Thursday, March 29, 2012

Coalgate needs to be brushed away…..

The CAG created a sensation recently by stating that by not auctioning coal blocks since 2004, after having first mooted the idea itself in that year, the Government of India had caused a loss of Rs 10.67 lac crores to the country. It mattered little to the CAG that the policy of “allocations” was being followed since time immemorial….right till 2004 when the government first considered “auctions”. It was unable to adopt auctions for various reasons. Does the mere fact that the government considered changing the policy but could not do so constitute a scam?

The revelations in the TOI today show how the then Minister Of State for coal – Dasani Narayan Rao – and the PMO had had elaborate discussions on auctioning the coal blocks since 2004. But for one reason or the other, the auctions were not done. Rather, the “extant” policy of “allocating” coal blocks through a “screening committee” was continued. It wasn’t a slip-up or a goof-up or something done surreptitiously to make money on the side. It was merely continuation of an older policy till the time the new policy could be implemented. The delay itself was necessitated by special circumstances that existed then.

At worst, this could be a case of poor governance. Having mentally decided to auction the coal blocks, the bureaucracy and the political establishment should have been able to move quickly to make it happen. However, the many constraints the UPA-1 government faced must no doubt have played a role in making the implementation difficult. Remember, the Left was supporting the UPA government from the outside. A cabinet decision which did not have the Left’s backing could never be implemented. This is what appears to have stalled the auction process in 2004. The CAG report, as mentioned in the TOI says “it (the new policy) would invite further delay in the allocation of blocks considering that the Coal Mines (nationalization) amendment bill 2000 envisaging competitive bidding as a selection process for allocation of blocks for commercial purposes was pending in the Rajya Sabha with stiff opposition from trade unions and others concerned”. With the trade unions opposing it, there was no way the Left would have supported the auctions. This was in 2004-5. Again in 2006, it appears that the problem persisted and the PMO had allowed the department to proceed with the extant (existing) mechanism (through the selection committee).

Again in 2007, the PMO felt that it would be more appropriate to make an amendment in the Mines and Mineral (Development and Regulation) Act, 1957, so that the system of competitive bidding could be made applicable to all minerals covered under the said act. There was thus a further delay in the auctions for coal mines. So again, there was a re-think, rather than a “goof up” or “intentional scam”.

Like I mentioned in an earlier post on the same subject, coal blocks were never auctioned in this country. Auctioning everything has never been government policy. India is a socialist country and making money is not the sole priority of the government. Even during the 6 years of NDA rule, coal blocks were not auctioned. Maybe the NDA government thought of auctions as an appropriate mechanism and moved the amendments bill in 2000. But it could not get it approved on account of its own compulsions. The UPA-1 government could also not get it approved for reasons explained above.

There is one thing that is well known about India. Decision making is an extremely slow process; an attempt at generating adequate support for any piece of legislation takes too much time. Passing new laws takes years. Implementation of laws also takes time. But then no one really cares for governance in our country. If a minister, or an entire bureaucracy, delays decisions, no one asks them any questions. But if in the process of decision making, some mistakes – even innocent ones – are made, then the same are projected by bodies like the CAG as scams. We have created an environment in the country where sitting on one’s back-side is acceptable; but moving quickly is not. Not so long back, Praful Patel was hauled up because he took the decision to order the planes too soon; in just 17 months of discussions!

When the Government refuted the charges made by the CAG in its draft report, the CAG went on the defensive saying that they were very good accountants; of course they are. But good accountants can make big mistakes when they fail to understand their mandate. The CAG may be mathematically right – just about “maybe”. But that’s a silly way to approach a policy matter. The Government has been thinking of freeing up diesel pricing for a long time. Let’s say the first “thought” was ten years back. So if the CAG were to do an audit today, they would probably say that the country has lost many lacs of crores again because they did not implement what they thought! This is plain ludicrosity!

The real truth is that there is nothing called Coalgate. The media has branded it as such so as to generate more eyeballs for its content. The truth is that just one uses the venerable Colgate to brush the muck out of the teeth, it is time to brush the muck that is itself being called Coalgate…..

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