"Allocation of coal blocks by the Screening Committee has existed since 1993. The NDA government followed the same policy." - FALSE

29. "Allocation of coal blocks by the Screening Committee has existed since 1993. The NDAgovernment followed the same policy." - FALSE

While the above statement is factually true, its implications are not. Prior to 2004, there
was no "urgent need" to introduce auction as a means of allotment. This is because the supply
of coal exceeded demand, and coal prices worldwide remained low. However, with the
introduction of the Electricity Act 2003, (which allowed private companies to generate power),
the worldwide increase in the price of coal post-2004, and the increased domestic demand for
coal, demand started exceeding supply. As the CAG report points out, this is why there was an
urgent need for a change in policy. In other words, even if allocation of coal through auction
had been introduced prior to 2004, it is doubtful it would have benefited the exchequer, considering
the nature of the market.