Economy Aug 28, 2012
Here's one glaring absence in the great 'coalgate' debate: the corporate players who were supposed to have made windfall profits from the arbitrary coal allocations. These players, acting in some arrangement with the central government, are believed to have caused a presumptive loss of Rs 1.85 lakh crore to the national exchequer. They had bagged 57 out of around 190 coal blocks allotted between 2004 and 2009.
The political parties across the spectrum have been in an all out war in the media over coal allocations. The media have virtually taken over the role of Parliament as the ultimate forum for a national debate and have been asking 'probing' questions to all involved. The notable absentees in the discourse are the high profile corporate players. With crony capitalism being the favourite word around, why should they be out of the debate?
What are the private companies accused of? First, they acquired coal reserves at a fraction of their true market price; second, there was an apparent conspiracy between the screening committee members and coal allottees; third, some deliberately delayed starting production; and a few sold off their coal blocks to bigger entities with a profit, as in the 2G spectrum allocation scandal. The charges are serious. Interestingly, we don't know much about their stand on the entire controversy.
The reports of the Comptroller and Auditor General's starting from the 2G spectrum allocations, through the land allocation for the Delhi airport to the coal allocation issue have been about the unholy nexus between private companies and the government. While the ruling party has been put on the mat by the rivals several times over the issue, the corporate players have escaped without any scathing questions on their conduct in shady deals. The media, for obvious reasons, treats them with kid gloves.
As the debate over the coal allocations rages, the ASSOCHAM has come up with a rather ineffectual critique of the CAG's reports. In an advertorial issued in the Business Standard newspaper it said the national auditor's reports on coal block allocations, land allocation for Delhi airport etc has created an environment of suspicion and distrust.
"The CAG's conclusions over the 57 coal blocks allotment appears to have been arrived at without taking all the facts into consideration. Only one of the 57 coal blocks has gone into production. Several of the blocks were allocated to power, steel and cement companies for captive use. If the blocks were auctioned, the cost of these blocks would have pushed up the sale price of power, steel and cement. These are the basic industries crucial to the entire economic value-chain"
It said there could have been some mistake in the selection of beneficiaries "but to extrapolate the current price to the prospective coal output from these blocks and then arriving at a figure of over Rs 1.87 lakh crore as the loss to the government, does not seem to be correct application of accepted principles of economic value assessment," the advertorial said.
It goes on to add: "When the government encourage private sector investment and remove constraints to it, the CAG reports by way of erroneous conclusion have made any liberal reform a political risk.'' Elsewhere, the Business Standard advertorial says "the economic situation is so grim that the Government cannot afford the luxury of risk-aversions in the wake of the CAG's questionable conclusions."
Valid arguments. But what stops the corporate players to come out in the open and put these points aggressively. Are they wary of their own possible wrongdoing? Or they don't simply care? Where do they stand on the ongoing debate? We simply don't know.
But their reluctance to assert themselves leaves them under a cloud.
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