Rebuilding a sustainable economy post Covid

The global economy is in recession, and it is predicted to be more destructive than the Great Depression of 1929 and the Global Financial Crisis (GFC) of 2007. India too has been hit hard – tens of millions have lost their jobs, and the economy is projected to shrink by 4-9% in 2020-21. The last time the Indian economy contracted by more than 5% was in 1979 when the entire country was devastated by a once in a century drought (and some regions with floods).

Both Morarji Desai’s and Charan Singh’s governments fell, and we had mid-term elections which brought Indira Gandhi back into power. The fallout of this political upheaval was the founding of the Bharatiya Janata Party in early 1980, which successfully challenged the Congress and came to power within two decades. I believe that the India in which we live in today was in many ways created in 1979. The question is: What kind of India will the 2020 economic recession create? And, can we steer the ‘new’ India towards a more just, equitable and sustainable society?

A defining feature of the current economic crisis is the unprecedented fiscal and monetary stimulus packages being rolled out by the governments to provide relief and revive the economy. According to the International Monetary Fund, the total stimulus package for G20 countries averaged 12.1% of GDP – many times more than GFC. India too has announced a stimulus package worth 10% of GDP (though there are opposing views on this number). A quick analysis of the stimulus packages shows that they are primarily targeted to revive the current economy; hardly any country has thought about the long-term transition.

In India too, the focus is on the existing ‘brown economy’ and shovel-ready projects. The attention on the immediate crisis has also relegated climate and environmental concerns to the background. This is evident in the increasing plastic pollution and investments in the fossil fuel industry. Regulatory changes in the environment and labour sectors have also been proposed for the ‘ease of doing business’. While there is nothing wrong in short-term stimulus packages to keep the current economy alive, they must not be environmentally destructive. On the other hand, we also have to ensure that the long-term economic recovery takes into account the social and environmental crisis the world is facing today.

In other words, we must differentiate between a short-term stimulus to jumpstart an economy and a longer-term strategy to transition to a sustainable society. While the former mostly requires fiscal and monetary support, the latter requires long-term investments and serious pricing and policy reforms. The current economic crisis offers us a once in a lifetime opportunity to roll out a long-term strategy along with stimulus packages in core sectors:

  • Make agriculture sustainable: Agriculture accounts for 50% land, 85% water, uses a massive amount of chemicals and provides low-income livelihood to 50% of the population. Agriculture is central to building a sustainable society.
  • Transform the energy sector: We are at a cusp of change in the energy sector. With stimulus and R&D, we can build a new energy architecture based on renewable electricity, battery storage, smart grids and hydrogen fuel for industries.
  • Build resilient infrastructure: Massive amount of money will be spent by the government to build roads, airports, buildings etc as part of the stimulus package. We must make them ‘green’. Instead of roads, we should prioritise railways; instead of concrete jungles, we must build sustainable cities.
  • Invest in nature: Reversing deforestation and desertification and enhancing soil, wetlands and forests will build resilience against climate change and also provide massive livelihood opportunities.
  • Support local and small businesses: For jobs, sustainability and resilience of the supply chain, local small businesses are going to be the key. Government policies must support the development of efficient and green small businesses.
  • Invest in social capital and governance: None of the above would be possible without an educated and healthy society and good governance.

If we consider the experience of the past, then the economic recovery is going to be a long haul. The New Deal enacted by Franklin Roosevelt to respond to the Great Depression lasted for seven years (1933-39). Rebuilding in India will also need time and money. We must spend these rethinking about the type of economy and social system we need and want in the future.

India needs a new EIA law

The Draft Environment Impact Assessment (EIA) notification 2020 has become a hot potato for the ministry of environment, forest & climate change (MoEF&CC). First, the Delhi high court overruled the ministry’s decision on the time limit for public comments and increased it till August 11. Then, in response to a formal complaint of the environment minister for spamming his email account, the cybercrime unit of the Delhi police invoked a terrorism-related law to shut down the website of young environmental campaigners, who were running an online campaign against the draft notification.

