Environmental Degradation and Neoliberalism: Does De-Regulation work?

Utsav Mitra


This post is part of our Symposium on Law and Political Economy in India After Covid.

Environmental regulation has always taken a back seat when it comes to neoliberalist policies and pro-market reforms, especially in a developing country like India. When the Government actively takes measures, which dilute the existing environmental regulation in the country, it is bound to raise strong objections from all quarters. In this post, I shall analyse neo-liberalisms capture of environmental law with respect to the recent changes that have been introduced in the Environmental Impact Assessment process vide the draft environmental impact assessment notification introduced by the Government in March, 2020. I shall discuss the various issues that have been raised against the draft, and also the potential consequences it may have on the environment.

Neoliberalism & Environmental Regulation in India

Neo-liberalism refers to market-oriented policies that reflect a shift towards reduced State-influence in the economy. Such policies involve lowering trade barriers, de-regulating markets, implementing competitive exchange rates to help exports, encouraging foreign investments and various privatisation measures amongst others. The fundamental ideology behind neo-liberalist policy is economic liberty, where the markets are assumed to be highly intelligent and capable of auto-checking themselves. Therefore, neo-liberalism largely seeks to restricts the State’s role to mostly maintaining public law and order, and ensuring minimum interference with the economy. Much like rest of the world, India too has embraced neo-liberal policies since the early 1990,s when it opened up its markets to foreign investors and allowed the private sector control over its means of production. Since then, neo-liberal ideas have  gradually found their way into the domain of environmental policy making as well. The Environmental Impact Assessment (“EIA”) is said to be one such tool of neo-liberal environmental policy, where before an industrial activity/project is approved, the effect of such an activity/project on the environment is studied and analysed. If the proposed activity/project is deemed to have adverse consequences on the ecosystem, approval for the project is usually denied by the concerned authority. The EIA was first introduced in the United States in 1969 upon adoption of the National Environmental Policy Act. In India too, the EIA gained formal recognition in 1994, when the Union Ministry of Environment and Forests, under the Environmental (Protection) Act 1986, promulgated an EIA notification making Environmental Clearance (“EC”) mandatory for the expansion or modernisation of any activity, or for setting up new projects in the country. This law was enacted after the Bhopal Gas Leak disaster of 1984, largely due to huge public pressure for the regulation of industrial projects in the country. Although the EIA is regarded as one of the most successful policy innovations and has been implemented in over 100 countries, there are quite a few differences in the EIA systems of developed and developing nations. For example, EIA systems of developed countries are comprehensible and clearly defined, where screening for actions of environmental significance is carried out completely, and there exists specific guidelines on scoping, public participation and the review process which are not usually present in the EIA systems of developing nations. Since its inception in India as well, the EIA has been a cause for much debate and concern amongst environmentalists who believe that there exist several shortcomings in the process, and a lack of genuine regulation of economic activity. More specifically, issues had been raised regarding the approach to conducting an EIA, the fact that most projects are almost always given approval, the lack of an authority to constantly monitor the environmental conditions imposed on the project proponent, conflict of interests in the process and lastly, the fact that the affected communities are not well aware or informed about the process of public hearing and the rules regarding the EIA. All this has resulted in several pertinent issues being challenged in the Courts and Tribunals across the country, and have led to some important decisions such as Sterlite Industries (India) Ltd. Vs. Union of India, where the Supreme Court held that an EIA approval could be challenged if proper procedure was not followed, or in Samata and Forum of Sustainable Development v. Union of India & Ors, where the National Green Tribunal (“NGT”) held that the views, opinions, comments and suggestions of the appraisal committee must be recorded in order to give a reasoned decision.

The Environmental Impact Assessment Notification 2020

It is in this backdrop that the draft environmental impact assessment notification (“EIA draft 2020”) issued by the Ministry of Environment Forests and Climate Change (“MoEFCC”) in March 2020 has become a cause for much furore given the nature of proposed changes it seeks to make in the existing rules, i.e., the Environmental Impact Assessment Notification of 2006 (“EIA notification 2006”). The objective behind the EIA draft 2020 has been stated by the Government as an important move to streamline processes, decentralize and implement the directions of the Courts and National Green Tribunals. However, upon further analysis, it has been alleged by several activists and environmental organisations that the EIA draft 2020 has infact sought to largely dilute the existing regulation, and make the processes opaquer instead of the transparency it promised. The existing law, i.e., EIA notification 2006 had also faced severe criticism upon its implementation, having been amended several times in the past. Therefore effectively, the EIA draft 2020 is a culmination of these revisions, and to an extent, further dilutes the original law. For example, some of the criticism levelled against it is that it largely neglects sustainable development, and furthers the neo-liberal agenda of minimum regulatory control over commerce and industry. It is contended that the affected communities have no real powers under the draft notification, and this tips the scale to favour the corporates. Another major cause for concern is the fact that the EIA draft 2020 allows an activity/project to carry on operations even if it has not received adequate environmental clearances from the authorities, and receive a clearance post the construction of the plant. Such post-facto clearance threatens to leave disastrous consequences on the environment, and especially on the affected communities whose basic livelihood is dependent on it. Moreover, a list of selected projects is exempted completely from any form of public scrutiny which are considered “strategic”  such as modernisation of irrigation projects, plant constructions, mining activities, national defence and security, expansion of national highways, amongst others. By removing the voice of the public completely from the process, many are of the opinion that the public trust doctrine has been abandoned and such projects can now be commissioned in extremely fragile and eco-sensitive zones, where large scale environmental violations may lead to devastating consequences. In fact, this is now being viewed as a complete trade-off between economic growth on the one hand, and environmental quality on the other. Another worrisome change has been the extension of time allotted for the submission of a compliance report.

