Sunday, September 9, 2012

Coal Block Allocation Scam and Wasted Monsoon Session of Parliament



Another session of parliament got washed away. Reason, opposition BJP would not allow parliament to function, unless prime minister resigned taking moral responsibility for coal block allocation scam. BJP also wanted cancellation of all coal blocks allocated so far. What is the controversy all about? People in power have been stealing taxpayers money all along. However, of late it is becoming more and more brazen. So what is this new scam all about or is this really a scam? I think it is part scam, part politics of opportunism. Let us look at the scam part.

Comptroller and Auditor General’s (CAG) office usually audits government accounts. CAG had claimed government has lost nearly 186000 crores of rupees by not auctioning coal fields in a transparent manner. Government had distributed these fields in an arbitrary manner to select politically connected people. There was no guideline for selecting people for allocation, and even if there was any it was flouted.

 Government on its part claimed that allocation was made by senior bureaucrats from centre and states. These officers used their judgement to allocate coal blocks. Government claims, coal blocks in most mature democracies are usually given on a discretionary basis. Some  Indian companies have benefited from such process in Australia. Then where is the crime?

However, ministers have made recommendations in favor of their families and friends. Recently CBI has chargesheeted a congress politician from Maharashtra. It is important to say in the net are politicians from BJP and RJD also. So people from several political parties have benefitted. There is no holier than thou here. It this is not a crime, this is morally wrong.

Government claimed that to generate electricity coal is needed.  Government says from the date of allocation, it takes close to 4 years or more to actually start mining. Because companies need a lot of clearances before mining, notably environmental ministry clearance. It also takes money, a lot of it, to bring necessary expertise to start mining. If the same industry group is also involved in setting up power generation plant, then it would need more money. Since the owners of coal fields, cannot sell coal,  can only use coal for power generation, there is no money loss to the exchequer even if there is a great delay in starting the mining process. So where is the crime?

Many of such allottees had misrepresented facts about their alliance, expertise, financial status to get coal blocks. This is a crime. Several parties have sold the block allotted to them to a third party and made a huge sum of money. This is certainly a crime.

I think political parties have made large sum of money through coal block allocation to select parties. This money may be needed to run election campaign. That is why there is so much reluctance to cancel coal block allocation. It is partly correct that in the process of cancelling licence several genuine player may be affected. Government may look bad for not framing proper policy and not following proper procedure. Gap between electricity demand and electricity production may widen if licences are cancelled. However, critics say not single ounce of coal is mined, not a single watt of electricity is generated since the allocation. So how much more can we lose? Anyway common public will be the loser, because politicians and bureaucrats get continuous power supply anyway.
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