19 January 2023

Cost of green clearance violations: Recalling 3 cases opened by NGT

GS-2: Statutory, regulatory and various quasi-judicial bodies. 

GS-3: Conservation, environmental pollution and degradation, environmental impact assessment.

The National Green Tribunal (NGT) has taken action on three cases revealing six major projects where strict clearance conditions aimed at compensating for high environmental impact were disregarded, overlooked, or only fulfilled on paper. 

Kulda-Tamnar coal link 

• Kulda (Odisha): An open cast mine runs by MCL, a subsidiary of the world’s largest coal producer Coal India Limited (CIL).
• Tamnar (Chhattisgarh):  India’s first private sector mega thermal plant operated by JPL.

Concern

• 14 villages suffer on a ruined road as coal trucks operate 24/7, causing pollution and harm to lives and livelihoods. 
• Since, 2014, 3 extensions to Kulda mine and 5 concessions to Tamnar plant were granted with promises for setting up a conveyor system but not implemented.
• In May 2020, thermal plants were ordered to use rail/conveyor for coal transport, but 5 months later, road transport was allowed until rail/conveyor infrastructure was ready. 
• In Oct 2021, despite villagers' complaints, the district collector of Sundargarh denied their request to stop coal transport by heavy vehicles.

Intervention by the NGT

• In March, the NGT established a committee with representatives from the district magistrates of Sundargarh and Raipur, central and state pollution control boards, and the Environment Ministry to investigate the case. 
• The committee's report in July 2022 found that the allegations of coal transportation by road in violation of EC conditions through villages, as reported in the media, were confirmed. 
• The report also highlighted that the poor road conditions led to increased vibrations and coal dust spillage from the transportation vehicles, resulting in adverse health and safety impacts on the residents of the villages along the road.
• Based on a report, a recent NGT order set a 4 month deadline to –

• Reconstruct the road to check dust pollution and recover the cost, if necessary, from MCL and JPL,
• Recover compensation for past violations from MCL and JPL, and
• Provide a timeline for setting up a conveyor system or rail link to transport coal from Kulda to Tamnar.

• The chief secretaries of Odisha and Chhattisgarh are responsible for completing the road, and the heads of the State Pollution Control Boards (SPCBs) will be responsible for determining and recovering damages using the "Polluter Pays" principle. 
• The NGT has warned that if the deadline is not met, the officials will have to appear before the Tribunal at the next hearing on May 15.

Dibang hydel project 

• In 2014, the Dibang hydel project received preliminary approval from the Environment Ministry's Forest Advisory Committee (FAC) with the condition that a national park would be established to protect the river basin. 

• Despite non-compliance, final forest clearance was granted in 2020.

• After the people of Arunachal Pradesh stated that they were not willing to give up their land for the creation of a national park, the NGT ruled in September that there was nothing left to be decided and dismissed its own the case.
• However, in December, the FAC acknowledged that previous approved projects had a poor compliance record and that there were many objections to the Etalin hydel project in Arunachal. Thus, the proposal cannot be accepted in its current form and that a revised proposal should be submitted.

Lower Subansiri hydel 

• The Lower Subansiri hydel project received forest clearance in 2004 with the condition of establishing a 900 sq km sanctuary, which was later reduced to 500 sq km and then to 168 sq km sanctuary and 332 sq km conservation reserve. 

• However, only 127 sq km has been designated. 

• In response to NGT's notice, Arunachal Pradesh informed the ministry that a sanctuary for remaining 41 sq km is being considered but establishing a conservation reserve for 332 sq km is not feasible due to local opposition. 
• The matter was brought to National Board for Wildlife (NBWL) which reportedly accepted Arunachal Pradesh's position, the NGT will hear the matter again on January 20.  

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Fact File

Three key takeaways from RBI’s report on state govt Budgets

GS-3: Government Budgeting.

In India, public discussions often center on the Union government's budget, but state government spending is significant. State governments account for a large portion of overall government spending, with their capital expenditure surpassing that of the central government. State budgets are crucial, especially as economic growth heavily relies on public sector investment.

Recently, the Reserve Bank of India (RBI) released its report on state government budgets for 2022-23. The report shows how state government finances improved following the economic slowdown caused by the pandemic in 2020-21, but highlights areas of concern.

Debt-to-GDP

• The report highlights that the state debt-to-GDP ratio remains high, but falling from 31.1% in 2020-21 during the pandemic to 29.5% in 2022-23. 

• Though it's a decrease, it is still above the recommended 20% ratio suggested by the Fiscal Responsibility and Budget Management (FRBM) review committee, which is headed by N K Singh.

• A high debt burden can limit states' ability to respond to economic shocks and may also lead to higher interest payments on obligations. 

• Interest payments by states rose to 2% of GDP in 2020-21, and while it's expected to decrease to 1.8% in 2022-23. 

• There are variations among states with some, like Punjab, Tamil Nadu, Haryana and West Bengal having a higher ratio of interest payments to revenue receipts, leaving less room for spending on other priorities such as health or education.

Contingent liabilities

• Contingent liabilities meaning the obligations of a state government to repay the principal and interest payments in case a state-owned entity defaults on a loan.

• The report indicates that state governments have experienced an increase in their contingent liabilities, specifically in the form of guarantees for loans taken out by state-owned entities. 
• These guarantees have risen from 2% of GDP in 2017 to 3.7% of GDP, with Andhra Pradesh, Telangana, and Uttar Pradesh having the highest amount outstanding.

• The poor financial condition of state-owned power distribution companies, known as DISCOMS, also has negative effects on state finances.

• Despite various attempts over the past years to improve their performance, they continue to incur losses. 
• This could lead to another bailout, which would impose a significant financial burden on states, with a cost of 2.3% of GDP for 18 major states according to a RBI study.

Old Pension Scheme

• Additionally, new risks have arisen as some states are opting to switch back to the old pension scheme. 
• In the early 2000s, it was recognized that the old scheme would be financially challenging, leading to a new framework that would reduce the state's burden. While most states had adopted the new scheme, some, such as Rajasthan and Chhattisgarh, have now decided to revert back. 

• This will negatively impact state finances, as a significant portion of tax revenue is already allocated towards pensions, with Rs 3.86 lakh crore allocated in 2020-21. 

• Switching back to the old scheme will further increase pension liabilities, leaving less room for other important spending.

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