Indian Coal Allocation Scam

Year : 2012

Amount : 185,591 crores 

Scammers: Comptroller and Auditor General of India, the coal ministry, many electricity boards and private companies

Coal allocation scam (or Coalgate) is a major political scandal concerning the Indian government’s allocation of the nation’s coal deposits to public sector entities (PSEs) and private companies. In a draft report issued in March 2014, the Comptroller and Auditor General of India (CAG) office accused the Government of India of allocating coal blocks in an inefficient manner during the period 2004–2009. Over the Summer of 2012, the opposition BJPlodged a complaint resulting in a Central Bureau of Investigation probe into whether the allocation of the coal blocks was in fact influenced by corruption.

The essence of the CAG’s argument is that the Government had the authority to allocate coal blocks by a process of competitive bidding, but chose not to. As a result, both public sector enterprises (PSEs) and private firms paid less than they might have otherwise. In its draft report in March the CAG estimated that the “windfall gain” to the allocatees was ₹10,673 billion (US$160 billion). The CAG Final Report tabled in Parliament put the figure at ₹1,856 billion (US$28 billion) On 27 August 2012 Indian prime minister Manmohan Singh read a statement in Parliament rebutting the CAG’s report both in its reading of the law and the alleged cost of the government’s policies.

While the initial CAG report suggested that coal blocks could have been allocated more efficiently, resulting in more revenue to the government, at no point did it suggest that corruption was involved in the allocation of coal. Over the course of 2012, however, the question of corruption has come to dominate the discussion. In response to a complaint by the BJP, the Central Vigilance Commission (CVC) directed the CBI to investigate the matter. The CBI has named a dozen Indian firms in a First Information Report (FIR), the first step in a criminal investigation. These FIRs accuse them of overstating their net worth, failing to disclose prior coal allocations, and hoarding rather than developing coal allocations. The CBI officials investigating the case have speculated that bribery may be involved.

The issue has received massive media reaction and public outrage. During the monsoon session of the Parliament, the BJP protested the Government’s handling of the issue demanding the resignation of the prime minister and refused to have a debate in the Parliament. The deadlock resulted in Parliament functioning only seven of the twenty days of the session. The Parliamentary Standing Committee report on Coal and Steel states that all coal blocks distributed between 1993 and 2008 were done in an unauthorized manner and allotment of all mines where production is yet to start should be cancelled.In 2015, Coal auction helped state government earned 80,000 Crore after sales of 11 coal blocks.

Advertisements

One thought on “Indian Coal Allocation Scam

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s