You are here: Home » Companies » News
Business Standard

7 things you wanted to know about 'Coalgate'

A quick summary of the coal allocation scam

Nikhil Inamdar  |  Mumbai 

The multi-billion dollar ‘Coalgate’ scandal is back in the headlines as the CBI filed a fresh FIR against industrialist Kumaramangalam Birla and former coal secretary P C Parakh. Birla’s flagship company Hindalco has also been named in the FIR, and both Birla & Parakh have been booked for criminal conspiracy under section 120 B of the PCA (Prevention of Corruption Act).

ALSO READ: Coal allocation scam: Fresh FIR against KM Birla

Want to know what the ‘Coalgate’ scam is all about? Here are the 7 things you must be familiar with:

#1 What is the coal allocation scam?

In a nutshell, the coal allocation scam, or ‘Coalgate’ as it is popularly referred to in the media, is a political scandal that engulfed the UPA government in 2012. The scam came to light after the Comptroller and Auditor General of India (CAG) accused the government of India for allocating 194 coal blocks to public and private enterprises for captive use in a flawed, ad hoc manner between 2004 and 2009.

#2 What did the CAG allege?

The premise of the CAG’s argument was that the exchequer suffered a huge loss and public and private entities enjoyed windfall gains, because the government’s policy of allocating coal blocks was non transparent. It alleged that despite having the opportunity to bring in transparency, the government did not introduce the process of competitive bidding. It also found that many politicians lobbied for allotment to certain private players raising questions about crony capitalism. The CAG also said some private players got more coal blocks than needed for their captive operations and several sold coal meant for internal use in the open market. Many firms were also found to be squatting on blocks for years on end.

#3 What was the presumptive loss?

The CAG initially estimated a Rs. 10.6 lakh crore loss to the exchequer, but the final report tabled in the parliament put the figure at Rs. 1.86 lakh crore

#4 What was the government’s defence?

The government contended that the delay in introducing the auction process was a result of coalition politics. It also alleged that opposition ruled states opposed the auction methodology. The government defended its allocation policy saying maximization of revenue shouldn’t necessarily be the government’s prime motive, as an auction can lead to higher prices hurting consumers. Prime Minister Manmohan Singh has rebutted the CAG’s report and claims there was no misdoing.

#5 What has been the fallout?

A complaint filed by the BJP resulted in the CBI initiating a probe into alleged corruption in the allocation of coal blocks. The CBI has so far lodged 14 cases against individuals and firms including high profile industrialists like Naveen Jindal and his company JSPL, Kumaramangalam Birla, Congress MP Vijay Darda and his brother Rajendra Darda, JLD Yavatmal Energy Limited, AMR Iron & Steel Private Limited, Vini Iron & Steel Udyog among others. The CAG report also resulted in the formation of an Inter-Ministerial Group (IMG) to decide on de-allocation of coal blocks that were not developed on time. The IMG recommended de-allocation of 13 blocks and forfeiture of bank guarantees of 14 allottees including the likes of Tata Sponge, GVK, Arcelor Mittal, Monnet Ispat & Energy, Adhunik Metaliks etc. A Standing Committee report has suggested that allocation of all coal blocks between 1993 and 2008 was unlawful, seeking licenses of those mines where production hadn’t started to be cancelled, in effect indicting both the NDA and UPA regimes.

#6 What was Prime Minister Manmohan Singh’s role in all this?

Former Coal Secretary P C Parakh who has now been charged by the CBI along with Birla hit out at the PM last year for overruling his call for auctions and continuing arbitrary allotments of coal blocks. 142 blocks were allotted during the PM’s tenure as Coal Minister. These allegations emboldened the BJP which has repeatedly demanded the PM’s resignation.

#7 What was that brouhaha on the missing files?

As many as 157 files, crucial evidence for the CBI probing the scam, have gone missing including those containing minutes of screening committee meetings, allocation records etc. While the coal ministry says it has deposited a bulk of the files with the CBI, reports suggest 18-20 crucial files still remain untraceable. The CBI has instituted preliminary enquiries into the mysterious disappearance. Without these files, the probe could be stuck in a limbo.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, October 15 2013. 14:08 IST