Tuesday, April 23, 2013

Getting the facts on Coalgate right….and asking just how involved is the BJP in it????

Since a lot of muck has been flying around regarding the coal “scam”, I think its important to take stock of what all has been happening. Here is a summary of facts, lest you have forgotten them:

1)    As the Standing Committee of Parliament for coal headed by the TMC’s Kalyan Banerjee pointed out in its report yesterday, “everything in the coal allocation process was wrong since 1993”. The report is bizarre as I wrote yesterday. But it is right in one thing. That the process of allocations through “screening committees” started way back in 1993. Actually in July 1992. As per Wikipedia “A number of coal blocks, which were not in the production plan of CIL (Coal India Limited) and … SSCL (Singareni Collieries), were identified in consultation with CIL/SSCL and a list of 143 coal blocks were prepared and placed on the website of the MoC for information of public at large”. So there was no hush-hush here. Information was provided to anyone and everyone who was interested in getting a mine. Whoever fit the criteria could apply. No scam here.
2)    Wikipedia reports: The guidelines for the Screening Committee suggest that preference be given to the power and steel sectors (and to large projects within those sectors). They further suggest that in the case of competing applicants for a captive block, a further 10 guidelines may be taken into consideration. The 10 criteria comprise inter-alia a) stage of completion of project b) net worth of the applicant c) production capacity of the end plant d) date of commissioning of mine and of the end plant e) technical expertise in operating mines f) recommendations of the administrative ministry (power, iron & steel) g) recommendation of the state government where the mine is located and h) financial track record and strength of the applicant. Does anything look amiss? Does it look like the Government bent the rules to favor a few? Do you smell a scam????
3)    The Committee was composed of government officials from the Ministry of Coal, the Ministry of Railways, and the relevant state government. Make note of the last point. The state governments were represented on the committee. Any decision taken by the screening committee was taken after discussion with the state reps. Who ran the state government? Non-Congress parties including the BJP, RJD, BJD, Left front etc etc in most cases. So should we not include them in the corruption scam as well?
4)    Upto 2005, 70 mines were allocated, out of which 41 were to the private companies. Do note that a bulk of the time in the “pre-2005” period was ruled either by the BJP (6 years), JD(United) for 2 years. The Congress ruled at the Center for 3 years. If any blame fixing needs to happen, it should be in the same proportion. The BJP gets the most blame. Besides, it did not even think of auctions. That was Manmohan Singh’s wisdom.
5)    Between 2006-8, as many as 66 mines were allocated to the public sector and 32 to the private sector. In no small measures, these – and the ones allocated before 2005 – contributed to the remarkable growth in coal production by 31% in just 4 years by 2009-10. On the back of this coal production, installed thermal capacity went up from some 80000 MW to some 150000 MW between 2005-6 and 2010-11 (source: page 16 of CSO report “Energy Statistics 2012” available at http://tinyurl.com/dybya65. Does this indicate the policy worked or didn’t? Where is the scam? Or do you see any corruption motive here????
6)    The CAG’s biggest thrust was that the Government had the legal option to auction coal mines starting 2005. While the CAG may find that the legal sanction was there, it was not such an open and shut case. There was also opinion that the laws (CMN/MMDR) needed to be changed. Hence the Government chose not to go ahead with auctions then. This kind of thing happens all the time. Want a current example? The Government wants to allow more private banks to come in right? The Government feels that the RBI can allow this even under extant laws. The RBI feels the laws need to be amended and its powers to override the Board of the banks strengthened. Who is right and who is wrong? The Government has chosen to go with the RBI’s point and amend the Act first. This has caused delays. If twenty years later, someone alleges that the Government could have gone ahead and increased the number of licenses earlier, will people remember the RBI’s counter point of view? It’s the same in the coal case. No one remembers today, but there was a strong view against auctions. How can delayed auctions be called scam at all.
7)    Then the point that the states where the coal mines were located - West Bengal, Chhattisgarh, Jharkhand, Orissa and Rajasthan all ruled by the opposition parties – none of whom wanted auctions. Why? Why is the spotlight not on them???
8)    Again from Wikipedia, the PM’s statement in Parliament “A meeting was convened in the PMO on 25 July 2005 which was attended by representatives of coal and lignite bearing states. In the meeting the representatives of state governments were opposed to the proposed switch over to competitive bidding. It was further noted that the legislative changes that would be required for the proposed change would require considerable time and the process of allocation of coal blocks for captive mining could not be kept in abeyance for so long given the pressing demand for coal. Therefore, it was decided in this meeting to continue with the allocation of coal blocks through the extant Screening Committee procedure till the new competitive bidding procedure became operational. This was a collective decision of the centre and the state governments concerned.Is this a false statement???? Has the BJP challenged its veracity????
9)    The “windfall gains” estimate of the CAG are bunkus. The CAG has taken the value of coal that may or may not be recoverable, at costs of production that may or may not be correct and most importantly – and this seems to be core expertise – has forgotten to take the present value of monies generated over a period of 100 years. What kind of accounting body is this???? Besides, it has ignored the 26% tax the Government makes from all such windfall profits!
10)                       Now coming to the corruption angle that CBI is looking into (under SC supervision). Amongst those alleged to have bypassed the screening committee system by giving false information is Ajay Sancheti, a BJP MP. There is also an RJD MP as well as some from the Congress. Its not like the BJP goes scot free

The above points show that a) the move to auctions was not possible in 2005 b) all political parties followed the screening committee process – the most the BJP c) The announcements of the mines to be allocated, the guidelines etc were all put out in public domain. There was no hush-hush d) state government reps – largely comprising non-Congress parties – were very much part of the allocation decision making and most importantly e) the states ruled by opposition parties were opposed to auctions.

This is not to say that there wasn’t corruption in the allocation process. Everyone knows there is corruption in almost every single government department – both at the centre and the states. I know so many of friends who encounter corruption in government departments in Gujarat, Bihar, everywhere. But to call the coal allocation process itself to be a case of corruption, and to brandish it as the “mother of all scams” is crap. And then to blame the architect of the auctions – the PM without whose thinking we would still have been continuing with allocations – as the one who is guilty (of what???) is criminal. This is politics at its worst. At present, we have only seen bureaucrats stop taking decisions. Very soon, we will see politicians stop taking decisions as well. After that, we can all sit back and enjoy India’s ride down back to the Hindu (BJP) rate of growth. We may have the satisfaction that “everything is above board”, even if there is nothing to show for it!

The real truth is that both the 2G and coal “scams” are purely political attacks. There is zero truth in them. The CAG is part of the political establishment under its present chief. Everyone seems to be forgetting that as a country develops, its policies evolve. If the Government dismantles price control in diesel and kerosene at a future date, that will not make the present subsidy regime corrupt. Where there are cases of corruption, those caught should be jailed. But to blow up the whole thing as a scam is just a political plot to tarnish the image of the PM and the Government.

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