The environmental cost of India’s efforts to promote ‘ease of doing business’

The ruling National Democratic Alliance government has weakened environmental protection rules covering 70% of polluting industry categories in an effort to make it easier to do business, which could hinder India’s fight against pollution, an IndiaSpend analysis of government reports and plans from 2014 to 2017 shows.

Between early 2015 and late 2017, state pollution control boards, on instructions from the Centre, have exempted 146 of 206 classes of polluting industries from routine inspections. Industrial units in these categories can now self-certify their compliance status or obtain “third-party certification”. Earlier SPCBs would conduct compliance checks by themselves.

This change has allowed units in sectors such as coal washeries, stone crushers, fly-ash disposal, railway sidings and food processing – many with a poor track record of compliance – to operate without direct regulatory oversight. Measures such as self-regulation have so far neither led to better industrial compliance nor reduced complaints and legal cases against polluting industries, according to a June 2019 paper by the Centre for Policy Research, a public policy think-tank.

Several third-party auditors have been found to have covered up instances of industrial negligence in the past. While the purported aim of these reforms is to improve the ease of doing business and reduce the burden on pollution inspectors, experts and data indicate that this will perpetuate poor compliance with existing environmental norms.

Multiple studies – here, here and here – show that pollution levels in India are getting worse by the day. As many as 14 of the world’s 15 cities with the most polluted air are in India, including Kanpur, Patna, Delhi, Jaipur and Patiala. Prolonged exposure to toxic air reduced the life expectancy of the average Indian by over four years, found a 2017 study by the University of Chicago.

The Central Pollution Control Board identified 351 river stretches that do not meet water quality criteria, as per this 2018 report. Industrial pollution is a big contributor to overall pollution levels. In the National Capital Region, for instance, it contributes 23% to the city’s overall pollution, as per a 2018 study.

The dilution of environmental regulations has coincided with the expansion plans of several sectors recently exempted from board inspections. Many projects from the exempted categories were recently in the news for defaulting on environmental norms. These changes have been brought in despite the environment ministry’s admission that compliance is weak.

Colour-coded regulation

Under the Water and Air Acts, SPCBs grant consent to industries that are likely to discharge waste into water bodies or seek to set up operations in areas monitored for air pollution. Consent is granted if units fulfil certain conditions of environment protection – height of emission stacks, quality of wastewater/emissions, waste outlet location, rate of discharge and so on.

In most states, until the first half of 2016, SPCBs conducted routine inspections to verify compliance of all permitted industries against these conditions. The frequency of these inspections would vary according to their categorisation as “red”, “orange” or “green”. Highly polluting industries, categorised “red”, would be inspected at short intervals, medium-risk or “orange” industries at longer intervals, and the least polluting or “green” ones at the longest intervals.

In 2014, the Centre introduced the concept of third-party inspections and self-certification for consent renewal and compliance monitoring. In 2016, the Centre altered the industry categorisation and moved 84 industry types to less severe categories. Subsequently, in 2017, the Centre recommended that green category industries be exempted from inspections altogether and orange category ones be allowed to have audits by “third-parties”.

In this way, monitoring protocols were relaxed not only for the existing less severe industrial activities but for an additional 84 industry types. Adoption of these changes by the states meant that in 146 industry types, the SPCBs could skip inspections. In 83 industry types, special agencies could conduct inspections on behalf of SPCBs, and in 63 types, the industries could self-declare their emissions in lieu of SPCB visits.

Regrouping industries

The industry classification released on February 29, 2016, is based on a 0-100 pollution index based on air pollutants, water pollutants, hazardous wastes and consumption of resources. Industries that score 60 and above are classified as red, 41-59 as orange, 21-40 as green, and 20 or less as white.

The CPCB called this a “transparent” exercise carried out on demand from “the state pollution boards and industrial associations” for ease of doing business. The previous categorisation did not consider “pollution due to discharge of emissions (air pollutants) and effluents (water pollutants) and its likely impact on health”, CPCB’s report said, adding that the earlier classification was not backed by a scoring system. However, a comparison between the two classification exercises does not reveal much difference.

This re-categorisation brought the number of “red” industries down to 60 from 85, took the number of “orange” industries up to 83 from 73, and “green” down to 63 from 86. It also placed 36 industry types in the new “white” category. In this exercise, only six industries were moved into a stricter category than earlier assigned, 152 retained their previous categories, and 84 were moved to a category less severe than previously assigned.

Industries such as stone crushers, coal washeries, hot mix plants and lime manufacturers were shifted to “orange” from “red”. Fly-ash export, transport and disposal, railway sidings, oil and gas pipelines – all classified as high-risk industries for the environment – have been shifted from red to green. And coke briquetting, packaging material manufacturing, cutting and polishing of marble, and emery powder production have been moved from orange to green.

