The Parliament is in a furore over the CAG audit report faulting the allotment of captive coal mines to Iron & Steel, Power and Cement producing companies in India. Basically the issue is the auditors fault the GoI for not following the practice of ‘open auction’ or ‘best-bid’ options for exploiting or mining the coal deposits, Instead of following or adopting the practice of ‘nominating’ the coal fields to particular ‘unit’ as a captive coal provider and notional losses suffered due to it. The CAG calculates the notional loss - that is the money Govt. could have put in its coffers if they had auctioned instead of nominating the mines - at a whopping rs. 185,000 Cr ($ 3.3 Bn).
The audit report also points out delays - one, delay in formulating the cohesive policy for adopting an auction based system, and, two, an operational delay by the nominated companies in bringing the allotted mines to production.
The opposition, whether the left, chiefly communists or from the right, basically the BJP are bent on slamming the present administration under the PM Manmohan Singh, even venturing to the extent of alleging his personal involvement in the supposed fiasco.
The arguments by the opposition are the easiest to trash. Both these formations, the left lead by the CPI/CPM and the right by the BJP have been a major partners or even wholesome wielders of power in the recent past when the same policy of ‘nomination’ as opposed to ‘auction’ was in effect.
It was a Left front administration essentially, between 1996 to 1998, termed as United Front and the subsequent National Democratic Alliance (NDA) administrations between 1998 to 2004 which maintained the same policy of ‘nomination’ or ‘allotments’. To twist the knife in further, the Communists supported the first UPA administration between 2004 till 2008, till they fell out on the Indo-US Civil Nuclear Agreement, while the same policy was in place.
In the whole issue, what is forgotten is, it was the UPA-1 government under the PM Manmohan Singh who floated and initiated the whole policy change of ‘Auctioning’ of coal blocks. Surely this administration under UPA-1 or UPA-2 cannot be faulted for the delay in implementation, while it has been the BJP led state governments who have been objecting to an open auction of coal blocks.
The worst article/view on the whole issue was posted 2 days back on the TOI online edition ‘More gibberish from the CAG’ [http://blogs.timesofindia.indiatimes.com/the-real-truth/entry/more-gibberish-from-the-cag-its-not-coalgate-but-caggate] - which left me totally confused. There is only one point in the blog post which is of note.
That CAG is not the one to set policies - but only to audit as per procedure/policies. I too believe that in this 'Coalgate' CAG exceeded its brief - by questioning a 'policy' decision - whether to adopt competitive bidding or captive allotment is a policy decision for the administrations of the day. By insinuating that there was a loss to the exchequer by not following an alternate policy is not for an Auditor, even one who is a constitutional authority, to say. An auditor is not mandated to audit a government policy, only to check whether the approved policy is followed to the letter.
The other points raised in the referred blog post are nothing but blowing smoke - up our collective eyes.
It would be interesting to see whether both the political formations presently slamming the government would actually concede what has been opined in that article. For one, apart from other ideological issues, it would mean accepting FDI in mining operations, (including Chinese companies), if the best mining companies are to be considered. OTOH, if foreign companies (which are the best in the World) are to be excluded, it would be basically back to the self same entities who have been ‘allotted’ the coal blocks in the first place. So what exactly is the CAG and we are talking about?
Though I’ve highlighted the protests by the BJP led state governments to the ‘competitive bidding’ policy as one of the primary hurdles in implementing such a policy - personally I feel there are some merits in their argument. If everything becomes profit oriented and cost based, how will the backward states (and even backward - meaning non-industrialised - districts within a state) ever develop? If we cannot ensure or guarantee a dedicated coal mining project to a cement/steel/power project in interior state (like MP) which doesn’t have any coal reserves worth its salt, how will that state ever develop?
As far as CAG and ‘better' policies (than existing), they better leave the task (which is the actual preserve, 'primarily', of) to the Planning Commission of India.
But then seeing what those clutch of wise men under Montek Singh have displayed - an extraordinary vision in formulating better policies and planning better structures than existing -
ROFLMAO!
(image courtesy Manjul.com)
The audit report also points out delays - one, delay in formulating the cohesive policy for adopting an auction based system, and, two, an operational delay by the nominated companies in bringing the allotted mines to production.
The opposition, whether the left, chiefly communists or from the right, basically the BJP are bent on slamming the present administration under the PM Manmohan Singh, even venturing to the extent of alleging his personal involvement in the supposed fiasco.
The arguments by the opposition are the easiest to trash. Both these formations, the left lead by the CPI/CPM and the right by the BJP have been a major partners or even wholesome wielders of power in the recent past when the same policy of ‘nomination’ as opposed to ‘auction’ was in effect.
It was a Left front administration essentially, between 1996 to 1998, termed as United Front and the subsequent National Democratic Alliance (NDA) administrations between 1998 to 2004 which maintained the same policy of ‘nomination’ or ‘allotments’. To twist the knife in further, the Communists supported the first UPA administration between 2004 till 2008, till they fell out on the Indo-US Civil Nuclear Agreement, while the same policy was in place.
