Minister has also written to Hon’ble Prime Minister on the subject,” an environment ministry official, who signed off as Manoj on the note, wrote.

Sources told HuffPost India this official is most likely Manoj Kumar Singh, the Joint Secretary who was leading the effort within the environment ministry for getting this notification drafted and implemented.  

Then Environment Secretary Ajay Narayan Jha also saw this note. When reached for comment, Jha, who is now the Finance Secretary, said his office will call this reporter according to his convenience but, at the time of publication, a response was still awaited.

It wasn’t just Naidu and Javadekar who were eager to push through the controversial policy measures. Documents reviewed by HuffPost India show Maharashtra Chief Minister Devendra Fadnavis was also keen to implement them in his state.

In a letter written on October 7, 2016 to the then environment minister Anil Dave, who had taken over from Javadekar in early July that year, Fadnavis mentioned that Naidu’s ministry had asked Maharashtra to make the same changes to Mumbai’s building bylaws.

Yet Maharashtra could not proceed without permission from the environment ministry. So in his October 7, 2016 letter, Fadnavis asked Dave to “kindly give clearance expeditiously, so as to achieve the objectives of Ease of Doing Business”.

The enthusiasm of civic bodies in Delhi as well as Maharashtra, especially Mumbai, to adopt the new bylaws is not incidental to this story. These are the only two cities that the World Bank evaluates when assessing the ease of doing business in India.

In fact, official documents accessed by HuffPost India show that the bureaucrats helming the municipal corporations in Delhi and Mumbai were asked to attend review meetings that Prime Minister Modi’s office continued to organise much after the initial meetings in 2014 to keep a close track of policy measures it had asked the ministries to implement in past meetings regarding Ease of Doing Business.

On 2 May 2016, for example, Joint Secretary to the Prime Minister, A K Sharma, wrote to the secretaries of at least eight central ministries as well as commissioners of the municipal corporations in Mumbai and South Delhi  informing that the Principal Secretary to Prime Minister, Nripendra Misra, will hold a meeting on May 7, 2016.

The purpose of the meeting, Sharma’s note made clear, was “a review of compliance of the decisions taken in the last meetings on the subject, so as to make an impact in this year’s report of World Bank.”

Why the National Green Tribunal criticised the policy changes

The Environment Ministry’s decision to essentially junk a decade’s worth of significant legal safeguards provoked concern among environment groups and hope in the real estate industry. The ministry was inundated with objections and suggestions from both sides almost immediately after the first draft of the notification was published in April 2016.

Environmentalists were worried that  the notification would worsen the already bad management of India’s urban environment. Local municipalities, they argued, simply did not have the expertise to evaluate the environmental impact of mega-construction projects.

The real estate lobby, represented by CREDAI sent their suggestions as well in over half a dozen letters written to then environment minister Anil Dave and Environment Secretary Ajay Narayan Jha. 

In a letter to Jha dated 5 October 2016, accessed by HuffPost India, then CREDAI President Getamber Anand and the chairman of CREDAI’s environment committee, Shantilal Kataria, said “we as CREDAI would like to assure you that we welcome this move” to give municipalities the power to grant mega-construction projects.

In a letter to Jha dated 5 October 2016, accessed by HuffPost India, then CREDAI President Getamber Anand and the chairman of CREDAI’s environment committee, Shantilal Kataria, said “we as CREDAI would like to assure you that we welcome this move” to give municipalities the power to grant mega-construction projects. 

The letter also requested him to “expedite the notification process so that they can be included in the local bye-laws for ease of doing business and boost the common vision of “Housing for All by 2022”’.  

They also asked that housing projects be spared the need to get “Consent to Establish” and “Consent to Operate” clearances from state pollution control boards citing a Delhi High Court order.

In June 2016, CREDAI’s Maharashtra unit made similar demands in a letter to the then environment secretary Ajay Narayan Jha.

The environment ministry constituted a committee of four experts to review these suggestions and objections: Chandrabhushan, Deputy Director General of the Centre for Science and Environment (CSE), an advocacy non-profit; Mili Majumdar, Managing Director of Green Business Certification Inc, a private green-rating and certification organisation; Tanmay Tathagat, Executive Director of Environmental Design Solutions, a consulting firm; and S.K.Srivastava, a senior bureaucrat at the ministry.

Their report, which was not made public but accessed by HuffPost India, echoed some of the CREDAI’s recommendations. One of them was that residential buildings up to 1,50,000 square meters of built up area would be spared the need to obtain Consent to Establish and Consent to Operate clearances as previously required.

