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Rediff.com  » News » All parties need to be blamed for coal scam

All parties need to be blamed for coal scam

September 14, 2012 17:05 IST

Contrary to the CAG report, the true scam is not exclusive to the UPA, or one for which it bears the prime culpability. Rather, it's a collective or collusive scandal, with both the UPA-ruled Centre and the non-UPA states reaching a nice 'match fixing'-style arrangement to snatch away coal mines from public sector companies and allot coal-mining leases to shady business interests, says Praful Bidwai.

Parliament's monsoon session was largely drowned out in disruption, and functioned for only six out of 19 days. The Lok Sabha worked for a total of 25 hours, or 20 percent of the scheduled time, and the Rajya Sabha a mere 27 percent. Only four of the 15 bills tabled were passed.

Missing from the list include bills for reservations for Dalits in promotions in government jobs, measures against money laundering, and for protecting whistle-blowers. Of 399 "starred questions," to which oral answers are expected from ministers, only 11 were answered. "Question Hour," when MPs discuss topical issues, was only held once.

The coal scam, or alleged losses to the exchequer from the allotment of coal-mining blocks to private firms, estimated by the Comptroller and Auditor General at a staggering Rs 1.86 lakh crore, saw Parliament reduced to an arena of sloganeering, vicious confrontation, raucous accusations, even fisticuffs.

The Bharatiya Janata Party, which led this disruption, brazenly justified it as a form of 'cleansing'. "Disruption can sometimes produce results that discussion cannot," said its Rajya Sabha leader Arun Jaitley. Clearly, the BJP has convinced itself that after 'Coalgate', the tide of public opinion against the United Progressive Alliance has turned into a tsunami -- a repeat of what happened to the Rajiv Gandhi dispensation after the Bofors scandal broke out in 1987, making its exit a certainty.

However, as we see, the BJP may be counting its chickens too soon. It hasn't come out of the disruption episode smelling of roses. Its state governments are vulnerable to the criticism that they too were neck-deep in the coal scam.

Besides, the BJP's record on corruption is no better than the Congress's. And after the Anna Hazare campaign more or less unravelled, and some leaders like Arvind Kejriwal decided to enter mainstream politics, the BJP's anti-corruption crusade has become limp.

It is undeniable that the UPA, like all governments since 1991 which have followed neo-liberal policies, is guilty of transferring valuable natural resources from public ownership to private interests. In the specific instance examined by the CAG, 57 coal blocks were allotted at cheap rates and without inviting competitive bids to 25 private corporations such as Essar Power, Hindalco, Tata Steel and Jindal Steel for captive consumption in power, steel and cement production.

This has effectively allowed private corporations to gain control of about one-fifth of India's known coal reserves, among the largest in the world. It's equally true that some of the dubious allotments were made to MPs and firms connected with them. These reek of cronyism. In one case, a UPA minister from Tamil Nadu was promised coal at the absurd price of Rs 25 a tonne!

Only one of the 57 blocks has reached the stage of production, although the licence conditions stipulate that the lessee has to start operations respectively within 36 and 48 months for open-cast and underground mines. This has triggered suspicion that the companies invested in coal for speculative reasons, and may trade their assets for super-profits, as they did in 2G telecom spectrum.

The CAG has done well to point out these irregularities. However, the Rs 1.86 lakh-crore loss estimate is a notional figure, and involves many subjective assessments and extrapolations. So stunning as the number is, it may only be indicative, not a half-way hard figure. But such dramatic figures have a way of invading our political debate and sensationalising it. 

A crucial assumption underlying the CAG report is that the UPA government didn't invite competitive bids for the coal blocks on the ground that auctioning them would necessitate an amendment to the Mines and Minerals (Development & Regulation) Act, 1957. Building consensus on this would cause delays, and a loss in GDP and revenues. Infrastructure development is urgent and couldn't wait. So the government had to find a rough-and-ready allotment route.

The CAG doesn't question this 'logic of urgency'. But it insists that the auction route should have been taken by issuing administrative orders or creating procedures to allow the central government to issue mining licences. Such orders, it holds, would have legally substituted for a proper amendment to the MMDR Act. According to legal experts, this view is mistaken. Sound common sense also suggests that a statute cannot be overruled by administrative orders.

