Economic implications should be considered in coal mine case: FICCI

SC recently held that all coal block allocations made since 1993 till 2010 have been done in an illegal manner

Multiple levels of serious economic implications to the nation, including loss of employment, should be considered while taking a final view on coal block allocations made since 1993 till 2010, industry body Ficci has requested the Supreme Court.

The Supreme Court recently held that all coal block allocations made since 1993 till 2010 have been done in an illegal manner by an "ad-hoc and casual" approach "without application of mind".

The apex court said that further hearing was needed to determine the consequences for which it would hear the matter on September 1.

"This judgement has once again brought to the fore concerns about the country's policy regime and has the potential to disrupt restoration of investors' trust," Ficci said in a statement.

"We reasonably expect that any extreme step (such as possible en-masse cancellation of allocations) shall not compromise legitimate business and investors who participated in good faith in processes laid out over an extended period by the governments of the day," Ficci President Sidharth Birla said.

The apex court, which used almost all terms to condemn the procedures adopted by 36 screening committee meetings since 1993, however, stopped short of cancelling them saying "what should be the consequences, is the issue which remains to be tackled."

"At stake are productive assets estimated at Rs 2,86,000 crore till 2012, which could be left stranded and rendered Non-Performing, in an hitherto unprecedented manner.

"We urge the fullest consideration of multiple levels of serious economic implications to the nation, including loss of employment, replacing domestic loss of production with imports and compromising energy security," Birla said.

One tangible solution going forward could be introduction of independent mining companies, selected by competitive revenue-sharing bidding and engaging them from exploration to mining in un-mineralised blocks; this is in line with global practices, Ficci said.

Moreover, the use of electronic platforms for market access and price discovery ensures transparency and avoids implicit transfers from the Centre and a comprehensive legislation encompassing these objectives is urgently required to overhaul the coal sector.