Call it a paradox. The LDF government always vouches by its commitment to decentralization and strengthening of panchayats and gram sabhas. But when it comes to policy, it is all set to seize key powers from local bodies in the name of ushering in investment to the state. The state cabinet on Wednesday decided to bring in 11 amendments to the existing laws to facilitate investment and to reduce hassles in starting business ventures.


The major stumble block, the government realized, in attracting investment was the powers of the local bodies to give and cancel no objection certificate (NOC) to businesses and industries. So the cabinet decided to bring in a unified act- Kerala Investment Promotion and Facilitation Act- which would also mean that the panchayats in the state would lose their power to control industries. 


The Act will be a major departure from the Panchayath Raj model and the transfer of major powers to the local bodies. To facilitate the new act, the government will have to bring amendments to various existing laws including Kerala Panchayat Act, Kerala Municipality Act, Building rules, Kerala Lift and Escalators Act, Value-Added Tax Act, Water Resource Regulation Act and Kerala Factories Rules. As per the unified act,  prior permission would not be necessary for launching new industries that fall under 'green' and 'white' category.


The act also envisages an Investment Promotion and Facilitation Centre to strengthen the single window clearance system. The centre will have officials from various departments, development agencies and Kerala State Industrial Development Corporation. By easing the existing rules, Pinarayi Vijayan government is aiming at bettering the state's position in the World Bank's 'Ease of Doing Business Index'


The grama panchayats in the state have been effectively using their powers to restrict polluting industries and business ventures that went against the interests of the local people. The grama panchayat's cancellation of NOC was crucial in the legal fight against CocaCola plant at Plachimada in Palakkad. Similarly, numerous metal crusher units and polluting industries faced trouble as local panchayats used the powers vested on them. In the new circumstances, the gram panchayats would be considerably weaker with power to control such ventures.


In the face of local protests against relocation of liquor shops and the resistance by the panchayats against liquor outlets, bars and wine parlours, the state government is also mulling revoking the rights of the local bodies to provide NOC.