Prime Minister Manmohan Singh's detailed statement on his government's conduct over the allocation of captive coal mines to select companies does not quite lay to rest the charges of arbitrariness and windfall gains that were first made by the Comptroller and Auditor General and subsequently picked up by the Opposition.
The government's case is that it was stymied in Parliament when it tried to amend laws to ease commercial coal mining and was constrained by state governments, some ruled by opposition parties, and later by the advice of its legal department when it explored the option of reworking the administrative rules governing captive mines. Yet the accusation of arbitrariness refuses to go away when only a quarter of the allocated blocks are actually being mined today, producing less than half the originally projected coal. This weakens the contention that switching to auctions would have delayed the allocation process significantly.
The charge of windfall profits is even more sticky. Among the steel, aluminium, cement and power producers given coal blocks since 2005, there is a clutch of lesser-known companies whose valuations would have understandably benefited from their mining rights. The government does not agree with its auditor on the methods of calculating the cost and sale price of coal.
But it is a secondary issue that Coal India Ltd, the government monopoly, has more productive mines than were allocated for captive consumption. While the amount of revenue foregone by the government may be in debate, the loss to the taxpayer is not. Since 1993, 17,397 million tonnes of coal reserves have been farmed out to private parties: that is a lot of national resource going free. The argument that taxes and local development charges will reclaim some of the notional loss is weak at best.
The Congress's appeal to the Opposition for a debate in Parliament on the issue has so far fallen on deaf years. Disrupting Parliament as the BJP has done cannot be an option in a democracy though the BJP has sought to justify its actions on the ground that the truth can only be arrived at by these means.
There are several institutions which are mandated to look into matters like the coal issue and it does not require Parliament to be stalled at huge cost to the exchequer to arrive at answers. However, the government will be best advised to cancel all coal blocks allotted by committee and seek auctions. This will spare it the further ignominy of being ordered by courts to do so on the lines of air waves for mobile telephony.
The government's contention that building political consensus on how to allocate the common wealth overrides financial considerations merely keeps the door open for discretion that is particularly prone to abuse in India. Our lawmakers must come together on national resources rather than bicker and quarrel as they are doing now.