Chauthi Duniya’s Report Vindicated COALGATE SCAM CAG Underplayed It

Chauthi Duniya’s April 2011 Report stands vindicated by the CAG Report. We had reported that in the name of captive coal block allotment the country has been robbed of Rs. 26 lakh crores. We still stand by it as we believe that to be cautious the CAG underplayed the loss. The most unfortunate fact is that it happened under  Prime Minister Manmohan Singh’s nose. It happened in his own ministry. Coal, the most vital natural resource of India, has been gifted away by the UPA government to its favourite corporate houses and middlemen. Will the PM take the blame for this biggest loot of exchequer in the history of this nation, for it happened when the coal ministry was under his charge? Now, the time has come to remind Mr. Prime Minister what he said on 28 May 2012.
“If I have indulged any such misdeed, then my entire public career, be it as finance minister, leader of the opposition in Rajya Sabha or as Prime Minister …  If there is even an iota of truth in it, then I will give up my public career and the country can give me any punishment.” — Prime Minister Manmohan Singh
The CAG Report is now out in public. It says that the lack of transparency in the allocation of coal blocks to private players resulted in a loss of a whopping Rs.1.86 lakh crore to the exchequer as on 11 March  2011. The Coal Minister defended the government by saying that the CAG has miscalculated the loss.  In December 2011, the CBI said that had the Government given away coal even at the lowest minimum price — which only exists on government rate cards — of Rs. 50 per tonne, the 17 billion tonnes of coal distributed between 2006 and 2009 would have fetched the exchequer Rs. 85,000 crores. If the value of coal is calculated at the market price of Rs. 2,500 per tone –the peak rate offered for coal –then the loss comes to Rs. 42,50,000 crores. Private companies buy coal from abroad at rates up to Rs. 14,000 per tonne. These facts were widely reported in the media but the government did not challenge them.  According to our investigation, the CAG has downplayed the loss. The CAG report gives a very conservative estimate. First, the CAG calculated the loss on coal allotment during the period of 2005-2009. Secondly, the CAG has kept the public sector company out of its purview.
The Coalgate Scam is not just about the loss but it also exposes the way the PMO functions. When the coal blocks were being allotted, officials knew about the mess. The Coal Secretary was continuously writing to the PMO that the procedure is not sustainable and coal blocks should be auctioned. His suggestions were rejected outright. Who was taking these decisions and why? A Screening Committee was responsible for coal block allocation which was headed by the Coal Secretary but shockingly, decisions were taken by officials of the PMO. Why? If there was any change in the allocation policy then why was the Coal Secretary kept in the dark? Was there lack of coordination or lack of trust among the officials responsible for the coal block allotment? These are difficult question which can only be answered by Manmohan Singh.


The UPA government under the leadership of Manmohan Singh is creating new milestones in corruption. The CAG Report nails the government over coal block allotment; the Coal Minister says that it is the government’s policy. It is not unusual for UPA Ministers to first deny all scams when they surface. It happened with 2G, Commonwealth Games (CWG), Adarsh and many more. The practice of defending the indefensible has made them masters of manipulation. The Government’s Propaganda machinery will be let loose to find fault with the CAG Report.  The first response from the government was : “CAG has miscalculated the loss”. The government wants the people to believe in their calculation of the theory of no-loss. Sadly, the people of India have stopped believing the government’s calculation and figures. If everyone starts believing in calculations and figures of the government then one would be forced to conclude that there is Ramrajya in India, which certainly is not the case.

