POLITICAL ECONOMY

$33 billion Coalgate rocks Indian Parliament again

India's Parliament remains adjourned over coal scam, Opposition stands firm on demand for PM's resignation

Author: Shivom Seth
Posted: Monday , 03 Sep 2012

MUMBAI (MINEWEB)  - 

After eight consecutive days of adjournments some had hoped India's main opposition party would relent and allow India's parliament to function. But, the Bharatiya Janata Party (BJP) showed no signs of halting its demands for Prime Minister Manmohan Singh's resignation in the wake of the multi-billion dollar `coal mining' scam, or `Coalgate, as the local media has dubbed it.

But, the party, has eased back slightly, saying that it will facilitate the functioning of  Parliament if coal block allocations are cancelled and a judicial probe

Coalgate is the latest in the series of financial irregularities to hit the present government in India. As pointed out by the government's auditor, the Comptroller and Auditor General (CAG), a constitutional body, the state exchequer suffered a `notional loss' of $33 billion (Rs 1,860 billion) because of the government's decision between 2004-2009 to allot 142 coal blocks to public and private mining companies  without going through the auction route.

Between then and now, as many as 58 companies have failed to develop these blocks. In the first part of those years, Prime Minister Singh had also held the coal ministry portfolio. Seizing on this, the BJP has demanded the prime minister's resignation.

However, there was some confusion on the opposition's stand, vis-a-vis the Prime Minister's resignation over the weekend. Late Saturday, Leader of the Opposition in the Lok Sabha, Sushma Swaraj, had reportedly indicated that her party would be willing to withdraw its resignation demand if the government acceded to the other demands.

In his blogpost on Sunday, BJP's senior-most leader L K Advani had said the National Democratic Alliance (NDA) which comprises several of India's opposition parties, had offered to resolve the deadlock if all allotments made were cancelled. He had also called for the process, whereby the screening committee that decided these allocations, be subjected to a judicial probe.

When the ruling Congress party combated this by saying there would be no withdrawal of allocations, the BJP responded by once more calling for the PM's resignation.

The government's position was that the policy decision to allot coal blocks to mining companies without auction was not in bad faith at all, so there was no question of any rollback.

The ruling party's stand has been that India's coal sector needed to be privatised but because an auction, among other things, would have meant getting approval from the Left parties, on whose support the government rested at that time, to amending the Coal Mines (Nationalisation) Act, it had decided to allot and not auction the mines.

The Indian government also blamed the four state governments (all of them then ruled by BJP governments) for not allowing it to carry out the auctions but asking it to allot the mines, thus aiming to put the ball back in the BJP's court.

India has as much as 118 billion tonnes of coal as of April 1, 2012, according to the Geological Survey of India, ranking it fourth globally behind the US, Russia and China. 

Prime Minister Singh had told Parliament earlier that he took `full responsibility' for the decisions of the coal  ministry, and rubbished the Opposition's allegations of impropriety as baseless. He said some observations of CAG were `clearly disputable', while some were based on a `selective reading' of a 2006 law ministry opinion.

Meanwhile, on Monday, the Prime Minister's office asked the coal ministry to take up de-allocation of another 32 coal blocks for which notices have been issued over `unsatisfactory progress'. These blocks are in addition to the 58 for which show-cause notices were issued to the developers. 

The Indian government is under severe pressure due to the shortage of coal in the country and feels no time should be lost in the development of these blocks to meet the widening gap between domestic coal demand and supply.