Wednesday, August 29, 2012

CAG Reports on Allocation and Pricing of Coal-Bearing Areas, 2G Spectrum: Whither Growing Corruption in India?

Reactions to recent reports of the Comptroller and Auditor General (CAG) of India on the allocation and pricing of coal-bearing areas and second-generation telecommunications spectrum (2G Spectrum) are reminiscent of the well-known parable of the blind men and the elephant. Depending on the political persuasion and ideological inclination of the person concerned, the reports are either futile exercises in exaggeration or an important endeavor to hold those in power and authority accountable for their actions.

The reports are either consciously aimed at embarrassing the government using dubious data and specious assumptions or these are attempts to bring about greater transparency in public finance and curb corruption in high places. Everything depends on which side you are on. The CAG has repeatedly talked about “presumptive” or “notional” losses. The government, in turn, argues that the losses are not real but hypothetical and that the auditors of the constitutional body need more than a few basic lessons in mathematics and economics. So what if the coal has not been mined?

The fact is simply that the coal acreages no longer belong to the government. Forget local inhabitants or indigenous communities, the coal blocks now belong to particular privately controlled companies, some of whose promoters and directors have rather close links with relatives of certain Congress leaders. Coal, incidentally, is a subject of the federal government.

In both the “Coalgate” and the 2G scam reports, what the CAG has stated is that there was inaction by those at the top, including Prime Minister Dr Manmohan Singh and Finance Minister Palaniappan Chidambaram. Both predictably protest their innocence. Despite the clean chit given to the finance minister by the Supreme Court on August 24, what cannot be disputed is that he knew very well what the disgraced Former Communications Minister Andimuthu Raja had been doing (he, in fact, says that he did not approve of some of his actions).

In fact, it was Dr Singh’s own government’s ministers and bureaucrats (including those in his office) — and not just those representing the state governments of Rajasthan, Chhattisgarh, Jharkhand, West Bengal, and Orissa — who ensured that his advice to have competitive bidding for coal blocks was not operationalized for more than six years.

Dr Singh, Chidambaram and their supporters have provided long, detailed and convoluted explanations about why what should have happened — auction of coal blocks and spectrum — did not happen. In both instances, previous governments (especially those run by the NDA) have been blamed. Two wrongs do not make a right.

Prime Minister’s Reaction
Prime Minister Manmohan Singh took “full responsibility” for the coal allocations made under a policy in existence since 1993. Amid slogan-shouting by the Bharatiya Janata Party (BJP) the prime minister has told Parliament that there is no impropriety in coal allocations. The CAG report is “flawed” as the auditor’s methodology to calculate the loss is questionable, he says and argues that it is not the CAG’s job to suggest a change of policy from allocation to auction of natural resources and tell the government to overrule state objections in changing the law.

Speaking both inside and outside Parliament, Dr Singh said he was not running away from taking “full responsibility” for decisions taken by the coal ministry when he had held the portfolio himself. He, however, declared that the allegation of impropriety “is without any basis and is unsupported by facts”.

As the uproar by the BJP on the floor of the two Houses continued for the fifth day in a row, the Prime Minister read out his statement amid the din. After reading a few paragraphs, he laid the statement on the table. Daring the BJP to hold a debate in the House to let the country judge the truth, he declared: “We have a very strong and credible case as the CAG’s observations are clearly disputable.” As BJP continued to create a ruckus, both Houses saw repeated adjournments, and no legislative businesses could be transacted.

Unconvincing Remarks
The prime minister’s statement presented in the Parliament and the remarks he made to the media outside the Parliament on the controversial coal block allotments are as unconvincing as the stand that his party has adopted since the scam broke out in public few months ago.

In fact, it is because Dr Singh wants to gloss over the salient aspects of the charges that have been leveled against him that he has tried to present the image of a ‘combative' leader; he took on the comptroller and auditor general of India for alleging “impropriety” which was “without basis and unsupported by facts”. Well, that is not for Dr Singh to decide since there is the Public Accounts Committee (PAC) which will study CAG's observations and submit its report to the Parliament on the merits of those observations. 

The prime minister does refer to his government's resolve to ‘challenge' in the PAC the findings of the country's premier audit organization, but then we also know that the Congress has scant regard for what is one of Parliament's most important panels. The obnoxious manner in which members of the party, assisted by some of their allies, had conducted themselves when the PAC was hearing CAG's 2G Spectrum scam report, is still fresh in the minds of the people.

The prime minister pats his own back by saying that it was the UPA government which “for the first time conceived the idea of making allocations through the competitive bidding route in June 2004.” But that unfortunately is not the point here. What happened thereafter is. Dr Singh swiftly dumped the auction idea and cleared a proposal to dole out coal blocks to private parties at vastly under-priced rates. By the time the government returned to its original ‘concept' of putting in place a mechanism for competitive bidding — and it took the regime over two years to do so — more than 140 coal blocks located in various States had been sold down the river to private players, many of whom have not even till date begun mining the resource.

BJP's Flawed Reasoning
After disrupting the winter session, BJP is at it again, insisting that the prime minister must resign for the so-called Coalgate scam before the Parliament is allowed to function. Led by senior leaders like Arun Jaitley and Sushma Swaraj in the presence of LK Advani and cheered on by Nitin Gadkari from outside, it rejects a debate in Parliament as the matter will merely be talked. A non-confidence motion is, however, ruled out as the numbers do not favor them. Meanwhile, disruption of Parliament is being paraded as a national duty. The argument is that similar disruption alone forced the resignation of Raja and Maran following the CAG’s 2G Spectrum scam report. And if Raja could resign as Minister for Telcom, Dr Singh must resign as he held additional charge of the Coal Ministry during the years when Coalgate occurred.

In the Coalgate matter, four Opposition-led state governments (Chhattisgarh, Orissa, Rajasthan, and West Bengal) and Jharkhand had opposed coal auctions as proposed by the Centre and recommended allocations of coal blocks in their states for local power and cement manufacture. Taking federal sensitivities into account, the federal government did not press its case for open auctions, a factor indirectly noted with some approval by the chief justice of India in a lecture delivered in Delhi recently.

Instead of allowing the Parliament to debate the matter and send it to the Public Accounts Committee for detailed scrutiny before the House takes a final view on the matter, the Jaitley argument is that the party is entitled to trump the whole, thus enabling a strident minority in the House to impose its will on the majority, and that too without the requisite parliamentary debate and investigation, in violation of every rule and canon of democratic process and conscience. This is the kernel of the matter, not the bogus, political spiel spewed out by the BJP and other persons before TV channels looking for meaningless but high-TRP-rated gladiatorial fights night after night.

Jaitley says “Parliamentary obstructionism … is a weapon to be used in the rarest of the rare cases.” But, unfortunately, the BJP seems bent on disrupting the Parliament constantly.

It can be said that the UPA government’s strategy to hold the ground until winter sets in is neither politically prudent nor morally defensible. If one were to accept the finance minister’s argument that there was no loss in the allocation of coal blocks as the coal has not been “taken out of mother earth,” then surely the proper course would be to ensure that the companies which benefited from the discretionary allocation of the blocks are not allowed to profit from the coal that still remains unmined.

Nevertheless, the problem is that the government’s defense of the allocation is varied, full of holes, and contradictory. On one hand, the UPA is trying to present a luminously clean picture of the whole scenario, on the other BJP is not a less known perpetrator of corruption. It is high time that the parties stopped fooling the public and appreciated the intelligence of the common people.

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