The government headed by Dr Manmohan Singh and Mrs Sonia Gandhi has laid down its code of governance. You can sell a fertile womb at heavy discount as long as the child is still inside. This metaphor passes the test of common parlance: our natural resources, like coal, are the gift of Mother Nature. The Supreme Court has held that a natural resource is also a national resource. It is a property of the people, and government is only a temporary caretaker. It is duty-bound to maximise the returns to the people in case of any economic exploitation of natural resources.
CAG, or the Comptroller and Auditor General, is the government’s premier audit authority. Vinod Rai, who holds the position, has had a distinguished career in government, reaching the status of a secretary in finance when P. Chidambaram was minister. Dr Manmohan Singh sponsored him for CAG precisely because of his reputation for competence and integrity; and he duly took over on 7 January 2008.
Rai sent a report on coal mines to Parliament during this monsoon session affirming that “Delay in the introduction of the process of competitive bidding has rendered the existing process [of allotting coal blocks] beneficial to private companies. Audit has estimated financial gains to the tune of Rs 1.86 lakh crore likely to accrue to private coal block allottees.” The language is simple enough. For a substantial portion of this period, the Prime Minister held the portfolio.
After some brainstorming the UPA government has formulated a response: coal has not begun to be mined from these allotments, so there has been no gain; hence the CAG report is unsustainable. This argument would be valid if the government also announced that it was cancelling these allotments, returning the money paid and auctioning the blocks. This should be very easy, since, as per the government’s own statement, no mining has begun. In other words, the private sector has not made any investments in its purchase; the original price therefore should be sufficient compensation. This is the only way to ensure that Finance Minister P. Chidambaram’s claim of “no gain” means what it claims. Nor should the private companies complain. As noted, they have not begun mining. The CAG report itself states that its figure of Rs 1.76 lakh crore [about $37 billion] constitutes the gains that are “likely to accrue”. Cancellation is the only insurance against unwarranted torrents of profit.
On 11 September 2004, PMO circulated a note asserting that there were flaws in competitive bidding; on 1 November 2004, PMO opposed an amendment to the Coal Mines (Nationalisation) Act, 1973. Why? There is no convincing answer.
The other UPA argument is that some BJP-ruled states also once favoured the process of allocation over auction. So what? The blocks they allocated should be cancelled as well. The point is not a political party’s deeds or misdeeds but the people’s rights, and their welfare. $37 billion will buy a lot of free meals for children in districts dominated by the Maoist insurrection, even after we have deducted the percentage that will inevitably be corroded by inefficiency and corruption, and leave enough for a healthcare plan for mothers and infants.
But the catch is in the opening sentence of the quoted CAG paragraph. The loss to government was due to a “delay in the introduction of the process of competitive bidding”. There was a system in place, which all parties when in government used. But in 2004, after the UPA came to power, and possibly encouraged by Dr Singh’s reputation for probity, Coal Secretary P.C. Parakh recommended, in a formal note dated 16 July 2004, a change to auction on the valid grounds that this would be less open to favouritism and generate far more revenue. This view emerged from a meeting with all stakeholders, held on 28 June 2004.
One would imagine that the Cabinet would applaud. Instead the idea was blocked by officials within the Prime Minister’s Office. On 11 September 2004, PMO circulated a note asserting that there were flaws in competitive bidding; on 1 November 2004, PMO opposed an amendment to the Coal Mines (Nationalisation) Act, 1973. Why? There is no convincing answer. These are not the only instances. And if auction was wrong then, how has it suddenly become right after at least 57 blocks were awarded by this government to private businessmen — a list that includes some very famous names along with the usual lot of unknowns. A draft Mines and Minerals Bill incorporating auctions was finally readied in 2011, but it still has not been passed.
Diversionary tactics to confuse the truth work, up to a point. Whether the BJP should stall Parliament in order to get its message across may be a moot issue in many minds. But the forum of confrontation has shifted from Parliament to the teashops and courtyards of the country. The decisive arguments are being heard by the ultimate judge in a democracy: the voter. Judgement will be heard on election day. Mother Nature’s womb belongs to the people.