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A time to bid

After the recent coal block auctions, there is no further scope for hypothetical assumptions with political overtones.

Written by P C Parakh |
Updated: February 25, 2015 9:13:41 am
The auction route is now firmly established and no government can dare depart from it. The auction route is now firmly established and no government can dare depart from it.

The recent coal block auctions have once again revived the nasty debate on “coalgate”, which had gripped the nation for a long time. The Comptroller and Auditor General (CAG) report estimating a loss of around Rs 1.86 lakh crore was a virtual bombshell. This was perhaps a major cause of the decimation of the Congress in the last Lok Sabha elections. Vinod Rai, the then CAG, faced a vicious and vituperative attack from the Congress for going beyond his brief. According to the Congress, the CAG is just a glorified accountant and has no business entering policy issues. Ministers Kapil Sibal, Salman Khurshid and P. Chidambaram, with all their legal acumen, tried to prove that there was, in fact, no loss to the public exchequer. The BJP mounted its vociferous attack against what it dubbed the biggest scandal since Independence.

After the recent coal block auctions, there is no further scope for wild and hypothetical assumptions with political overtones. The politics behind the attack and counter-attack must now yield to hard realities. Now, even the top legal luminaries and apologists for the Congress cannot deny the fact that auctions in merely 17 coal blocks, many of these with relatively small extractable reserves, have yielded revenues of over Rs 80,000 crore for the government. While non-operating mines may not have similar aggressive and high bids, in my view, the total revenue from the auction of 204 blocks may touch a mind-boggling figure of Rs 10 lakh crore, which is a quantum jump from the estimated loss projected by the CAG. This is a resounding vindication of my initiative and stand as coal secretary.

Eleven years ago, in July 2004 to be precise, I had submitted a note to the coal minister (Manmohan Singh, the then prime minister, was holding the coal portfolio) that the extant system of coal allocations was leading to “windfall gains” for the allottees and consequential loss to the government. I, therefore, suggested that for greater transparency and objectivity, the government should switch from a discretionary mode to open bidding. No worldly wise politician would have easily concurred with such a proposal, but Manmohan Singh, with his impeccable personal integrity, promptly approved my note. It is unfortunate that due to deeply entrenched vested interests within the political system, the “accidental prime minister” could not enforce his own decision.

The CAG was in full agreement with my stand. Indeed, he acknowledged that he had borrowed the expression “windfall gains” from my note. I am glad that nearly 10 years later, Justice G.S. Singhvi of the Supreme Court pronounced his classic judgment while dealing with spectrum allocations. He held that the disposal of natural resources should be only through open bidding. Soon after that, Chief Justice R.M. Lodha delivered the historic judgment that forced the government to adopt open bidding for the allocation of coal blocks.

Last year in my book, Crusader or Conspirator? Coalgate and Other Truths, while defending the estimate made by the CAG, I had stated that his estimate was on the conservative side and predicted that in a booming economy, actual gains for the government could be much higher.

Corruption is so deep-rooted and all-pervasive in our country that there is strong resistance to systemic changes that remove discretion. This is precisely what happened in the case of the allocation of coal blocks. But after the recent auctions, it can be safely asserted that corruption in coal allocations is now a thing of the past. There is no going back. The auction route is now firmly established and no government can dare depart from it. This pathbreaking reform could and should have been introduced by the government long ago. But thanks to the independence, wisdom and courage of our judiciary, it was finally the Supreme Court that ushered in this long overdue policy change.

The CAG’s report on coal allocations was triggered on the basis of my note. I am proud to say that these actions initiated by me have resulted in a financial jackpot for the nation.

The writer is former Union secretary, ministry of coal.

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