By Ramesh Kanitkar
In the “Coalgate scam”, the prime minister, Dr. Manmohan Singh stands in the dock himself, unlike in the 2G scam when he could brand Raja a scapegoat. For Dr. Singh was the minister for coal during the period of the Coalgate scam.
The comptroller and auditor general (CAG) has found that coal blocks were allotted to thermal power generation companies absolutely free violating the government’s own policy between 2004 and 2009 causing an estimated Rs. 10.7 lakh crore loss to the exchequer. The Union finance minister, Pranab Mukherjee has batted for the prime minister, going to the extent of publicly ridiculing CAG as an institution. “Ninety per cent of CAG observations are dropped after the auditor gets a response from the ministry. That is the normal practice and it has been going on for the last 150- years,” Mukherjee said. And to rub salt to CAG’s wounds, he added that CAG is a British created body and its job was not to praise but to “find faults with the government”. But the CAG Vinod Rai has stood his ground and made it clear that there is hardly any difference between estimated and real conclusions arrived at by his officers.
It could be that the estimated loss of Rs. 10.7 lakh crore by CAG was more notional than real. But the prime minister owes an explanation to the nation why coal blocks were allotted to private players in power totally contrary to his government policies. Let it be known to the country that the prime minister’s Office (PMO) has been especially tracking the growth of power industry. It is done on the overt premise that adequate power production is a key to high economic growth at 9 per cent or more in the coming years. Monitoring of the power sector development by PMO should have been a guarantee that no policy is violated in the allotment of coal blocks. How did the PMO allow it? Why did PMO monitors fail to see when coal blocks were being gifted away to companies on a discretionary basis?
Our prime minister is a market fundamentalist. He has been zealously (zealotly) working to dismantle the old system of state patronage of the licence-permit raj. Why? Because the old system was based on discretionary allotments by government. In the new economy Dr. Manmohan Singh espouses, all allotments should be made based on a competition. That is the difference between crony capitalism and capitalism based on free enterprise. Is it not right then to ask Dr. Singh why competition was substituted by discretion in coal block allotments? Why was it not done on the basis of competitive bidding?
You would be shocked to know that Dr. Singh’s government had framed a policy by which coal blocks were to be allotted only by auction route. But the government continued to give away coal blocks without bidding even after a meeting headed by the prime minister (coal minister) in October 2004 decided that all future allocations would be through the competitive route. The meeting decided that applications for captive mines received after June 28, 2004, would be processed under the new competitive bidding regime. The government chose this as the cut-off date since the intention to introduce competitive bidding for coal blocks was first made public on this date at a ministry meeting with stakeholders. However, even after this policy decision, the coal ministry continued to make allotments on a discretionary basis. And the fishy thing is that the coal ministry was making these allotments with the approval of the PMO!
Here lies the scam. Why did the PMO go on approving coal ministry’s discretionary allotment of captive mines for five years till 2009? Why did it not enforce its policy decision made at the meeting headed by PM in October 2004? It could have done it simply by issuing an administrative order. Bidding is a common process in government-private party dealings. There are enough laws governing bidding and contracts. All that the prime minister needed was to issue an administrative order to introduce bidding process for coal block allocations.
The plot gets murkier from here on. The PMO (read coal ministry), instead of issuing such a simple administrative order, bizarrely, inexplicably and allegedly mal-intendedly, gets engaged in brainstorming for amending the Coal Mines (Nationalisation) Act of 1973 or the Mines and Minerals (Regulation and Development) Act of 1957 in order to enable the government to introduce bidding process.
It is ostensibly a clever move, for an amendment proposal would need to go through several departments and years could pass in the back and forth of the bureaucracy. When the law ministry gets down to consider the proposal it finds it unwarranted. In July 2006, the law ministry writes to the coal ministry, telling them it could introduce competitive bidding by amending the administrative instructions. The allotments, the law ministry said, could be done through bidding under the Indian Contract Act. But the prime (Coal) minister went on approving allocations without any bidding process till 2009. And he allotted the blocks without making it obligatory for the beneficiaries to pass on the gain from free coal blocks to end consumers in tariff.
We do not have any evidence yet of any pecuniary largesse to Dr. Manmohan Singh or others in the Congress party from the discretionary coal block allotments. But prima facie, Dr. Singh’s wrongdoing is apparent. INAV