The submission to Parliament of the report of the Comptroller and Auditor-General (CAG) on the allocation of coal blocks to private companies in the 2004-2009 period shows every sign of becoming the starting point of a major political confrontation between the government and the Opposition parties, especially those ranged on the side of the BJP-led NDA.
With the next general election barely a year and a half away, the intrinsic value of material that can be converted into anti-government ammunition can hardly be underestimated. The matter has acquired greater salience than it might have as Prime Minister Manmohan Singh held charge of the coal portfolio in the 2006-09 period. Dr Singh continues to be regarded as a man of probity, whatever his perceived deficiencies as a politician or leader. As such, if he can be demonstrated to have low motives, the government would go into the next election battle on a stretcher, as happened in the Bofors era, no matter that the probe into the howitzer deal hasn’t gone anywhere although power has changed hands over the years.
This is the real political meaning of the so-called “Coalgate” drama. The conceptual issues that surround it are far from clear-cut. It is still to be established that allotting scarce natural resources through auctions is the only true way to ensure the best deal for consumers and the best deal for the treasury in conditions of imperfect competition (which is the state of the real world outside the textbooks). The auction route pursued for 3G spectrum disbursement is a case in point. The price revealed through the process has found few satisfied buyers.
The CAG says that in the absence of competitive bidding (auctions), the allocation of coal blocks to private parties was conducted through non-transparent procedures which caused “windfall gains” of Rs 1.86 thousand crore to private companies. A part of this could have accrued to the exchequer, but what proportion of it has not been specified. So, the extent of true loss is not indicated. It is noteworthy that the draft “Coalgate” report a few months ago — which was leaked to the media and became the base of the scaffolding of the political case against the Prime Minister — had suggested loss to the exchequer of more than Rs 10 lakh crore. So, the fresh figures are vastly lower than that. At the very least, this suggests lack of due diligence on the part of the CAG.
Reports of the government auditors are scrutinised by the Public Accounts Committee and then debated by Parliament. We have thus entered the season of fireworks, inside the legislature and outside. A weakened government has to convince the people that it has not wavered in the service of the public good.