Coal scandal is a perfect primer for the plunder of India

Later today,an inter-ministerial group (IMG) will take up for consideration the case for the cancellation of coal mine block allocations made to private parties over the years, which are the focus of the Comptroller and Auditor General’s recent report indicting the government for notional loss to the national exchequer from a failure to auction the blocks.

The cancellation of the allocations, if it does come about, would meet one of the demands from the BJP and the rest of the Opposition; it would also compel the UPA government, which has been forced on the defensive by the ferocity of the Opposition attack, to concede that at least some of the allocations were patently mala fide. It would also mark the unravelling of the government’s specious theories about “zero loss” from the allocations, which are demonstrably untrue.

Anecdotal evidence of the absurd manner in which allocations were made feed the growing suspicion that the whole process, for all its claims to having abided by due process based on strict evaluation parameters, was clouded over by the taint of corruption.

[caption id=“attachment_439399” align=“alignleft” width=“380”] The coal scandal is a story of crony capitalism. Reuters.[/caption]

Indicatively, in one case, a company with a paid-up capital of just Rs 1 lakh and with no record of having operated in the mining space, was allocated a mine block. The rather more comical revelation about the nature of these potential beneficiaries came, as Swaminathan S Aiyar reminds us , from the sex scandal that torpedoed ND Tiwari’s political career. The video and photographs of Tiwari disporting himself sexually with three commercial sex workers were made public by the madam of a brothel who felt cheated because Tiwari did not deliver on his promise of a mining licence.

In many ways, these and other instances of improper allocations illustrate the prostitution of India’s national resources by a cosy nexus among politicians, bureaucrats, business groups and power brokers.

As the CAG report made clear, and as a note reportedly prepared for today’s inter-ministerial group reinforces, many of the allottees have made not the faintest progress towards mining the coal in the blocks they had been allocated. The note prepared for the IMG meeting records that of the 90 coal blocks allocated to private players since 1993, 60 blocks, which account for an estimated 6.7 billion tonnes of coal reserves (valued at Rs 2 lakh crore) “can be cancelled due to lack of progress”.

But even if the cancellations are made, it may already be too late to stop the unjust profiteering by some of the original allottees. That’s because the coal scam too is seeing another eerie echo of the 2G telecom scam, where some of the companies that secured telecom spectrum at throwaway prices (and were expressly forbidden from reselling the spectrum) profiteered instead by selling a stake in their company at astronomical prices, thereby defeating the purpose of the lock-in provision.

According to this report , which quotes an unidentified CBI official, more than 10 companies that had been allocated coal blocks for captive mining for free had made a killing by selling a stake - either in part or in whole - in their companies without undertaking any coal extraction work. In other words, they got the mines for free ostensibly for captive production but sold their companies - either in part or in whole - thereby profiteering hugely from the transaction and killing the spirit of the provision in respect of captive use of the coal.

There is as yet no ‘smoking gun’ establishing Ministerial corruption - or the passing of “mota maal”, as Sushma Swaraj put it so colourfully. Yet, as TN Ninan observes , in Delhi’s gossip circuit, it’s been known for long that “there was a fixed rate for getting coal mines allotted: so many crores per million tonnes of coal reserves.” What we don’t know, he adds, is whether every allottee paid up, or whether there were exceptions, and how much of the money went to political parties and how much to individuals.

In fact, the whole scandal surrounding the coal block allocation is a perfect metaphor for how everyone from politicians to bureaucrats to business barons to power brokers are milking India behind the smokescreen of due process and a larger accountability to Parliament.

As the CAG report makes clear , the noble intention of opting for competitive bidding for the allocation of captive coal blocks was first articulated in June 2004. But since then, at every stage of the process of enacting legislation to formalise the mechanism for competitive bidding, all it required for the plunder to continue as before was for the lowliest Minister of State or even a bureaucrat to throw a spanner in the works and derail the whole process and send it on an infinite loop of reviews and reappraisals.

All sorts of high-minded principles were invoked in this endeavour: the need to “build a consensus”, considerations of federal polity, the requirement to ramp up coal production urgently to fuel India’s GDP growth. But in the end, all of these were nothing more than efforts to show a semblance of policymaking at work at its stately pace - while the private profiteering carried on through the back door.

That stonewalling effort continues to this day, as is evident from the effort of the Coal Secretary to shoot down the recommendation by the inter-ministerial group (mandated by the Prime Minister’s Office, no less) to cancel the coal block allocations.

In effect, even today - after the scandal of monstrous proportions hasbeen in the public domain for so long, dragging the Prime Minister’s name into it - the Prime Minister’s writ for the deallocation process to be finalised by September 15 is being effectively neutred by a bureaucratic_babu_.

The emasculation of the authority of the Prime Minister is complete today. And in the power vacuum, the country is being stripped bare-naked.