COALGATE: A BRUSH WITH REALITY

Coalgate: A Clarion Call

Coalgate has taken the nation by storm. The face-off between the ruling
UPA and the opposition had never before acquired the kind of threatening
dimension it has now over this issue.
As the Prime Minister pointed out in the parliament, the CAG report is critical
of the coal block allocations mainly on three counts. First, that the Screening
Committee did not follow a transparent and objective method while making recommendations
for allocation of coal blocks.
Secondly, it pointed out that competitive bidding could have been introduced
in 2006 by amending the administrative instructions in vogue instead of going
through a prolonged legal examination of the issue which delayed the decision
making process. The report also mentions that the delay in introduction of competitive
bidding rendered the existing process beneficial to a large number of private
companies. The CAG has estimated that there was a financial gain of about
Rs 1.86 lakh crore to private parties.
While the Prime Minister finds the observations of the CAG clearly disputable,
he also sought to deflect some of the blame from the ruling combine stating that
the policy of allocating coal blocks to private parties is not a new policy introduced
by the UPA.
The policy, he said, has existed
since 1993 and preceding governments
had also allocated coal blocks
in the same manner. The CAG, however,
has chosen to criticize the government
only now, the Prime
Minister appeared to argue.
Dr. Manomohan Singh, in fact, argued
that UPA made improvements
in the procedure in 2005 by inviting
applications through open advertisements
after providing details of
the coal blocks on offer along with
the guidelines and the conditions of

allotment. These applications were examined and evaluated by a broad-based
Steering Committee with representatives from state governments, related ministries
of the central government and coal companies.
Dr. Singh argues that any administrative allocation procedure involves some
judgement and in this case the judgement was that of the many participants in
the Screening Committee acting collectively. However, there were then no allegations
of impropriety in the functioning of the Committee.
The Prime Minister also opines that the observation of the CAG that the
process of competitive bidding could have been introduced by amending the administrative
instructions is based on a selective reading of the opinions given by
the Department of Legal Affairs.
Even before the Prime Minister,there have been critiques of the CAG report
with allegations flying thick and fast that the country’s top auditor went over the
top while drawing his conclusions on the issue. More interestingly, some ministers
have sought to play down the whole issue stating that there was no question
of any major loss to the exchequer as actual mining of coal has hardly taken place
in allocated blocks.
The issue, however, is more than about corruption. It is about procedures and
transparency of the system governing clearances. It should be treated as a wakeup
call and the government should take the opportunity to ensure that flaws in
the system are removed promptly.