on the spot
Tavleen Singh
It is my considered opinion that on ‘coalgate’ we in the media have overlooked the other side of the story. This has created the impression, thanks to our current reverence for CAG reports, that there cannot possibly be another side of the story. There is another side and it is a side that cannot be revealed in CAG reports because the Comptroller & Auditor General’s job is to audit government spending and not do more than this. Since Shri Vinod Rai became the CAG he has gone beyond this limited brief and turned his audits into exercises in reprimanding government for its policies and making charges so sensational that every policy begins to sound as if it was designed with the specific purpose of looting the wealth of the people of India.
To find out if ‘coalgate’ is really as big a loot of public resources as the CAG has made out I spoke to someone whose company was allotted some mines nearly a decade ago. You may have noticed that despite weeks of prime time shows on ‘coalgate’ not a single channel has so far given us the story from the viewpoint of those who are supposedly the looters. Even when the Central Bureau of Investigation filed cases last week against companies who are charged with obtaining mines fraudulently the only person interviewed was a Congress politician from Maharashtra who disassociated himself from the companies linked to him. The questions and answers went no further.
So what you are about to read could be the first glimpse of why the government considered it necessary to begin a process of privatization in the first place. Please keep in mind that all our coal mines have been nationalized since the seventies so there were no private sector companies with experience in coal mining at all. The companies chosen when a tentative process of de-nationalization began were those with interests in steel and power and among them was the one owned by the man I talked to. He spoke on conditions of anonymity. When I asked him why the mines he was given charge of were not yet in production he said, ‘You must understand how this works. Coal India continues to own more than 60% of the mines but it is left to us to get clearances and make the investment. You must also understand that these were abandoned mines because Coal India did not have the money to exploit them. This is why we were brought in along with other private companies.’
So the first point to remember when we consider the allegations made by Shri CAG is that he has not taken into account the need for private investment. Nor has he taken into account how much the people of India have lost, since nationalization, by way of under exploited coal resources. India is one of the world’s largest importers of coal despite sitting on huge resources because nationalization as a policy has failed. As the gentleman I talked to reminded me an estimated 2 billion tonnes of the finest coking coal is being destroyed by underground fires in Jharia that Coal India has not bothered to extinguish either because it does not have the financial resources or the technology to do this. The powerful leftist lobby in media and politics that is shrieking against privatization should keep in mind that no private company would allow this kind of colossal wastage of natural resources. It would find some way to put out the Jharia fires.
The second thing we need to keep in mind is that because of nationalization and the official delays that typify the public sector clearances for mining can take many years. The man I talked to said that one reason why his mines had not yet started working was because it had taken him nearly a decade to get forest and environmental clearances and that even the initial demarcation of which land was allotted to his company had taken an inordinately long time. Then there is the problem that there is no clearly defined mining policy or a clear set of rules. This is partly because mining has been in the hands of public sector companies that are in turn in the hands of high officials. And, it is partly because when there are no clear rules in place is heightens the discretionary powers of ministers who might wish to use them for personal gain.
Some years ago an Australian businessman with interests in mining came to me after reading some column I had written on the need for privatization of defunct and unprofitable public sector companies. He told me that his experience with ministers in charge of mining portfolios, both at the centre and in the states, was that they had no idea of how to go about creating a mining policy. Nor did they seem to understand how much investment and how much risk was involved. Modern technology that would, for instance, enable us to put out the underground fires in Jharia is very, very expensive so private companies making an investment in it would need to know that their money would not go down the drain because some government decided to change the rules.
The rules are in any case so murky in India that many Indian businessmen have chosen to invest in mines in other countries. According to some estimates more than $20 billion of Indian money has been invested by private investors in foreign mines simply because of the difficulties caused in India by leftist politicians and media analysts and a powerful NGO lobby whose fundamental argument is that there should be no private investment at all. These are the things that should be part of the national debate on ‘coalgate’ but because the Bharatiya Janata Party has chosen to reduce it to slogans and posturing in Parliament the debate has taken place entirely in television chat shows that cannot take it beyond the superficial. The losses to the Indian economy and the damage to India’s reputation are so enormous that if they could be calculated they would certainly exceed any of the losses that the CAG has been able to come up with. This then is the other side of the story.
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