Disciplining the enfants terrible of industry

  • 14/06/1993

Disciplining the enfants terrible of industry IT TOOK a series of dogged protests by farmers to get small-scale textile dyeing and printing units near Pali in Rajasthan to get together to set up effluent treatment plants jointly so that pollutants need never again paint the Luni river red and blue. The town and its more than 1,000 dyeing and printing units, operating about 70 km southeast of Jodhpur, discharge 7.5 million litres of industrial and municipal waste daily into the river.

The protests, which started in the mid-1980s, and a crackdown by the state pollution control board (SPCB), forced dyeing and printing unit owners to look seriously at pollution control measures. This culminated in a May 18 meeting with state government officials, when owners of the polluting units announced they would cooperate and fund a Rs 18-crore scheme that would drastically reduce over the next two years the toxicity of the discharge.

The Pali Industrial Area Small Industries Association (PIASIA) is to contribute Rs 10 lakh, with each member being assessed at Rs 10 per sq metre of factory land. The municipal committee will pay Rs 1 crore towards setting up the plant and the Union and state governments will contribute upto Rs 50 lakh each. "The rest will come from financing agencies such as the Rajasthan Industrial Investment Corp (RIICO)," says Mangilal Gandhi, who owns a dyeing-printing unit and is president of the Rajasthan Textile Handprocessors Association.

Effluents from Pali flow about 55 km downstream, making the groundwater in several riverbank villages unfit for irrigation or drinking. Says Babu Lal, a farmer in Giradhra-ki-Dhani village, about 4 km from Pali, "We always used water from shallow wells along the riverbed for irrigation and drinking. But for eight years now, these wells yield coloured, soapy water, with a high caustic soda content. We are forced to use this water for irrigation and our crop yields have been halved."

Similar pollution problems created by small-scale industries (SSI) exist in industrial estates across India, particularly in Ambur and Vaniyambadi in Tamil Nadu and Jajmau near Kanpur in Uttar Pradesh, with a preponderance of leather processing industries; Ankleswar in Gujarat and the Thane-Belapur belt in Maharashtra, key centres for chemicals, dyestuffs and dyestuff intermediates, and Mandi Gobindgarh in Punjab, where metal industries dominate. Industrial estates were set up in these places to curb the expansion of small industries into urban areas and to avoid mixed land use. But, a Central Pollution Control Board (CPCB) official notes, "The estates have become agglomerations of highly polluting industries."
Tannery effluents A high-profile small-scale industry that has gained notoriety in recent years as a polluter is that of leather. Tanning of hides generates large quantities of animal waste and effluents. The total pollution load from tanneries has not been determined as yet, but 600 tanneries in and around Ambur in Tamil Nadu, about 80 per cent of which are SSIs, discharge 35 million litres of effluents daily. Similarly, 115-odd small tanneries in Jajmau in Kanpur generate nearly 16,000 kg of solid animal waste containing extremely toxic salts of chromium daily; Tamil Nadu"s tanneries generate 5,250 kg of such salts and UP"s 1,150 kg. Effluent discharges have damaged more than 1,000 wells in Tamil Nadu and in Kanpur.

Pollution by SSIs is more per unit of output than large industries. K P Nyati, advisor on pollution control at the Confederation of Indian Industries (CII), explains: "SSIs tend to waste material and thereby pollute more. While SSIs account for only 35 per cent of industrial production, their share of industrial pollution could be as high as 65 per cent."

SSI owners concede excessive pollution, but plead helplessness. P B Duggal, who owns several winding wire units in Delhi, says SSIs lack the finance, the space and the expertise to install pollution controls even though the government provides concessional finance of up to Rs 50,000, or half the cost of pollution control equipment, whichever is less.

"Industrialists look for the cheapest -- not the most effective -- pollution control device to maximise the government"s contribution," Duggal explains. "Usually, what they install is inadequate." And, adding to this explanation is R Parthasarthy of the Association Chambers of Commerce and Industry, who attributes pollution also to the "poor level of awareness in the industry and the government about the impact of SSI activities on the environment."

Both Nyati and Parthasarthy represent organisations serving the needs of large-scale industries.

Plots too small
The industrial estate plots on which SSIs are located are too small to accommodate effluent treatment plants. SSI entrepreneurs also complain it is difficult to get pollution control systems tailored to their needs.

Explains an official with the environmental engineering department of Engineers India Ltd, "The pollution loads of SSIs are quite different from those of large units and require qualitatively different treatment systems. You can"t merely scale down a system designed for a large unit to suit an SSI"s needs."

An ideal way to control SSI pollution would be for industrial estates to set up common effluent treatment plants (CETPs), but this poses a funding problem. India"s first CETP, for example, was set up in 1982 at Pali by RIICO, which ran it until 1987. Its operation was stopped because local industries would not cover running costs.

Two years later, the industrialists joined the Pali district authorities to set up the Pollution Nivaran Samiti (PNS), which would administer a fund made up of proceeds from a chungi (toll) tax of Rs 25 per 100-kg bale of cloth entering the town. Since 1989, the CETP has been operating continuously, financed by bale tax collections that exceed the Rs 7 lakh per month it costs to run the treatment plant. Another CETP success story is the Jeedimetla industrial estate in Hyderabad.

Pollution by SSIs is also due in part because the CPCB and SPCBs fail to enforce rules. In Pali, a special court was set up to prosecute polluters, but of 300 cases filed, only three ended in prison sentences and fines.

The CPCB"s approach of setting standards and prosecuting those who do not comply with them has not helped either. CPCB prescribes a unit has to install and run pollution control equipment to conform to standards if it costs less than 3 per cent of its annual sales. But this criterion is unrealistic, says S K Shiwalkar, president of the Federation of Associations of Small Industries of India (FASII). "An SSI has to have an annual turnover of Rs 150 lakh to meet this requirement. The average annual turnover of SSIs is in the Rs 50 lakh- 60 lakh range."

