PMO likely to phase out PIB approval for PSU projects

NEW DELHI: The Prime Minister’s Office has proposed doing away with Public Investment Board approval for most projects of public sector companies to speed up the pace of investment in the economy.

The PMO has instead asked the finance ministry to rely on the project evaluation done by the financial institutions funding them, as those were quite exhaustive, senior government officials said.

PIB approval is essential for projects of above Rs 200 crore, and will benefit a large number of projects, pending with different ministries. While Navratna companies are outside the purview of the PIB process, the PMO feels, if a project is expected to be funded by internal resources of a company, it should not have to go through the long winded clearance procedure.

Among others, PIB approval is pending for plans to buy aircraft for Indian Airlines and Air India at a cost of 10,000 crore each.

However, in both cases the government is expected to foot a sizeable part of the bill.

The trigger for the change in PIB approval norms has come from both power and heavy industry ministries, which are currently processing a large number of projects from public sector companies under them.

While schemes up to Rs 25 crore are approved by the concerned ministries, schemes up to Rs 200 crore need the go ahead from the Expenditure Finance Committee, headed by the expenditure secretary.

For mega projects of above Rs 200 crore, the government routes it to the PIB, which is also chaired by the expenditure secretary and includes in addition, the secretary of the Planning Commission.

According to the officials, a PIB approval takes about four months to come through. Some of them also require a final nod from the cabinet committee of economic affairs.

The National Common Minimum Programme of the UPA has talked about stepping up the pace of public investment sharply. But the ministers feel that the time consuming approval process is slowing down the process.

In ’02, based on the recommendations made by a committee headed by former industry secretary, V Govindarajan, the government had made several changes in the norms for project approval, including that of raising the ceiling for EFC and PIB from Rs 10 and Rs 100 crore respectively.