In the whole issue, what is forgotten is, it was the UPA-1 government under the PM Manmohan Singh who floated and initiated the whole policy change of ‘Auctioning’ of coal blocks. Surely this administration under UPA-1 or UPA-2 cannot be faulted for the delay in implementation, while it has been the BJP led state governments who have been objecting to an open auction of coal blocks.
The worst article/view on the whole issue was posted 2 days back on the TOI online edition ‘More gibberish from the CAG’ [http://blogs.timesofindia.indiatimes.com/the-real-truth/entry/more-gibberish-from-the-cag-its-not-coalgate-but-caggate] - which left me totally confused. There is only one point in the blog post which is of note.
That CAG is not the one to set policies - but only to audit as per procedure/policies. I too believe that in this 'Coalgate' CAG exceeded its brief - by questioning a 'policy' decision - whether to adopt competitive bidding or captive allotment is a policy decision for the administrations of the day. By insinuating that there was a loss to the exchequer by not following an alternate policy is not for an Auditor, even one who is a constitutional authority, to say. An auditor is not mandated to audit a government policy, only to check whether the approved policy is followed to the letter.
The other points raised in the referred blog post are nothing but blowing smoke - up our collective eyes.
- When CAG questions 'discretionary' allotment, it is definitely a fair point. Especially when such discretionary allotments are found to default on commitments - like commencing production, it does raise the question of whether the discretionary allotment was made honestly or whether it had ulterior motives. Even discretionary allotments do need to follow certain basic, lawful principles.
- It is not necessary to show that Money was ‘made’ to prove/allege corruption. It is only necessary to show that 'loss' was suffered in an official act. Going further, it is NOT even necessary to show that any loss has occurred. An 'out-of-turn' or discretionary allotment to favour someone instead of another deserving entity is also corruption. It would continue to be termed as corrupt, EVEN if such an allotted party fulfils all subsequent conditions, ramps up production and functions as good or better than the original 'deserving' entity.
- Such an act can even be termed as criminal, if the allotted party fails to adhere to conditions of the allotment - like failure to commence production and thus causing an actual loss, by way of employment, taxable duties and revenue and impact on industrial production - precisely the situation in several cases of allotment in Coalgate, as discovered by the CAG.
- Equating 2G scam with Coalgate is the most insidious writing I've ever come across. (The 2nd most warped writing must be the one defending Kapil Sibal).
- :-D
- In Coalgate, the CAG seems to be questioning policies and attributing losses if a different policy had been adopted, instead. (There is a small justifiable matter of ‘failure’ to commence operations & losses thereof, though). In 2G the whole issue is A. Raja as Telecom Minister did not stick to the laid down policy. Even the ‘1st-come-1st-served’ policy was distorted, allegedly by him, to alter it into one of '1st-payer-1st-served' overnight, which is not only unfair, but downright malafide under any sensible law.
- Contrary to that blog post money was 'made' in the 2G scam. Swan, Unitech et.al., paid a licence money of Rs. 1500 Cr (approx) and allegedly turned around and sold or entered into a Joint Venture with the same licence for Rs. 4500 to Rs. 9000 Cr. within a matter of weeks. It is thus patently untrue to say that money was NOT made in 2G scam.
- :-P
- Last is the abject example of an ODI cricket match. Reading it makes me wonder whether the blogger understands cricket, or chooses to lay another smokescreen. Turning his argument around, 2700 legitimate balls can be potentially bowled in a Lord's Test. (90 x 6 for 5 days). Pakistan, assuming they bowl half of it against England can be credited with ~1350 balls. Thus there is a potential for ~1350 no balls to be bowled by Pakistan in the Lords Test. So Ameer, Asif and Butt should not have been convicted of match fixing at all - seeing they only bowled 3 out of 1350 potential no balls [http://www.dailymail.co.uk/sport/cricket/article-2056073/Pakistan-trio-guilty-cricket-match-fixing.html].
- :-(
It would be interesting to see whether both the political formations presently slamming the government would actually concede what has been opined in that article. For one, apart from other ideological issues, it would mean accepting FDI in mining operations, (including Chinese companies), if the best mining companies are to be considered. OTOH, if foreign companies (which are the best in the World) are to be excluded, it would be basically back to the self same entities who have been ‘allotted’ the coal blocks in the first place. So what exactly is the CAG and we are talking about?
Though I’ve highlighted the protests by the BJP led state governments to the ‘competitive bidding’ policy as one of the primary hurdles in implementing such a policy - personally I feel there are some merits in their argument. If everything becomes profit oriented and cost based, how will the backward states (and even backward - meaning non-industrialised - districts within a state) ever develop? If we cannot ensure or guarantee a dedicated coal mining project to a cement/steel/power project in interior state (like MP) which doesn’t have any coal reserves worth its salt, how will that state ever develop?
As far as CAG and ‘better' policies (than existing), they better leave the task (which is the actual preserve, 'primarily', of) to the Planning Commission of India.
But then seeing what those clutch of wise men under Montek Singh have displayed - an extraordinary vision in formulating better policies and planning better structures than existing -
- policies by declaring Rs. 32 per day is Rich benchmark, and
- structures by building Rs. 35 lakh toilets for themselves,
ROFLMAO!
(image courtesy Manjul.com)
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