Thursday, May 2, 2013

UPA government: Caught in ‘CAG’mire

Close on the heels of its report on the allocation of 2G spectrum, which led to the cancellation of 122 licences, three CAG reports indicting the ruling government has left the UPA red-faced yet again. As the usual blame game holds crucial reforms to ransom, can India expect answers from its elected leaders?

If being dysfunctional was an attribute to go by, India’s parliamentarians would have won laurels. Sadly though, the case is not so. Our memories of parliamentary proceedings in recent times are ridden with disruptions and logjams that have resulted in the government earning a dubious reputation of being one in ‘policy paralysis’. This tag has been synonymous with India’s staggering economic growth along with a plethora of scams scarring the country’s reputation and the trust of its citizens. In early August this year, the Comptroller & Auditor General (CAG) of India released three reports that created a storm in political circles. These reports – on the allocation of coal blocks, the Indira Gandhi International Airport in Delhi, and Ultra Mega Power Projects (UMPPs) – have left the UPA government on a sticky wicket. For instance, according to the CAG’s report on the allocation of coal blocks submitted on August 17, 2012, the government allocated 142 national coal blocks arbitrarily to state-run and private companies from the period ranging between 2004 and 2009. During this period, the charge of the coal ministry was with none other than the Prime Minister Manmohan Singh himself. Result: The Parliament has been paralysed for the eighth consecutive day (till the time the magazine went for print) with the opposition demanding the PM’s resignation and cancellation of coal block allocations.

Coal, or black gold, currently accounts for about 70% of India’s energy consumption. Given the dependence of the power, steel and cement sectors on this vital fuel, the government’s handling of coal production and supply has always been mired with controversy and shortages. Until 1993, there was no specific criteria for allocation of coal blocks and most allocations were done based on letters of recommendation from concerned state governments. However, after 1993, the allocations made by the coal ministry based on recommendations of an inter-ministerial screening committee. The screening committee recommended the allocation of coal blocks to a particular allottee out of all the applicants for that coal block by way of minutes of the meeting of the committee. “There was nothing on record in the said minutes or in other documents on any comparative evaluation of the applicants for a coal block which was relied upon by the screening committee,” the CAG report stated, adding, “Minutes of the screening committee did not indicate how each one of the applicant for a particular coal block was evaluated. Thus, a transparent method for allocation of coal blocks was not followed by the screening committee.” As per the report, one that has gained maximum attention, the government deviated from the standard protocol of competitive bidding, resulting in an estimated loss of Rs.1,86,000 crore. 142 coal fields were sold since July 2004 to private and state-run companies. Interestingly, some of the 57 coalfields bought by private companies in 2004 did not even begin production till 2011, while some companies made enormous profits by selling the coal mines. It further estimated that private companies made windfall gains because of the low bidding prices paid for the fields. Meanwhile, coal imports during the period (2007 to 2011) increased from 49.80 million tonnes to 68.92 million tonnes.

Quite expectedly, a much-awaited statement by the PM tagged the CAG’s findings as ‘disputable’ on grounds that the policy of allocation of coal blocks to private parties, which the CAG had criticised, was not introduced by the UPA. “The policy has existed since 1993 and previous governments also allocated coal blocks in precisely the manner that the CAG has now criticised,” the PM said. The PM added that the CAG’s premise that competitive bidding could have been introduced in 2006 by amending the existing administrative instructions was ‘flawed’. Apart from rubbishing the CAG findings, Dr. Singh also sought to lay the blame on major coal and lignite bearing states such as West Bengal, Chhattisgarh, Jharkhand, Orissa, and Rajasthan for opposing a switch over to the process of competitive bidding. The CAG, understandably, has also come in for its fair share of criticism and the realm of attack has been far ranging. “If coal is not mined, it remains buried within mother earth, where is the loss,” asked Finance Minister P. Chidambaram. “The loss can arise only if coal is mined and sold,” he said, defending the PM. Digvijay Singh went a step ahead slamming the CAG for giving exaggerated figures and even targeted CAG Vinod Rai of political aspirations.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
Posted by at
Labels: , , , , , , , , , , , , ,