India will set up a new environmental regulatory agency to review investment projects, as the government struggles to balance industrial growth with ecological protection.

In announcing the planned National Environment Appraisal and Monitoring Authority , Prime Minister Manmohan Singh said it is not acceptable to expect “a certain degree of environmental degradation and over-exploitation of natural resources” while pursuing economic growth.

The plans for the new regulatory body come after the environment ministry held up a number of major investment projects during the leadership of Jairam Ramesh, who is now India's rural development minister.

Prime Minister Singh told an environmental seminar on Sunday that the new agency will not only be responsible for appraising and evaluating the environmental impact of a project, but will also monitor whether industry is complying with “green norms.”

Mr. Singh gave few details about the planned regulator, saying only that it could lead to a “complete change” in how clearances are granted, as projects would be reviewed by “better and more objective standards of scrutiny.”