By Kevin Gandhi

Edited by Nandita Singh, Senior Editor, The Indian Economist

The Coal Allocation Scam, or as the media has sensationalized it into, ‘The CoalGate Scam,’ is in essence, a political scandal concerning the illegal allocation of coal deposits to Public and Private sector enterprises in an ad-hoc manner by the UPA government, under the direct supervision of the then Prime Minister, Mr. Manmohan Singh.

This scandal came to light after the Comptroller and Auditor General of India accused the government under Mr. Singh of allocating 194 coal blocks to PSEs in a flawed manner.

Now, the whole premise of CAGs argument was that the exchequer suffered a huge loss, whereas the public and private sectors enjoyed random windfall gains. This allocation of coal deposits was made non-transparent, with many politicians lobbying for allotment to certain private players for personal gains. Moreover, the existent policy of introducing competitive bidding was never introduced, even after strong recommendations were made to do so, in all of the years.

Our previous government’s stance insisted that the delay in introducing the auction was a result of coalition politics. Furthermore, their stance was defended by the fact that opposition-ruled states opposed the whole process of competitive bidding. Also, the guilty alleged that the maximisation of revenue shouldn’t necessarily be the government’s primary objective. According to former Prime Minister Mr. Manmohan Singh, one of the primary accused, there was “no misdoing” on their part.

The CAG’s initial estimate was of a whopping Rs. 10.6 lakh crores loss to the national treasury. However, the final tabled report in the Parliament put the figure at Rs. 1.86 lakh crores.

Not only has this been the biggest scandal that the UPA has been involved in, but also one of the biggest losses incurred by our nation. As of August 2014, the Supreme Court of India declared that for the CoalGate scam, 94% of the losses are due to the UPA government’s actions and the other 6% due to other parties involved.

Coming to the context of Manmohan Singh and his involvement in this scam, it is crucial to note that the former Coal Secretary P. C. Parakh – now charged by the CBI for his involvement, sold out the former PM for overruling his call for auctions and continuing arbitrary allotments of these coal blocks. Approximately 142 such blocks were allotted during his tenure.

Another important fact to be noted is that as many as 157 crucial files, that would prove to be important evidence to the CBI, have gone missing. The coal ministry claims to have deposited a bulk of all the files with the CBI, reports suggest that 18-20 such files still remain untraceable.

The Supreme Court verdict in August 2014, declared that all coal block allocations made between 1993 and 2010 have been illegal and that this was carried out by “arbitrary use of power” by successive governments. One more interesting fact to be noted is that this case, which has been long fought for, finally came to verdict after the rival party, the BJP, came to power. Although the verdict is now officially on the record; what needs to be done to account for the losses, the next move of the coal ministry, etc. will all be made known only in due course of time.

Kevin is a second year, undergraduate business student at NMIMS University, Mumbai. His hobbies include listening to bands such as Coldplay and Oasis, writing, going on nightly runs and occasionally playing the guitar. He has also participated in various Model UNs across the country. He loves to travel and is an enthusiastic supporter of the Kolkata Knight Riders.

Posted by The Indian Economist | For the Curious Mind