The Committee of Secretaries on expediting the clearances of infrastructure projects has recommended an increase in the limit for investment approval from the Cabinet Committee on Economic Affairs (CCEA) to Rs 1,500 crore (Rs 15 billion) up from the current level of Rs 100 crore (Rs 1 billion).
The move is aimed at accelerating the pace of investment in infrastructure sectors like power and coal, where the quantum of investment required for each project is fairly large. It would also reduce the time required for obtaining project approvals.
The approvals are only required for projects promoted by public sector companies or by departmental enterprises.
As per current norms, the approval authority for projects up to Rs 50 crore (Rs 500 million) is the minister of the administrative ministry, while investments in projects ranging from Rs 50 crore to Rs 100 crore also need to be cleared by the finance minister.
All projects and schemes with outlays of over Rs 100 crore have to go to the cabinet or to the CCEA for approval.
The power ministry's proposal to do away with a multi-stage approval process for investments had been endorsed by Prime Minister Manmohan Singh last week.
Singh had said recently that the power sector in India would need additional foreign investment of $75 billion over the next 10 years.
This was part of the total package of $150 billion worth of foreign investment in infrastructure that the country was targeting over the next 10 years. There was a consensus that pre-PIB approval should in principal, be abolished.
As per current norms, Public Investment Board approvals are required for projects valued above Rs 200 crore (Rs 2 billion) and doing away with the approval requirement would benefit a large number of pending projects.
Doing away with pre-PIB approvals would reduce approval time from over an year to about 20 weeks, said officials in the power ministry.
The present appraisal process in the government states that schemes up to Rs 5 crore (Rs 50 million) can be cleared by the ministries or departments concerned, while schemes in the Rs 5 crore to Rs 25 crore (Rs 250 million) range have to be approved by the Standing Finance Committee.
Schemes in the range of Rs 25 crore to Rs 100 crore are approved by the concerned ministries, while schemes in the Rs 100 crore to Rs 200 crore range need the approval of the Expenditure Finance Committee headed by the expenditure secretary.
For mega projects of above Rs 200 crore, the government routes approvals through PIB, which is also chaired by the expenditure secretary and includes the secretary of the Planning Commission. PIB approval takes about four months to come through, officials said.
In case of projects above Rs 500 crore (Rs 5 billion), pre-PIB scrutiny is also required before coming to PIB. Some projects also require a final nod from the CCEA.