The 'Coalgate' Primer

So much coal wash slurry has flown into the Yamuna because of the serious washing of dirty coal in public by the premier Ruling party and the principal Opposition party that the whole debate is becoming confusing to follow. Here is a lowdown on what is the whole matter all about.

There was allocation of mines between 2006 and 2009 by the UPA government after discussing the matter with various state governments. So what? One may ask. Well the devil, as they always say, is in the fineprint of the whole allocation process.

There was briefly talk of allotting mining leases based on auction prices. Eventually the government abandoned in the 'face of stiff resistance of the states'. It is an excuse of convenience, because as quite a few former CAGs have pointed out (and which I also pointed out thanks to their observation) that Seventh Schedule under Article 246 of the Indian Constitution defines the subjects on which Centre and State governments can legislate, and it clearly specifies that it is the responsibility entirely of Central government (Subject 54 under Central List and Subject 23 under State List). All the opposition can be overruled because the government at Centre has the power to do so.

There is no zero loss as is being bandied about by a few people. These economists, industrialists and ministers who are trying to confound the debate are lying through their teeth. Naresh Gujral had pointed out on Times Now how companies like Jindal Steel, JSW Stainless and GVK Infrastructure among others saw a major boost in their market valuation on receiving these mines at throwaway prices. Moreover, these very people are now complaining about coal shortages by not mining coal from these blocks. So it is not just a loss to the government but it is also a subversion of the Competition Act that this government has been pretending to strengthen for the past four years. Surjit Bhalla who talks so much about crippling fiscal deficit needs to be harshly reminded that this is one of the reasons why the government will continue to have a huge fiscal hole, and can get away with doing nothing as long as Benthamians like him exist.

CAG is not exceeding its mandate at any cost, as Jawaharlal Nehru's speech about the role of CAG during the Constituent Assembly proceedings will vouch. Moreover, if the CAG is wrong, why is the Coal Ministry now using the very assumptions to price coal mine blocks for future competitive bidding? Self contradiction has got this government to score another own-goal.

There is no way out for this government, since after 2G and Commonwealth, the media (hyperbolic as it may be) knows that corruption sells well with the Indian masses, and will leave no opportunity to hound out the story at any cost.


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