Though the police have now withdrawn the notice, the public uproar against the draft notification continues. Reportedly, lakhs of people have written to MoEF&CC to scrap the draft. So why is there such a hullabaloo around this subordinate legislation?

Chad Crowe

The draft EIA notification 2020 seeks to replace the existing law – the EIA notification 2006 – which grants Environment Clearance (EC) to projects. The major criticisms against the new draft are that it dilutes scope of public participation, legalises post-facto EC, removes the requirements of EIA study for several categories of projects, and weakens the provisions of reporting by companies. To understand the significance of these changes, let’s look at the 2006 law.

The EIA notification 2006 is possibly the most amended piece of environmental law. It has been amended 43 times, and at least 50 office memorandums (worth 350 pages) have been issued to tweak this law. Many of these changes have diluted the original version for some or other industry. The 2020 draft, in large part, brings together several of these revisions.

Therefore, effectively the 2020 version is a little worse than the existing one. So, while I appreciate the criticism of the proposed draft, keeping the 2006 version or even improving it is not going to solve the environmental problems in the country either. Let me explain why.

First, the approach of conducting EIA of individual projects is bad science. The environment is affected by the cumulative impacts of all activities, which project-specific EIAs fail to capture. Even if individual projects meet all benchmarks, their cumulative effects may still destroy the environment. This is evident in most mining and industrial areas of the country – from Singrauli to Korba and from Vapi to Patancheru.

Second, the EIA report, which forms the basis for EC decisions, is prepared by a consultant paid by the project proponent. This creates an apparent conflict of interest, and therefore most EIA reports are not worth the paper they are written on. I am yet to come across an EIA report that says that a project is likely to have significant ecological impacts.

Third, the process of the public hearing, which is mandated to take into account the concerns of the project-affected people, is a sham. Public hearing as practised in India is neither an informed consultation nor an informed consent. Most times, it is organised in the presence of police force, and physical violence is not uncommon.

Worse still, concerns of the community are most often dealt with in a cursory way by the expert appraisal committees (EACs). EACs typically ask companies to make some investments like building schools or providing drinking water to appease the community. MoEF&CC has even formalised this by calling these expenditures as ‘corporate environment responsibility’ (CER) and directing companies to earmark 0.125-2% of the capital investment on CER.

Finally, the environmental conditions imposed on the companies are rarely monitored by authorities. Monitoring is based on self-certified half-yearly reports submitted by companies; this has been reduced to yearly report in the 2020 draft.

The fact is that the current EIA and EC process in India is defunct. While it involves a lot of paperwork, there is little improvement on the ground. 99.9% of the projects are cleared, and non-compliance of the safeguards is rampant. The paperwork and transaction costs, on the other hand, gives legitimacy to industries to argue for watering down the process further.

It is, therefore, time that we demand a new EIA law based on sound science, and robust and transparent decision making processes to safeguard environment and community rights as well as to reduce investment risks of industries. This can be achieved by integrating three environmental concepts.

The first is the strategic environmental assessment (SEA). SEA will help to evaluate the ecological ramification of policies and plans and address concerns at the earliest stage of the decision making process. Many countries have adopted SEA to integrate environmental concerns in policy making.

The second is the regional planning approach. This involves conducting carrying capacity studies and developing regional plans based on them. This will allow us to take into account cumulative impacts and also provide information to project proponents to decide the location of the projects beforehand.

The third is project specific EIAs. In this, EIAs should be done for major projects and not for all. The focus here should be to improve environmental management plans and post-clearance monitoring. To ensure quality EIA reports, an environment information centre should be established to provide independent data to consultants and the EACs. In all the three processes, public participation should be ensured to improve assessment and scrutiny.

The EIA process is the most important piece of environmental law as it has the scope to decide the development trajectory of the country. But this powerful piece of legislation has never been discussed or legislated by the Parliament. Time to take the EIA discourse to the Parliament floor and develop a new law suitable for the 21st century.

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