Indian Decade

India Rocked by Coal Scandal

A scandal over the allocation of coal fields by the UPA government could put the 2G scandal in the shade.

The Times of India has just published a report by the Comptroller and Auditor General (CAG) stating that the government lost billions by not auctioning off coal fields, instead favoring about 100 entities in the allocation of 155 coalfields between 2004 and 2009. The losses incurred were allegedly six times bigger than the 2G scam.

The UPA government did, though, receive an important assist from none other than the CAG itself. The CAG wrote a letter to Prime Minister Manmohan Singh categorically denying the accusations against the UPA in the news reports.  The matter is particularly serious in light of the fact that Singh held the coal minister’s portfolio for much of the UPA’s rule, and is said to have been in charge of the portfolio when the alleged scam took place.

The government promptly released an edited version of the CAG’s letter to the prime minister that said the CAG “thinking” had been changed, that there was no inference or a loss to the national exchequer, and that the media reports were “exceedingly misleading.”

The government released a paragraph from the CAG’s letter to the prime minister declaring: “In the extant case, the details being brought out were observations which are under discussion at a very preliminary stage and do not even constitute our pre-final draft and hence are exceedingly misleading…Pursuant to clarification provided by the Ministry in exit conferences held on 9.02.2012 and 9.03.2012, we have changed our thinking…In fact it is not even our case that the unintended benefit to the allocatee is an equivalent loss to the exchequer. The leak of the initial draft causes great embarrassment as the Audit Report is still under preparation. Such leakage causes very deep anguish.”

The opposition for its part used the media reports as an excuse to stall proceedings in both houses of parliament. Even the Samajwadi Party, which bailed the government out over the National Counter Terrorism Centre issue, joined the main opposition Bharatiya Janata Party and the Left parties in criticizing the government over these latest claims.

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Union Coal Minister Sriprakash Jaiswal, meanwhile, asserted that the coal blocks were allocated only after all the state governments were consulted, and added that the government had placed advertisements in newspapers and invited bids for the coal fields in question.