Battle of big numbers

Govt's warning of losses from coal block cancellation also too high

As the Supreme Court deliberates on how to deal with the allocations of coal mines by the government that it has now determined are illegal, it should take a close look at recent claims made about possible losses. In January, the Union attorney general had told the court that Rs 2.86 lakh crore of investment was at risk in the coal-block allocations. This is a sizable fraction of gross domestic product, and was no doubt meant to remind the court of the dangers of a wholesale cancellation. This newspaper also has argued against a wholesale cancellation, as had happened to the 2G telecom licences. But in order to urge attention to each specific allocation of a coal "block", to its consequences and its status under the law, there is no need to attach scare-mongering figures for the possible loss. As was documented in a report in this newspaper on Monday, much of the Rs 2.86-lakh-crore figure comes from including all users of coal, including power and steel companies that have set up shop. In addition, the figure relies on "investment certificates" submitted by block owners, which have not been verified by the authorities.

The question of imputed losses has always been a fraught one when it comes to natural resources. Since independence - and before - the government has followed a policy in which industrial plants are assigned free or highly subsidised inputs in an attempt to make more investment profitable than would otherwise be the case. Given the rapid scale-up in ambitions that has taken place in the past decades, many more power and steel plants were due to come online, and the giveaway of natural resources has been comparably large. This has brought into the open cronyism and inefficiency associated with such systems. The 2G licensing, too, was susceptible to such manipulation - and so it was, naturally, manipulated. It is clear that the political and efficiency costs of sustaining this natural-resources policy are too high - and so India is hopefully shifting to a more transparent, market-based pricing policy for natural resources. It is to minimise the impact of this transition that it will be necessary to look at individual cases.

However, given this complicated history, the choice of extra-large numbers to try and scare public opinion into agreement is unfortunate. The United Progressive Alliance government, which had come up with the Rs 2.86-lakh-crore figure, had itself criticised the Rs 1.76-lakh-crore "presumptive loss" that the Comptroller and Auditor General had claimed in its report on the subject. In this battle of big numbers, the only real loser will be common sense. Rather than paying attention to the hype, one way or the other, it is fortunate that the Supreme Court and the committee it has appointed seems to be examining the nature of each allotment before coming to a more granular decision.