Coal block auction — its implications
Coal block cancellation and its aftermath
The curtains have come down on the dark saga of Coalgate that marked, possibly, the largest and longest-running process of giving away of one of the country’s important assets to favoured companies. The process was arbitrary, opaque, and corrupt. Political parties indulged in it with impunity despite occasional objections by bureaucrats and a few upright politicians whose number, sadly, is dwindling fast. The loot brought rich payola for politicians and their parties. In the process, the nation lost astronomical amounts of money.
It is a matter of great relief that the Supreme Court has declared all the coal bloc allocations from 1993 onwards illegal, and has cancelled almost all of the 216 blocs barring just four of them. It is a very bold step that will have far reaching ramifications. In the short run, there will be surely some disruptions, but the country will not be plunged to total darkness as the affected power generation companies contribute to barely 5% of the country’s total power generation.
In the long run, the country will gain greatly. Politicians, bureaucrats and industrialists will think twice before entering into any type of dishonest transaction with the government. Collusive loot of resources like spectrum, mineral assets, water, river bed sands, granite, marine resources etc. will be curbed to a large extent. The state’s exchequer will see more funds pouring into it as transparent, legal and well-advertised auctions are held to allocate resources to needy companies.
In the long run, international confidence in Indian businesses will get a much-needed boost. Pushers, fixers, and middle men will be thrown out of business. Crony capitalists will think of other legal ways to make money.
But, what will happen to the powerful politicians and bureaucrats who were behind the sordid system pivoted to slush money and power brokering? First, they deprived the country of huge amounts of cash income. Later, their misdemeanors has thrown the investments of the beneficiary industrialists on coal blocks into drains. To add insult to injury, they have been ordered to pay to government Rs. 295 per ton of coal mined calculated retrospectively from the day they began mining. No tears will be shed for these crooked manipulators who joined hands with corrupt politicians to perpetuate a reprehensible practice of plunder of nation’s wealth.
But the question that begs an answer is the punishment, if any, to be meted to the politicians who made money by scuttling the due process of allocation. Some of them are retired, now cooling their heels in government-maintained bungalows. The ends of justice will be met if these individuals are brought to book.
Not long ago, the Supreme Court cancelled 122 telecom licenses that were allotted flouting all rules of government. The nexus between greedy politicians and crony capitalists has long besmirched the industrial climate of India. Overseas and indigenous companies, who find the atmosphere to murky for them, have shied away from investing in the country. Breaking of the nexus was long overdue. The Supreme Court deserves plaudits for its bold stand against the highly compromised system.
The Apex Court has given the government and the functional mines some leeway by allowing them to continue operations till March 31, 2015. As per the arrangements going to be put in place, in six months time, the government-owned Coal India Ltd. will assume charge of the 40 mines that are actively extracting coal now. Coal India will also take over six other mines which are fully primed to commence operations.
Crucially, the Apex Court wants the ongoing CBI investigations to continue. So, the politicians and bureaucrats guilty of wrong doing can’t breathe freely yet.
Coal India is known for its lethargy, inefficiency and corruption. It is affected by all the diseases common to a government-owned company with a minister as its boss. In the first place, the private companies entered the fray because the Coal India refused to expand its operations. Now, how the same, much-maligned Coal India re-energizes itself as the manager of the 214 coal blocks remains to be seen. If it fails, it might lead to a catastrophe. If coal shortage continues or gets worsened, the power generation units will import high-cost coal to maintain their operations. This will push the import bill with all its consequences.
The Apex Court’s punitive levy of Rs. 295 per ton of coal mined in the past may severely strain the finances of the errant companies most of whom owe large amounts to public sector banks. This brings the spectre of default close to the doors of the banks. It may be another big headache for the government.
There are some more un-answered questions here. If and when fresh auctions are held for the coal blocks, can the successful bidders be coaxed to reimburse the previous owner the amount invested by him in making the mine ready for extraction? Will they be willing to take the past debts fully or partially thus freeing the old displaced owner of its loan burden?