There is no better case study on the ill-effects of corruption on governance and the people, than the coal block allocation scam. The Modi regime's transparent e-auction and its successful outcome is an eye-opener
All those who were pouring ridicule on Mr Vinod Rai, the former Comptroller and Auditor-General of India for estimating the total loss from the arbitrary and non-transparent methods adopted by the Manmohan Singh regime to allocate coal blocks to be around Rs1.86 lakh crore, now have egg on their faces. It now transpires that the former CAG could well have under- estimated the loss, because the open and competitive bidding initiated by the Narendra Modi Government has already netted over Rs2.09 lakh crore for just 33 blocks.
The fresh bidding was necessitated by the August 2014 judgement of the Supreme Court that the allocations were arbitrary and illegal, and its subsequent order cancelling the allocation of 204 coal blocks. Though the process of auction is still on, one can already see the distinct advantages that accrue to the people at large when corruption and arbitrariness are thrown out of the window and a clean and transparent system is adopted by a Government for the allocation of resources.
These developments provide evidence, if evidence was needed, that the gut assessment of the people vis-à-vis corruption was, after all, correct. They also vindicate the general feeling across the country since 2012 that corruption had reached humongous proportions and unless there was a change of regime and the political will to check its corrosive nature, the future of India and her 1.3 billion citizens would be in jeopardy.
In this context, we need to recall the CAG’s report on the allocation of coal blocks, which triggered many political and legal battles and eventually led to the cancellation of allotments and fresh auctions. The CAG found that there were no specific criteria for allocation of coal blocks until 1993. The allocations were done on the basis of letters of recommendation by state governments. After 1993, the Union Ministry of Coal identified coal blocks that could be allocated for captive mining to the eligible coal-using companies. Allocations to public sector undertakings for captive use or commercial mining were done through direct allocation.
For the private sector, the allocations were made by the ministry, based on the recommendations of an inter-ministerial screening committee which was headed by the Secretary, Coal. The criteria for selection of companies were laid down for the screening committee to follow. However, the auditors found that “there was nothing on record in the said minutes or in other documents on any comparative evaluation of the applicants for a coal block which was relied upon by the screening committee. Minutes of the screening committee did not indicate how each one of the applicants for a particular coal block was evaluated. Thus, a transparent method for allocation of coal blocks was not followed by the screening committee”.
The United Progressive Alliance Government promised on June 28, 2004, that it would bring in transparency and objectivity in the allocation of coal blocks. The same coalition continued in power for five years and was returned to office in the parliamentary election held in 2009. However, despite such political continuity, which is critical to issues of governance and policy implementation at the macro level, the much promised ‘transparency’ and ‘objectivity’ in the allocation of coal blocks was still not in place, even as late as February 2012. As a result, the CAG found that “in the meantime, 194 net coal blocks with aggregate GR of 44,440 million tonnes were allocated to different Government and private parties up to March 31, 2011.
The financial impact of the benefit to the private allottees has been estimated to the tune of Rs1,85,591.34 crore as on 31 March, 2011 for opencast/OC reserves of mixed mines. The Government could have tapped a part of this financial benefit by expediting decision on competitive bidding for allocation of coal blocks”.
This was the most damning indictment of the UPA Government by the CAG in regard to its policy of allocating coal blocks to private companies. People were shocked to learn that a scarce and limited resource like coal had been bartered away by the then Government to private players in a manner that smacked of corruption and favouritism.
The CAG’s findings, therefore, resulted in fresh political turmoil and the derailment of Parliament. Unable to cogently explain its decisions, the UPA regime resorted to the old tactic of shooting the messenger — by hurling accusations at the CAG. One leader even accused the person heading the organisation of harbouring political ambitions. But the Government could not shut out debate on the issue by bamboozling the CAG. Soon a public interest litigation was filed in the Supreme Court seeking an independent probe into ‘Coalgate’. The court directed the Central Bureau of Investigation to begin a probe and report directly to it.
The central point of investigation of Coalgate by the CBI was, just as in the case of the auditors, the absence of a transparent and objective method to allocate coal blocks to private players. When the CBI began virtually singing the CAG’s tune, the UPA Government panicked and made a brazen attempt to doctor the agency’s report to the court via worthies holding the offices of law Minister and Attorney General, and through some officials in the Prime Minister’s Office and the Coal Ministry. They were soon caught out and the law Minister lost his job.
Following the Supreme Court judgement cancelling 204 allocations, the National Democratic Alliance Government brought in an ordinance to re-allocate these coal blocks. It also chose the e-auction mode in order to ensure transparency. The estimated revenue from 33 blocks is Rs2.09 lakh crore and the Union Government has already announced that the auction proceeds will be transferred to the respective State Governments. The biggest beneficiaries of this bonanza will be the eastern States of Odisha, Chhattisgarh, Jharkhand and West Bengal, and Maharastra. The Centre has also announced that in addition, electricity consumers in these States will get an additional tariff benefit of Rs97,000 crore through the process of reverse auction of coal blocks. This will certainly offer a major boost to the idea of cooperative federalism that Mr Narendra Modi has been talking about ever since he became the Prime Minister.
Buoyed by the success of these auctions, Mr Modi has said that this only shows, if the Government runs on policies and governs efficiently, the system can be rid of corruption. Can there be a better case study for those researching the ill-effects of corruptionIJ