Coal comfort

The first thing that Prime Minister Manmohan Singh must do on his return to India from Tehran is break the destructive impasse over coal block allotments that has held up parliamentary functioning for eight days now. This presents a political challenge,given that the protesting BJP has taken a maximalist position. It has demanded that the PM accept moral responsibility and resign,existing allotments be cancelled,and an independent investigation should begin.

The first is obviously non-negotiable for the Congress. The second does not appear to be feasible either,given the collateral damage it would visit upon the firms that have already invested in coal extraction,both in terms of capital wasted as well as the uncertainty about supplying industrial projects,in power,steel,etc. There is also the question of where the line might be drawn. Would all allotments,post-1993,which have followed the same process,be redone,or would it be some other arbitrary cutoff for allotments declared suspect? An alternative option would be to allow coal from the disputed mines to be sold only to power plants where electricity tariff is regulated — this would clip the windfall profit. Auctions will begin for 54 identified coal blocks next year,and an inter-ministerial probe is already looking into the 57 coal blocks allotted to private companies and PSUs flagged by the CAG that have not shown progress. In this scenario,a judicial probe may be the only possibility that both government and opposition could forge an agreement on.

Much like the presidential election,the furore over coal has been an occasion for parties to signal proximity and distance from each other. While the crackle in the air is unmistakably in anticipation of the general election,parties must also make space for calm deliberation. Parliament is the only space where the distortions in the coal sector can be comprehensively addressed. Parties concerned about it can begin by pushing through the Coal Mines (Nationalisation) Amendment Bill pending in Rajya Sabha. Opening up coal mining to private investment with a strong regulator would make sure that India does not fall short of coal because of Coal India’s inability to provide it. The only way to get to that juncture is to first break the impasse by political give-and-take,and then sit down to a serious engagement in Parliament. If the major parties can commit themselves to that end,this could be a moment of reckoning and herald a transformation for the coal sector — as in telecom earlier — with cronyism giving way to fair competition,easing the way for greater investment.