Even when industries are willing to finance pollution control -- as in Pali"s chungi tax -- problems have arisen regarding quality standards for treated effluents. The plant in Pali does not yield water clean enough for irrigation and Gandhi admits this.

Some observers note high operational costs of effluent treatment plants and the lack of suitable technology discourage small entrepreneurs from taking up effluent treatment schemes individually. The effluent treatment plant in Pali costs Rs 1 lakh a month to operate -- an amount no single organisation or entrepreneur can afford for long. Says Paritosh Kumar, a CPCB scientific officer, "To make effluents fit for irrigation, we will require twice the current level of investment in effluent treatment."

Pali"s small entrepreneurs are at loggerheads with the SPCB over pollution and Pushp Raj Bhandari of PIASIA explains, "First, one government department establishes industrial estates in Pali to encourage the cloth dyeing industry; then another department comes down on us for pollution control."

Bhandari"s statement hints of a policy clash in government. On the one hand, the industry ministry doles out concessions and subsidises a project from the proposal stage and extends 5-year sales tax holidays when a unit goes on stream because the cost of generating employment in SSIs is less than in large-scale industries (See table). On the other, the ministry of environment and forests (MEF) is determined than an industry should not pollute. Says CPCB chairman D K Biswas, "If a unit cannot adopt pollution control measures, it should not be allowed to set up shop at all."

Consequences of liberalisation
Environmentalists fear India"s liberalisation drive will lead to a flood of dirty technology and processes that have been phased out abroad as polluting. "To boost the small sector," says Gurpal Singh, CII deputy director, "the government has allowed large companies and multinational corporations (MNCs) to invest up to 24 per cent in the equity of SSIs. This has been done to promote technology and quality upgrading in the SSI sector."

But environmentalists see in this provision a sinister aspect that will allow large companies to maintain a clean image by simply transferring their dirty processes to SSIs they have part-financed. MNCs also can transfer their dirty technology to Indian SSIs and the dyestuff and dyestuff intermediates industry is a case in point.

But a finance ministry economic adviser, who did not wish to be named, contends liberalisation will not bring in polluting industries. Citing the example of the small-scale chemicals sector, which are highly capital- and energy-intensive industries, he says it would not be competitive to expand this sector by importing dirty technology because it would be cheaper to import chemicals. Already, chemical units contribute 14 per cent to India"s total industrial output -- well above the 9-12 per cent contribution in other countries such as Mexico and Spain.

Shiwalkar of FASII maintains dumping dirty technology can be averted if SSIs refuse to accept such technology. However, such action is not on FASII"s agenda, nor does it have a programme to educate small entrepreneurs. A K Basak, adviser to the Development Commissioner for SSIs (DCSSI), also maintains the only way to prevent SSIs from adopting dirty technology is to educate small entrepreneurs and he intends to launch an awareness drive in different states. SSIs then ignoring anti-pollution regulations will be prosecuted.

At an August 1992 SSI board meeting, SSI representatives told Prime Minister P V Narasimha Rao they could not submit environmental impact assessment reports to SPCBs, as required under the Environment Protection Act, 1986, because they did not have the finance and the expertise. Shortly thereafter, environment and forests minister Kamal Nath announced all SSIs except those in 17 highly polluting sectors need not submit these reports -- they only had to state in a form what effluents were produced and the processes used to treat them.

Basak criticises this conciliatory gesture and adds he opposes dividing the small-scale sector into highly polluting and non-polluting categories. "If units excluded from the highly polluting list continue to operate as before, future efforts to impose controls on them will be hampered," he warns. His point is taken even further by S B Mohapatra, joint secretary in the ministry of industry, who says, "Any unit that cannot meet standards prescribed by CPCB will be forced to close down, regardless of whether it is on the list of 17 highly polluting industries."

Central project
But there is some hope for SSIs, caught in the muddle created by CPCB, DCSSI and the industry ministry. A Rs 800-crore project was launched in 1991, funded by the World Bank and the Centre, to set up CETPs. The project calls for these plants to be partly funded by local entrepreneurs (See table), who would benefit from their efficient functioning by paying less for pollution control and avoiding prosecution. SSIs from many areas of the country have approached the National Environmental Engineering Research Institute (NEERI) to prepare CETP proposals. Says Sudipto Mundle of the National Institute of Public Finance and Policy, "The introduction of CETPs along with fiscal incentives may be the answer to effluent treatment for SSIs. Private entrepreneurs should be encouraged to set up and operate CETPs and recover their costs from users."

This is exactly what the 1991 project has set out to do. Entrepreneurs will meet running costs on their own on the principle of making polluters pay and to keep effluent treatment costs low. Units in industrial estates have to set up a public limited company to run the CETP and the SPCB will then release funds to the company to prepare a project report. Once this is approved by the MEF, funding for plant construction is released, though the company also is expected to raise funds from users.

Effluent treatment in the leather sector is behind that in the textile sector, as seen at Pali. While a four million litres a day (mld) plant is planned at Ambur, a nine mld CETP at Kanpur is held up because of shortage of funds.

In Pali, PNS will contract with an outside agency to run the proposed CETPs. The NEERI project report for Pali envisages an investment of Rs 6 crore each in two new CETPs, plus Rs 6 crore for upgrading the existing treatment plant and building drains.

Rajesh Pande of the Society for Participatory Research in Action, however, warns many small units will still not be able to pay the cost of running CETPs and more fiscal incentives would be needed. And, Duggal adds that SSIs have been accustomed too long to receiving various benefits; it will take time for them to have a change of heart on environmental protection. But schemes such as CETPs can surely play a vital role in inducing such a change.