The Indian Coal Allocation Scam
The Indian Coal Allocation Scam
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The Indian Coal Allocation scam also referred to as Coalgate, took place between 2004 to 2009. This was a major political scandal that involved the Indian Government and how it allocated the coal deposits of the nation to private companies and public sector enterprises. The initial start of the Coalgate investigation soon snowballed into a massive political scandal. A number of top bureaucrats and leaders from UPA's previous regime were dragged into the probe. It was the biggest case of corruption to be brought to light under the Manmohan Singh-led UPA-2 government.
The Issue Behind Coalgate
The Issue Behind Coalgate
The CAG (India's Comptroller and Auditor General), issued a report that stated the allocation of coal blocks by the Indian Government was handled inefficiently, raising the question of potential illegal allocation during the time period in question.
The main issue of CAG's report was that the government held the authority to allocate these coal blocks. This should have been done through competitive bidding, however, another route was chosen by the government, which cut out competitive bidding altogether. It was also pointed out that, had the allocation been down in a more efficient manner, it would have brought the government more revenue. Instead, there was an estimated loss of about 150 billion (USD). This estimation was later dropped to about 25 billion (USD) in the final report.
The Fallout
The Fallout
This final report, CAG's observations, and the presumptive loss were refuted by Manmohan Singh, the then Prime Minister. It's important to note here that the CAG report did not speak of corruption. It simply stated that the allocation was handled inefficiently.
However, with the ever mounting allegations of corruption against the UPA-2 government, Manmohan Singh stated that, should he be found guilty, he would step down as Prime Minister. It was at this time that Hansraj Ahir and Prakash Javadekar of the Bharatiya Janata Party (BJP) lodged a complaint with the CVC (Central Vigilance Commission). The CVC then directed the CBI to investigate the situation and the implications of corruption.
This investigation named about a dozen companies, which resulted in a criminal investigation taking place. A number of accusations were made against the allocatees, such as they had overstated their net worth. It was also thought that malicious actions were used to secure allocations. Another allegation was that hoarding was taking place, which was detrimental to the development of these allocated resources. Some were accused of not disclosing previous allocations.
By June of 2012, an inter-ministerial review panel was created by the Coal Ministry to go over the process of the coal block allocations in question. They would then decide if they would be de-allocated or bank guarantees would be forfeited. 42 cases have seen guarantees being forfeited over the years, and around 80 coal fields have been taken back.
In April 2013, a report that was tabled in Parliament by the Standing Committee on Coal and Steel stated that between 1993 and 2008, coal block allocation had been cone in an unauthorized manner. It was recommended that any allotment of mines that showed no start of production should be canceled.
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