No compliance checks

To promote ease of doing business, the Ministry of Commerce and Industry has, since 2014, been putting out what it calls Business Reform Action Plans. They also rank states on the basis of environmental reforms. The reforms cover land allotment, environmental permissions and monitoring, construction permits, labour regulations, utility permits and information access.

States that score above 95% are grouped as “top achievers” and those scoring between 90 and 95% as “achievers”. The latest available ranking conducted under the 2017-’18 plan identified nine top achievers and six achievers.

Andhra Pradesh topped the 2017-’18 rankings, the compilation showed. In May 2016, the state allowed third-party inspections for certain orange category industries such as dairy, vegetable oil refinery, food and food processing. Then, in June 2016, it exempted green category industries from routine inspections provided they had exhibited “satisfactory compliance” in the past. Haryana, which ranked third, did the same in October 2017.

Of the 15 top-ranked states, all except Tamil Nadu have granted exemption from routine inspections to green category industries. And all except four – Jharkhand, Tamil Nadu, Haryana and Uttar Pradesh – have allowed third-party certification in lieu of SPCB inspections for orange category industries.

Tamil Nadu has had a protocol in place since October 2014 that grants renewal of consent to small red category industries, and all orange and green industries based on self-certification. However, it has not introduced any new protocols on compliance inspections after the Centre’s recommendations.

This implies that on average, for over three years, green industries in 15 states have been operating without compliance inspections and orange category industries in 12 states are being inspected by third parties, not SPCBs.

It also means that in Karnataka of the over 22,000 operating units, 5,500 orange-coded ones and close to 12,000 green-labelled ones, as of March 2018, have not had compliance inspections by the board for at least two years.

Third-party inspections

Based on the information available on SPCBs’ websites, Telangana has selected the Environment Protection and Training Research Institute and the Indian Institute of Technology Hyderabad as their empanelled third parties. Maharashtra uses the National Environmental Engineering Research Institute to audit orange category industries. Andhra Pradesh PCB has identified Andhra University, Nagarjuna University and Sri Venkateswara University to conduct inspections. Uttarakhand PCB accepts certification from any agency recognised by the CPCB or any of the state boards.

Several of these agencies are also involved in the preparation of Environment Impact Assessment reports for projects and, from time to time, have been accused of providing false information, fudging data and hiding critical details of projects. NEERI has been accused of relying on the project proponent’s iteration without verification to prepare the EIA report for the Karcham Wangtoo hydropower project in Himachal Pradesh. And EPTRI has been indicted for hiding crucial information and allowing plagiarism while preparing the EIA report for Hyderabad Pharma City, an industrial estate.

IndiaSpend reached out to PK Labhasetwar, senior principal scientist at NEERI for a response to this criticism. “NEERI exercises diligence while preparing EIA and other study reports,” he said, adding that most scientists involved in preparing the Karcham Wangtoo report in 2001-’03 are now retired. Shifting inspections to third-party entities may not have led to reduced burden or better compliance as expected. “There is documented evidence that the third-party verification is stringent only when SPCB counter-monitors their work,” said Sharachchandra Lele, fellow, environment policy and governance, Ashoka Trust for Research in Ecology and Environment, a Bengaluru-based think-tank.

We emailed our queries on the inspection procedure to member secretaries of Andhra Pradesh and Maharashtra PCBs on January 7, 2019. We were told on the phone that the Andhra PCB’s joint environmental engineer would respond but are yet to hear from the official. The Karnataka PCB and the head of EPTRI, whom we emailed on January 8, 2019, have not replied either. We will update this story once we hear from them.

Loose definitions

Self-certification or easing of regulatory oversight is effective only when those being regulated have demonstrated a steady commitment to existing regulations or if there is a decline in the social and environmental impacts of the regulated activity over time. But in this case, sectors such as fly ash disposal and railway sidings that have been given regulatory relaxations have been guilty of recurrent defaults and causing severe environmental and livelihood damage.

Addition of the phrase “satisfactory past compliance” could have eliminated the possibility of repeat offenders being rewarded. However, state boards have not clearly or adequately defined “satisfactory compliance”. Andhra Pradesh defines it as the absence of closure/stop-production orders by the board and any prohibitive orders by the courts. But it misses out the directions issued by the board or the court, which may suggest corrective measures in instances of non-compliance.

The Haryana PCB defines it as compliance with environmental laws and prescribed norms during the past 10 years or in the past three consecutive inspections, or installation of online systems for monitoring emissions/effluents. But this order, other than the online monitoring systems, makes no mention of how the board would assess compliance, and if such assessment would consider court or board directions issued in the past. Also, grievances raised by those living around such projects do not feature in the methodology suggested for evaluating past or current compliance. Given all these factors, self-certification and third-party inspections could lead to poor compliance with environment regulations.

This article first appeared on IndiaSpend, a data-driven and public-interest journalism non-profit.