India lost $37 bn by not auctioning coal mines: Auditor (Intro Roundup)

August 17th, 2012 - 7:06 pm ICT by IANS  

Bharatiya Janata Party New Delhi, Aug 17 (IANS) India’s exchequer could have been richer by Rs.1.85 lakh crore ($37 billion) if competitive bidding, rather than arbitrary allotment, was adopted to give coal blocks away, says the official auditor, faulting the government’s policies yet again.

As the opposition Bharatiya Janata Party (BJP) demanded the immediate resignation of Prime Minister Manmohan Singh, the government rejected the finding. It termed as erroneous the back-of-the-envelop estimate of losses that nearly amounts to the country’s budgeted income tax and customs mop up of Rs.1.95 lakh crore and Rs.1.86 lakh crore, respectively, for this fiscal.

The Comptroller and Auditor General of India (CAG), in the report tabled in parliament Friday, said the losses arose because the process of bringing transparency in the award of coal blocks, which was to commence in June 2004, got delayed due to various reasons.

“In the meantime, 194 net coal blocks, with aggregate of 44,440 million tonnes, were allocated to different government and private parties up to March 31, 2011,” said the much-awaited report, tabled with two others that also fault the official policies.

“The government could have tapped part of this financial benefit by expediting decision on competitive biding for allocation of coal blocks,” the report added, while observing that most allocations were made on the basis of recommendations from state governments.

“This is not just a scam, it is a case of murder and loot. We would like an answer from the prime minister,” said BJP spokesperson Rajiv Pratap Rudy.

The audit report does not directly indict the prime minister or his office. But during the time these mining blocks in question were allotted, the coal portfolio was held by him, at least for a brief while — between July 2004 and May 2009.

The report will now go to parliament’s Public Accounts Committee (PAC), headed by BJP’s senior leader Murli Manohar Joshi, for a thorough study. “In this government, there are scams in the skies, on the ground, and underground,” Joshi said.

But Minister of State for Parliamentary Affairs V. Narayanasamy slammed the report and said the auditor was not following the mandate. “Evidence will be taken and ultimately result will come,” he said, alluding to the fact that the government was still to be heard.

Coal Minister Sriprakash Jaiswal said the bidding process was not introduced because of opposition from three state governments — Rajasthan and Chhattisgarh, which were under BJP rule, and West Bengal that was being governed by Left parties.

In the report, the auditor has recommended immediate steps to allot mines through a competitive auction process in a bid to bring about objectivity and transparency in the policy and in the larger context of power for all this year.

The audit report also names 25 companies that were beneficiaries, including Essar Power, Jindal Steel and Power, Hindalco and Tata Power, DB Power, Adani Power, CESC, Monnet Ispat, Rungta Mines, Mukund and Tata Steel.

In a previous report tabled two years ago — on the award of scarce telecom spectrum, or airwaves, to new private players in 2008 — the official auditor had estimated the loss to the exchequer at Rs.1.76 lakh crore.

In its recommendations on how the government should go about awarding captive coal mines to private and state-owned players in the future, the auditor has suggested the setting up of an empowered group on the lines of the Foreign Investment Promotion Board.

This group, with representatives from nodal ministries of central and state governments, could act like a single-window mechanism to grant clearances for mining leases, forest clearance plan, environment management plan and land acquisition, said the auditor.

This is paramount since the need for electricity is crucial for the economic development of the country, as also in the context of the government’s earlier declared objective of power to all by 2012, the report added.

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