By Pradyut Hande:
After the CAG’s revelatory reports last week that pegged the losses accrued due to the allocation of 57 important coal blocks without a competitive auction process at Rs. 1.86 lakh crore, the UPA – II Government has predictably come under a barrage of criticism and approbation. With the opposition baying for its blood and multiple quarters demanding a modicum of accountability from an already beleaguered Government, one wondered when the Centre would send out its “fire fighting team” to douse the flames of rousing discontent. On Friday, August 24, Finance Minister, Mr. P. Chidambaram addressed a joint press conference with the Union Coal Minister, Mr. Prakash Jaiswal to spearhead the Government’s defence in the now infamous “Coalgate” scam.
However, instead of assuaging the public at large, Mr. Chidambaram’s arguments have only made one sit up and scratch his head in sheer puzzlement. According to the eloquent Finance Minister, “There can be no loss when the coal remains buried in Mother Earth. If it is not mined, there can be no loss.” Furthermore, Mr. Jaiswal pointed out that of the 57 allocated blocks, production is being undertaken in only one of them. Thus, the Government’s defence appears to be based on the dubious fact that the actual non-utilisation of the allocated mine blocks does not amount to any monetary loss per se.
On prima facie evidence, this flimsy defence appears to be gravely flawed. For all his sagacity, Mr. Chidambaram is knowingly or unknowingly confusing matters, in the process embarking on a tangent that has only sunk the Centre deeper into the quagmire of disrepute. To infuse greater clarity into these befuddling proceedings, despite the Government’s “defence”, it cannot absolve itself of the dubious allocation of the coal blocks at throw away prices to private companies even if most of them haven’t begun production.
The contentious issue of prudently auctioning these coal blocks through a transparent process of competitive bidding would not have resulted in such humungous losses to the exchequer; as was underscored in the CAG reports. Additionally, the “value of a mine will reduce in proportion to the coal mined from it; unless the loss is compensated by a huge rise in market prices of coal“. It is also important to note that at no point did Mr. Chidambaram or Mr. Jaiswal dispel the estimated figures of the losses accrued. This is a telling observation as it is symptomatic of the Government’s lack of conviction and direction in its own argument.
According to the CAG reports, India has coal reserves of about 286 billion tonnes. The Centre “surreptitiously” sold off 14% of these huge reserves for next to nothing between 2006 and 2009. Just because the private companies who became beneficiaries of the Government’s “largesse” haven’t been able to indulge in mining production activities thus far, doesn’t imply that the concerned authorities blundered by not adhering to the auction guidelines. Thus, Mr. Chidambaram’s hollow defence would fall flat had these companies begun production at their allocated coal blocks. Also, one wonders to what extent the holistic losses would amount to if public limited companies are taken cognisance of with regards to the coal block allocation. For now though, the Centre has only complicated matters for itself. Having entered uninvited through the “Coalgate” of controversy, it remains to be seen how it is able to extricate itself.
About the author: The Writer is a Business student with a degree from NMIMS, Mumbai. He is presently working as a Senior Executive with a leading Public Relations firm in Mumbai. Through his writing; he attempts to address myriad issues of both domestic and global consequence, ranging from Business and Economics to Geopolitics…from Sports to Arts and Culture. He has over 200 publications to his credit in some of the leading national dailies and weekly magazines across the country. He is also a keen debater, munner, quizzer, painter and amateur freestyle rapper. His other interests include Sports, Music, Reading, Travelling and Social Entrepreneurship. For his latest postings,Â follow his blogÂ . To read his other posts,Â click here.