It’s black days ahead

Updated on Aug 27, 2012 10:09 PM IST

The UPA must cancel all the coal block allocations it has made so far and then go in for transparent bidding. Sitaram Yechury writes.


For the last few days, Parliament has remained disrupted on the Comptroller and Auditor General’s (CAG) report on the allocation of coal blocks. Unfortunately, while the debate is taking place through the media, the institution that is entrusted with implementing the centrality of our Constitution — the supremacy of people’s sovereignty — is being denied the discharge its responsibilities. This leads to the suspicion of a ‘match-fixing’ between the government and the leading Opposition party, the BJP. If an informed discussion were to take place in Parliament, the two parties stand the risk of being exposed over their attempts to privatise our coal reserves, a nationalised resource, through backdoor allocations.

Amid the din, Prime Minister Manmohan Singh spoke in Parliament on Monday and sought to justify his government’s actions, and thus negate the CAG report. It was a laboured and defensive exercise. He stated that “the policy of allocation of coal blocks to private parties, which the CAG has criticised, was not a new policy introduced by the UPA”. With this, he brought the previous NDA government into the frame. Justifying backdoor privatisation, he stated: “As the economy grew in size the demand for coal also grew and it became evident that Coal India alone would not be able to meet the growing demand.”

According to the CAG report, the allocation of coal blocks is estimated to have led to a windfall financial gain to private operators to the tune of Rs. 1.86 lakh crore. A bulk of this would have come to the national exchequer if these allocations were made in a competitive and transparent manner. The concept of allocation of captive coal blocks through competitive bidding was first made public on June 28, 2004, by the then coal secretary. Subsequently, the coal ministry accepted this proposal as policy. The CAG report notes, “Despite these facts, the GOI (February 2012) is yet to finalise the modus operandi of competitive bidding.”

The PM does not satisfactorily answer why the modus operandi could not be finalised during these eight years. First, he says that there were issues with the department of legal affairs that needed to be resolved through appropriate legislative amendments. Second, and strangely, he says that in a democracy, consensus building among various stakeholders takes time. But eight long years! Finally, he states that the major coal and lignite-bearing states, ruled by the Opposition parties, “were strongly opposed to a switch over to the process of competitive bidding”. Among these states, he lists West Bengal, which was then governed by the Left Front. But his argument is incorrect.

At a meeting convened by the central government on August 10, 2009, the Left Front government stated, “While competitive bidding for transparent and rational allocation process is a principle that cannot be faulted, the proposition neither defines the role of the states nor safeguards their interests. In fact, with this proposal the legal position already tilted in favor of the Central Government gets further distorted. Therefore, the State Government urges that the power to invite applications to grant of mining lease should be devolved on the State Government.”

All communications during this period show that the Bengal government never opposed a competitive bidding process but insisted that the State dispensation route/government company route should not be bartered away to private companies against the interests of the State.

There is a point in the state governments’ opinions. The state electricity boards and the public sector electricity producing units generate and provide power to the people. The coal that is required for this purpose and for future expansion that people need (recollect that the UPA government declared “power to all” Indians by 2012) should have been set aside and the rest should have been allotted through a transparent auction process. Instead of doing this, the Centre decided on direct allocations that resulted in windfall profits for private operators.

What needs to be done now is to cancel all allocations made so far and to go in for a process of transparent bidding. This should not cause any problem as the finance minister himself says that coal is still inside “mother India”. The government should not wait to be rapped on its knuckles once again by the Supreme Court like it happened in the 2G spectrum case.

However, fresh auctions should take place only after setting aside the coal required for public sector power generation. Further, a high-level inquiry should be held in a time-bound manner to punish the guilty. The PM himself said: “It is true that the private parties that were allocated captive coal blocks could not achieve their production targets.” Further, he added, “[The] CBI is separately investigating allegations of malpractices on the basis of which due action will be taken against wrongdoers, if any”. It is imperative that the royalty paid to the state governments for the use of the mineral resources located in the states needs to be substantially increased. This can be done by an agreed percentage of an accepted index of the current market price, like the Brent index for crude oil.

Finally, here’s some food for thought: The BJP’s parliamentary tactics seen in the context of sharpening communal polarisation with disturbances and loss of lives in various parts of the country (using the unfortunate and highly condemnable violence in the Bodoland areas in Assam), points to a strategy of forcing an early general election and using communal polarisation for electoral gains.

For the sake of strengthening India’s secular democratic foundations, this strategy cannot be allowed to succeed.

Sitaram Yechury is CPI(M) politburo member and Rajya Sabha MP. The views expressed by the author are personal.


    In his, by now ‘compulsory’ address on the State-owned radio, Mann ki baat, on March 22, Prime Minister Narendra Modi accused the combined Opposition in Parliament opposing the amendments moved by this government to the land acquisition Bill, 2013 of spreading a pack of ‘lies’ as a ‘conspiracy’ to undermine farmers’ interests.

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