India 'Cannot Pollute Way to Prosperity,' Says Minister

Worries have been raised in financial circles that zealous enforcement of environmental rules is creating a regulatory climate that deters foreign investors.

India's crusading environment minister has rejected criticism that his pro-green policies are driving away foreign investors and said the country "cannot pollute its way to prosperity."

Jairam Ramesh, whose push to enforce environmental rules has put him in conflict with business, said there was "no robust empirical evidence" to suggest his blocking of industrial projects had contributed to a drop in foreign investment.

India, whose economy is expected to grow by 8.6% in the current fiscal year, must ensure that its growth "is ecologically sustainable," Ramesh told a gathering of foreign journalists late Monday.

"The time has come for India to make tough choices," said Ramesh, whose ministry was seen as little more than a rubber stamp for industrial projects before he took over the portfolio.

The country "cannot pollute its way to prosperity," Ramesh said. "All I am doing is enforcing the laws of the land."

Ramesh has created waves in recent months by shelving plans by British giant resources Vedanta to mine bauxite on land held sacred by tribal people, ordering the demolition of a 31-storey luxury condominium in Mumbai, and stalling construction of a $3 billion luxury residential town in western India.

The minister, who is reported to have been prodded by ruling Congress party colleagues to be more conciliatory, last month approved plans by South Korea's Posco to build a $12 billion steel mill but attached over two dozen conditions.

Worries have been raised in financial circles that Ramesh's zealous enforcement of environmental rules is creating an uncertain regulatory climate that is deterring foreign investors.

In 2010, foreign direct investment (FDI) in India slid 32% from a year earlier to $24 billion, according to United Nations figures.

India's central bank recently voiced concern that "a major reason for the decline in inward FDI is reported to have been the environment sensitive" policies pursued by the government.

India badly needs investment to upgrade its shabby ports, highways and other transport as it seeks to end bottlenecks and propel economic growth to double-digit levels the government says are needed to reduce massive poverty.

Ramesh said he was attaching more conditions to some environmental approvals "but I have never said I am here to reject projects."

The minister said many of the conditions that he attached to industrial projects were a "leap of faith" because the government lacked the administrative network to police their enforcement.

He said he had to trust that the "public gaze will put pressure on companies to become much more [ecologically] sensitive."

In the past, he said, there was a "certain laxity" in enforcing environmental rules -- not all of which could now be corrected.

Copyright Agence France-Presse, 2011

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