The horrific tale of misappropriation began in 2006-2007 when Shibu Soren was in jail and Prime Minister Manmohan Singh was holding the coal ministry. During this period, Dasi Narayan and Santosh Bagdodiya were Ministers of State for Coal. It was under the Prime Minister that the Coal Ministry gave out the maximum number of captive coal blocks free of cost. Not only were the coal mines given out free, they were distributed at the lower-than-nominal cost of just Rs. 100 royalty per ton of coal extracted. It was done at a time when the market price of coal was over
Rs. 2000 per ton. When this issue was brought to the notice of Parliament, the government ignominiously declared that it would not  allocate  coal  blocks  further  without amending the Mines and Minerals Act, 1957, which would bring in the clauses pertaining to open bidding process. Again, when the Bill was moved in the Rajya Sabha, it was agreed that no further allocation of coal blocks would be undertaken unless both the Houses passed the proposed Amendment into an Act. Though passed in the Rajya Sabha, it was deliberately stalled in the Lok Sabha for four years, and the Amendment Bill could become an Act only in 2010. In the meanwhile the government breached the promise it had made to Parliament as the allocation of free coal blocks continued sneakily.  Why was the Amendment Bill kept pending in the Lok Sabha even after the government had accepted the policy change in  Parliament? The amendment to the Mines and Minerals Act clearly envisaged that from the date of its passage, allocation of mines or minerals would be brought under the ambit of a fair and open bidding process. Thus, had the Bill not been kept hanging in the lurch, the government would not have been able to propitiate its favourite private companies. Accordingly, in this period coal blocks to the tune of proven reserves of 21.69 billion tons were given away free to private companies as also middlemen.
Prime Minister Manmohan Singh was the Coal Minister during this period and all this bungling happened under his very nose; maximum number of blocks was squandered under him only. Manmohan Singh gave away 63 blocks for free. But why did he do so? During these four years (2006-2010), almost 175 blocks were gifted to brokers and capitalists of different shades.
Apparently, the magnitude of the scam does not catch the eye so Chauthi Duniya decided to make an estimation of the monetary loss inflicted upon the exchequer because of this government generosity. Actually, the policy of giving captive coal blocks to private companies started in 1993. The pretext for this was that private players, in search of profit, could be lured into investing in such blocks which for the government would prove both difficult and costly to mine.  This would invariably take coal production to newer heights thereby fuelling the economy. From 1993 to 2010, 208 blocks of coal were allocated for free which is tantamount to coal reserves of 49.07 billion tons. Out of the 208 blocks, 113 blocks were given to 184 private companies for free. This amounted to coal reserves equal to 21.69 billion tons. If the value of this coal is calculated at the market price of Rs. 2500 per ton, it works out to Rs. 5,382,830.50 crores. If out of Rs. 2500, Rs. 1250 is deducted accounting for Rs. 850 as cost of production, transportation etc. and Rs. 400 is deducted as profit, then also the country lost revenue equal to almost Rs. 26 lakh crores. So this is the ‘Father and Mother of all Scams’. This is surely India’s biggest scam ever as also, perhaps, the biggest ever in any country in the world.
But the irregularities do not end here. Yet another startling fact has come to light. There are certain guidelines regulating the allocation of coal blocks which were circumvented. There are certain pre-conditions which cannot be violated in any case while allocating the coal blocks. One condition is that in case of underground mines production should mandatorily start within 36 months (a grace period of 6 months is allowed if the mine falls under forested area). If the mine is of the open cast type, this mandatory period of starting production is 48 months (and another 6 months is allowed if the mine falls under forested area). If production does not commence within this stipulated period, the license stands null and void. This clause has been added to keep out middlemen and brokers who themselves do not need coal but wait for the right industrialist to come and then sell the mine to the latter at exorbitant prices. But interestingly, the government has not cancelled any license under this clause even when the statistics of production are dismal. This is because the government had given away many a mine for this very purpose — that middlemen may make profit. If the government was and is not in collusion with black marketers and middlemen, why at all, in the first place middlemen were allotted blocks and secondly, why at all no cancellation of licenses has occurred even when the production period has been overshot? The latter is the job of Sri Prakash Jaiswal, who made no amends whatsoever. In the press conference he was looking left and right when a reporter asked him why these companies have not been punished for irregularities.

The Government Must Answer These Questions



  1. In 2006, the government promised that until the new law is in place there will be no allotment of coal blocks. Then why were the Coal Blocks allotted to private companies? Who gave the go ahead?
  2. The proposed amendment in the Mines and Minerals Act, 1957 clearly states that coal blocks shall be allotted only through auction. Then why was the bill kept suspended for 4 years (till 2010)?
  3. On one side, the new law was suspended and on the other side, the government kept allotting coal blocks covertly and speedily. Is this not sufficient to prove that it is a case of blatant misconduct?
  4. Why were these coal blocks  allotted to companies which were neither qualified nor competent?
  5. Why was the Coal Secretary  kept out of the loop in this allotment? Who in the PMO was calling shots? Who in the PMO decided to ignore the suggestion of the Coal Secretary that coal blocks be auctioned?
  6. Just like the 2G Scam, the companies which were allotted the coal blocks were sold to third parties. Is this not a blatant violation of law?
  7. The Coal Minister says that only 30 coal blocks are operational. This is not a valid argument because according to law if the blocks are not operational in the stipulated time then the allotment stands cancelled. How many coal blocks have crossed the deadline and what actions were taken against those companies?



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