This holds strongly true in the present case because the MMDR Act confers special powers upon the state governments. They alone have the statutory power of accepting applications for and granting mining leases. The Centre comes into the picture only through a screening committee, which ensures, before the lease is issued, that the licence conforms to the requirements of central laws. The screening is not a substitute for the statutory process of the states granting licences.

So the real power to lease coal mines lies with the states. And they have persistently and repeatedly opposed moves to dilute this power. They also explicitly opposed on July 25, 2005 the Centre's proposal to switch over to competitive bidding for issuing leases. That meeting, held at the Prime Minster's Office, decided to continue with the allotment process followed earlier.

The most vociferous among the states to demand this were BJP or National Democratic Alliance-ruled states. In fact, for all its (well-deserved) reputation for corruption and malfeasance, state governments ruled by the Congress account for only four of the 57 coal blocks. The rest are located in opposition-ruled states.

Twenty seven blocks, or almost half the total, belong to Jharkhand, where the notorious Madhu Koda was chief minister. Next comes Chhattisgarh, with 13 blocks. Orissa follows, with nine blocks. BJP-ruled states, including Madhya Pradesh (two blocks), together account for 42 blocks, or almost three-fourths of the total.

By contrast, Congress-ruled Maharashtra has four blocks. Even West Bengal, then under the Left Front, was not free of the block allotment malady. But it accounts for only two blocks.

So contrary to the CAG report, the true scam is not exclusive to the UPA, or one for which it bears the prime culpability. Rather, it's a collective or collusive scandal, with both the UPA-ruled Centre and the non-UPA states reaching a nice 'match fixing'-style arrangement to snatch away coal mines from public sector companies and allot coal-mining leases to shady business interests

That's the real issue which should have been soberly debated in Parliament as part of a larger discussion of the neo-liberal policy framework, which is uncritically accepted virtually across the political spectrum in this country despite its proven bankruptcy in capitalism's heartland, especially evident in Western Europe and the US.

This framework assumes, contrary both to good economic theory and to actual experience in India and elsewhere, that private enterprise is inherently more efficient than state-owned companies, and must be favoured because it can be trusted to obtain socially desirable results. This makes the privatisation and plunder of natural resources inevitable. Alas, this was never critiqued or debated.

The real, if not-so-obvious, question to ask is why the dog didn't bark -- why the Congress didn't go to town on the dominant role of opposition-ruled states in coal block allotment. The only plausible, if incomplete, explanation is twofold.

First, the Congress has lost some of its morale, self-confidence and even political instinct, as a result of the recent political setbacks and humiliations it has suffered. Even rhetorically, it didn't focus on the culpability of non-Congress states until it was far too late.

Second, some of the Congress's leaders and business cronies are involved in the coal scam. Even the names of coal minister Sriprakash Jaiswal, his former deputy Santosh Bagrodia and tourism minister Subodh Kant Sahai have all been mentioned, besides MPs like Naveen Jindal.

However, this can at best bring cold comfort to the BJP. Its chief ministers in the minerals-rich states bear the primary responsibility for the underpricing of coal as wielders of far greater statutory power than the Centre. And its MPs and media barons close to it are also implicated. Indeed, Ajay Sancheti, recently appointed as Rajya Sabha MP at the behest of party president and Nagpur buddy Nitin Gadkari, also stands tainted.

Politically, the Congress is in bad, indeed ghastly, shape. Many of its leaders are probably in the process of reconciling themselves to losing the next election. As a tired, effete Manmohan Singh fades out, and Sonia Gandhi passively follows a hands-off approach to the government, nobody is about to emerge as a mobiliser and campaigner who can electrify the Congress into combat mode.

But then, nobody in the BJP is playing a similar role either. As K N Govindacharya, RSS pracharak and former BJP strategist -- the ablest it has ever had -- puts it, a "BJP high command does not exist". The party has no leadership and "no coherent decision-making process"; it has alienated itself from the people.

The BJP is totally bereft of policy alternatives. It's hard to see how, and where, it can improve on its present tally of 116 out of 543 Lok Sabha seats.

Praful Bidwai