What is the Indian coal allocation scam?

Coal allocation scam or Coalgate, is a political scandal concerning the illegal allocation of the nation's coal deposits to public sector entities (PSEs) and private companies by Prime Minister Manmohan Singh.

In a draft report issued in March 2012, the Comptroller and Auditor General of India (CAG) office accused the Government of allocating coal blocks in an inefficient manner during the period 2004–2009.

The report created a massive uproar in political circles with the government being heavily criticised for causing a Rs1.86 lakh crore loss to the exchequer.

The CAG has come to the conclusion that the government's decision to not auction 194 coal blocks between 2004 and 2011 meant that the country lost a huge amount in revenue.

The figure was initially believed to be more than Rs10 lakh crore, but the CAG chose to keep PSUs out of its final report, bringing the figure down to Rs 1.86 lakh crore.

The CAG feels the loss could have been avoided, or at least have been lower, as the procedure for auction of the precious natural resource could easily have been put in place by 2006.

The failure to do so meant that 25 firms, including Essar Power, Hindalco, Tata Steel, Tata Power and Jindal Steel and Power, received a windfall through coal blocks on nomination basis, instead of competitive bidding.

Over the Summer of 2012, the opposition BJP lodged a complaint resulting in a Central Bureau of Investigation probe into whether the allocation of the coal blocks was in fact influenced by corruption.

On 17 August 2012 the CAG submitted its final report to Parliament. Much less detailed than the draft report, the final report still made the same charges against the government.

It stated that the Government had the authority to auction the coal blocks but chose not to which resulted allocatees receiving a massive gain from the program.

BJP on April 19 demanded the resignation of Prime Minister Manmohan Singh alleging that he was using the law ministry to save himself from the probe.

On 27 August 2012 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.

All the 142 coal blocks were allocated during the PM's tenure in the coal ministry.

Standing Committee on Coal and Steel tabled in Parliament on 23 April 2013 stated in its latest report 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.

It recommended that all 'personnel' who have been involved "directly or indirectly" in the allocation process "should be investigated for their role". There was no transparency in the allocation process and the exchequer did not get any revenue from allocation of the blocks.

It has pointed out that the allocations between 1993 and 2004 were done without any advertisement or public information. It accused both the UPA and NDA for perpetrating massive corruption.

On April 26 the CBI director Ranjit Sinha submitted an affidavit in the Supreme Court stating that the coal scam status report prepared by the investigating agency was shared with the law minister Ashwani Kumar “as desired by him” , joint secretary-level officers from the Prime Minister’s Office (PMO) and the coal ministry before presenting it to the court on March 8.

It contradicts the claim made by CBI counsel in SC that the coal scam scam report was not shared with any member of the government.

On April 29, CBI stated to SC that 20% if its original report was changed by Government.

Trivia:
There was no specific criteria for allocation of coal blocks in India till 1993. From 1993 onwards, the Ministry of Coal started awarding blocks to private parties for captive mining on recommendations of the Inter-Ministerial Screening Committee or through direct allocation.

The concept of allocation of captive coal blocks through competitive bidding was first announced in 2004. However, the government is yet to finalise the modus operandi of the mechanism.

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