As per the EIA draft 2020, promoters can now take up to one year to submit a compliance report, as opposed to the six-month period which was previously stipulated in the existing rules. This is suggestive of the fact that the drafters view the previous regulation as nothing but a hindrance to economic growth, and are willing to weaken the existing regulation. Several activists have also argued that diluting the existing EIA regulations will lead to a drastic increase in pollution levels, which are already at a record high. In light of such public outcry, the Delhi High Court has recently clarified that the time limit to file objections against the EIA draft 2020 is till August 11, 2020. Moreover, the Delhi High Court has also directed the Central Government to publish the EIA draft 2020 in the languages mentioned in the Eighth Schedule of the Constitution, as well as on the website of the MoEFCC. This will enable a greater number of people to have access to it, and thus entail larger public participation with more regional communities who may be directly affected by it. Previously, in the Samarth Trust Case, the Delhi High Court had clearly observed that EIA is a means of participatory justice, in which a voice must be given to the voiceless communities. However, the intention of the Government in hurriedly introducing this draft notification in the midst of the pandemic is largely questionable. Since the EIA draft 2020 was introduced only two days before the imposition of the nation-wide lockdown, it blatantly hampered the right of citizens to file objections.

For some time now, the Government of India has bought into the idea that neoliberal policies will lead to a faster growth in commerce and industry. However, such policies have in recent times come at the cost of directly diluting existing environmental regulation, and has also put a large question mark on the development of environmental jurisprudence in the country. The dilution of the existing environmental legislation, compounded with the disregard for all the progress that has been made in environmental jurisprudence through the Tribunals and Courts can also be seen as an outcome of the Indian political economy, which is now largely dictated by interests focussed only on growth. Such drastic de-regulation in environmental legislation does not serve anyone’s interests in the long run as environmental damage has irretrievable consequences, and will inevitably affect the economy as well. More importantly, the recent incident in Madhya Pradesh where toxic ash leaked from a power plant after a dyke collapse, or the severe flooding in Assam, or even the recent styrene gas leak at a plant in Vishakhapatnam are all indicators of why strict scrutiny of industrial projects must be done before permission is granted to them to commence operations. Although the revival of commerce and industry is of paramount importance in the present situation given the severe downward spiral of the economy due to the pandemic, it cannot be at the expense of sustainable development. In fact, experts in the field have noted that if we don’t learn from our past mistakes, and further hamper delicate ecosystems it may result in more health hazards like the current pandemic. Going forward, environmental policies must be drafted with the understanding that it is indeed possible to safeguard the environment along with having a robust economy, for example, by implementing cleaner and greener technology. It is not a question of a trade-off between the economy and the environment, but there must be maturity on the part of lawmakers to realise that the two can, and should co-exist harmoniously. This can only be achieved by designing an effective national environmental policy based on scientific research and transparent decision-making processes.


As these are still early days of the EIA draft 2020, more time must be given to the public to study and analyse it. In fact, it would be wise for the Government officials to sit down with all stakeholders and discuss the issues at length, rather than hurriedly seek its implementation. Important processes such as public hearings must take place through informed consultations, and the affected communities must be allowed to give an informed consent before projects are approved. Moreover, independent information centres should be established to compile and provide data and ensure the strict scrutiny of projects. The overall improvement in the quality of legal standards for economic projects/activities stands to benefit all at the end of the day. This is more important now than ever as the country is still recovering from the major setbacks caused by the pandemic. This is the ideal time to re-strategize and re-evaluate the aspirations of not only economic growth, but of doing business in a sustainable manner. As of now, the EIA draft 2020 has been nothing but non-transparent and unaccountable in various aspects, and as such, the neo-liberal approach should be reconsidered. If possible, the EIA draft 2020 should be revised adopting the precautionary principle and other environmental management principles. As noted by the Supreme Court in Vellore Citizens Welfare Forum vs. Union of India, both sustainable development and the precautionary principles are an explicit part of the law of the land. Thus, the EIA draft 2020, and in extension, the overall framework of the environmental regime in India must also be revised to be in alignment with such important environmental principles. As of now, it remains to be seen whether the criticism against the EIA draft 2020 is premature or not, and whether the Government takes any active steps to remedy the situation.

Utsav recently graduated from the National Law Institute University, Bhopal and will soon be joining Khaitan & Co.

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