“It’s a very clear case of multiplicity,” said expert committee member Chandrabhushan, justifying the recommendation. “Instead of having multiplicity of clearances, we need to have one clearance which is done well.” He claimed the committee did not make this recommendation based on what CREDAI had suggested and that it was based on a presentation made by the CSE to the TSR Subramanian committee. His colleague on the panel, Tathagat, simply stated that it was removed because the provisions were originally conceived for industrial establishments, not residential projects.

The report sought to assuage the concerns of environmentalists by recommending the creation of an environment cell to clear and monitor construction projects at the municipal level.

The idea for municipal environmental cells, Chandrabhushan said, came from Mexico City, which has an independent office of environmental management. “You need to have a separate office of environmental management in urban local bodies,” he said.“We took a small, four line notification and converted it into a clear roadmap for the urban sector in India.”

The final notification dated 9 December 2016, which was released by the ministry, therefore, looked much more different from the April 2016 draft.

Chandrabhushan explained the differences, saying, “Based on our experience we gave these recommendations and charted a course which is very different than what anyone, even (environment) ministry, was thinking about.”

The official justification for defanging the 2006 Environment Impact Assessment (EIA) notification, as described in the 9 December 2016 notification, appeared laudable: the ‘ease of doing responsible business’ and helping the government’s Housing for All by 2022 scheme which has an objective of “making available affordable housing to weaker sections in urban areas”.

But the environment groups were anything but impressed. Five separate petitions were filed at the Principal Bench of the NGT in early 2017. One of them was by Pushp Jain, who was represented by  Ritwik Dutta. His petition asked for the environment ministry to set aside the notification, terming it “illegal and bad in law”. The petition also said that citing “Housing for All” as one of the motives in the notification, when it was clearly pro-builder, was a case of “hiding behind the poor”.

By the end of 2017, after multiple hearings, a three member bench at the National Green Tribunal struck down the notification. On 8 December 2017, the tribunal asked the ministry to “reexamine” the notification and “delete, amend and rectify” clauses which were problematic.

In the past, the tribunal noted, municipalities had failed to adequately monitor construction projects. This was the very reason that the 2006 law had been passed. Overturning the law would amount to asking municipalities to monitor projects again — something they had demonstrably failed to do in the past and nothing had been done to improve their capabilities to ensure they could do it now.

Removing the consent to establish and consent to operate provisions of the Air (Prevention of Pollution) and Water (Prevention of Pollution) Acts also did not go down well with the tribunal.

“This action of the MoEF&CC cannot stand the scrutiny of law. (It) lacks legislative competence,” the order stated.

Chandrabhushan, the expert from the government panel, said some of this fracas could have been avoided if the laws had been amended by Parliament.

I agree here with the NGT,” he said.“Since Water and Air Act was passed by the parliament, the ministry should have taken it to the parliament if they wanted this amendment to be done.”

Barely three months later, the environment ministry appealed against the National Green Tribunal order in the Supreme Court. The ministry sought an immediate stay on the Tribunal’s judgement —which was not granted by the SC.

At the time of writing, the Supreme Court is yet to give its final decision on the ministry’s appeal while the tribunal’s order remains in force and projects are being cleared as per the provisions of the 2006 notification.

CK Mishra, the environment secretary, said, “Every notification that we issue is subject to legal scrutiny. And very few notifications have been permanently rejected or stayed or anything.”

Tathagat, one of the members of the expert committee, was more candid.

From the builders’ standpoint, there was and there is a lobby,” he said. The lobby, he said, existed because the government had created an opaque system of clearances that was riddled with inexplicable delays.”

“The builders were predominantly concerned about the delays and ambiguity of requirements,” Tathagat said. “So therefore there is a lobby that says, ‘Make it transparent, make it easier.’ And I understand that.”

He added that he disagreed with the Tribunal’s order.

“The government has made the requirements more stringent in the December 2016 notification,” he said, explaining that that old notification was applicable to a very small number of very large buildings. The 2016 notification, which the tribunal shot down, was applicable to a larger number of buildings.  

“It was including smaller buildings and making them liable for environment protection as well.” Tathagat concluded.

Dutta, the lawyer opposed to the petition, said the proposed changes in the law had to been seen in the broader context of the Modi government’s actions over five years.

“Earlier we used to say that the law is good, but implementation is poor,”Dutta said. “Today, the law itself is not there to implement. The fundamental right to a clean environment which is guaranteed under Article 21 is subordinated to ‘ease of doing business’.”