The Myth of Coalgate

In 2012, a Comptroller and Auditor General (CAG) draft report alleged that there was an “inefficient” allocation of coal blocks during UPA 1. There is a lack of objectivity in the report because the claim that the government’s allocations were inefficient were revised to allegations of corruption, following pressure from the Bharatiya Janata Party. BJP MPs Prakash Javadekar and Hansraj Ahir moved the Central Vigilance Commission (CVC) to call a CBI enquiry into whether allotments were corrupt. The charges of corruption were assimilated into the CAG’s report before the conclusion of the investigation, without evidence which flies in the face of due process and calls into question the politically motivated conspiracy that UPA 1 presided over a coal scam at all.

The CAG’s presumptive loss was grossly overestimated at Rs. 10.7 lakh crore. This was later revised to Rs. 1.86 lakh crore, indicating flawed methodology. Even the revised figure is faulty as it was arrived at by computing the difference between the sale price of coal and the cost of mining, which is not the correct method to represent the loss to the exchequer. Had Coal India extracted and sold the coal entirely on its own without private players, they would only be liable to pay dividends and tax on profits to the government. However Coal India does not have the capacity nor the technological capability to do this. After Congress built the commanding heights of the economy following the acute crisis of de-industrialisation by the British, it was Manmohan Singh as Finance Minister who drew back the government from being in the business of doing business. The false notion of the CAG that a government undertaking should crowd out the private sector and accrue to itself all the proceeds from coal must be addressed as it would have led to an increase in coal imports and a decrease in our balance of payments. Furthermore, the presumptive loss to the treasury should have been ascertainable in determining the proportion of revenue from the private companies who won the licences compared to the hypothetically higher proportion of the revenue that other competitors were willing to give the government. Such a calculation was not made, hence no such scam was proved.

Former Prime Minister Manmohan Singh refuted the accusation that the allocation of mining rights was corrupt as the legal requirements followed as per the Coal Mines (Nationalisation) Amendment Act, 1993. Under this law, competitive bidding and auctioning was not a legal requirement, as errantly claimed by the BJP-influenced CAG report. Therefore the main premise behind so-called Coalgate was wrong.

Prime Minister Manmohan Singh followed the same established process to grant private companies mining rights as BJP’s Atal Bihari Vajpayee and all his predecessors from the NDA, UPA and Third Front alike since 1993. His attempt to put a system of auctioning in place was objected to by Chief Ministers of BJP-ruled states in favour of this procedure. Therefore Dr. Singh and his UPA government cannot be held responsible for a widely used procedure that they inherited, which the states- particularly those ruled by the BJP- were in favour of.

Nevertheless, UPA 1 did demonstrate its commitment to a fair and transparent process of allocation as our government introduced additional procedural improvements in 2005. These ensured that applications for allotments were solicited via public advertisements with clear details regarding the coal blocks on offer along with transparent allotment guidelines and conditions. Care was taken to ensure that the applications went through a Steering committee with adequate representation from state governments, related ministries and coal companies. The vetting process was based on clear and replicable parameters like ‘techno-economic feasibility of the end use project, status of preparedness to set up the end use project, past track record in execution of projects, financial and technical capabilities of the applicant companies, recommendations of the state governments and the administrative ministry concerned.’

Furthermore, in good faith, the government called a Standing Committee to investigate coal block allocations. The standing committee was indicative of Congress’ consensus based, transparent governance as it consisted of 21 Lok Sabha Members and 10 Rajya Sabha Members proportionally drawn from the parties in government for the express purpose of ascertaining best practice and bring about legislative reform in allotting mining rights.

Despite the nationwide BJP-sponsored campaign of character assassination against former Prime Minister Manmohan Singh, the Supreme Court and the CBI found him not to be guilty after a three year probe in a specially constituted court. Instead Dr. Manmohan Singh was found to be kept in the dark by unscrupulous bureaucrats like former Coal Secretary H. C. Gupta, Coal Ministry Joint Secretary KS Kropha and Coal Ministry Director of Coal Allocation KC Samria. They were duly charged under section 120-B (criminal conspiracy) with 420 (cheating), 409 (criminal breach of trust by public servant) of the Indian penal Code (IPC) and under relevant provisions of Prevention of Corruption Act along with their beneficiaries Kamal Sponge Steel and Power Ltd (KSSPL) and KSSPL director Pawan Kumar Ahluwalia. However the BJP who are the political beneficiaries from this probe have continued to witch hunt Dr. Singh and defame him, despite him being found innocent by the highest court in the land.

To put it plainly, “Coalgate” did not happen. No matter how much pressure the BJP puts on government bodies, inefficiency is not the same as corruption. Furthermore, lawmaking is a continuous process which assimilates best practices over time. The difference between a Congress-led government and a BJP-led government is that efforts are made suo moto to continuously improve the allocation of rights to tap natural resources and that strict interpretations of laws with shelf lives aren’t used to shield our leaders. Rather we operate using consensus-based means that truly harness the institution of parliament and take into account the best recommendations from all parties, government and opposition. No Congressman was charged during so-called Coalgate, but the BJP have used it to attack the probity of the party and the man to whom we owe our current avatar, a resurgent, free market India.

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Indian National Congress

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