Lessons from coalgate

Published: 24th September 2012 12:51 AM  |   Last Updated: 24th September 2012 12:51 AM   |  A+A-

The report of the Comptroller and Auditor General of India on Allocation of Coal Blocks and Augmentation of Coal Production, March 2012, is relevant to uncover the systemic failure and crisis in governance with reference to integrity and efficiency. The most serious casualty in a cacophony is the capacity to objectively chaff the truth from the falsehood. An objective analysis would be a useful guide for systemic reforms. It is unfortunate that the so-called ‘Coalgate’ has not been debated in Parliament. The electronic media has become the forum for debating where typically blame game between the BJP and the Congress is repeated out as Tu Tu Mein Mein story. The aam aadmi is bewildered as he has been underserved in terms of administrative process details, which miserably failed to protect and promote the interest of the country.

The role of the CAG has been dragged in public domain. Perhaps, it was avoidable. The powers and functions of the CAG, if necessary, can be examined by the appropriate authority. Denigrating his status in public would not be in the long term interest of the country. Any adverse comment by the CAG is bounced back with the remark that the concerned constitutional authority is only an ‘accountant’ of the system and has no jurisdiction to oversee the implementation of policy with reference to aims and objectives enshrined in such a policy measure. Our Constitution framers had mandated that the CAG will also contribute in upgrade of governance from an objective, distanced and an independent view. The CAG is entrusted with the responsibility to oversee the policy implementation in the larger context of probity and transparency in decision-making, efficient usage of funds legislated through the budget and optimality of policy choice. If the audit of the implementation of policy brings to light deficiencies in the policy itself, the CAG is competent to point this out. It is for this reason that the CAG also undertakes the performance audit of selected departments.

The CAG has observed, ‘The process of bringing in transparency and objectivity in the allocation process of coal blocks which commenced from 28th June 2004, got delayed at various stages and the same is yet to materialize (February 2012) even after a lapse of seven years’. The details throw light on the role of the departmental secretary and the minister assigned with the portfolio, role of PMO, consultative process with other concerned ministries and the role of cabinet secretary at a supervisory level monitoring the implementation of Cabinet decisions. There is also the broader issue of compliance by the officials of the Ministry in case the orders of political superiors are not in keeping with national interest.

The secretary, Ministry of Coal submitted on July 16, 2004 a comprehensive note on the merits of competitive bidding and the prospects of windfall gains in case the allocation of coal mines is made through administrative measures. Secretary (Coal) reiterated his views on September 25, 2004 by stressing the desirability of taking decisions on the basis of competitive bidding in respect of pending applications. The secretary presented a revised note in February, 2005. Later a Cabinet note was circulated in March, 2005 with the recommendation for competitive bidding to achieve total transparency. However, the minister of state overruled the proposal of competitive bidding on four different occasions from 2004 to 2006. The intervention of the PMO was also critical as the PMO desired in the year 2004 and 2005 that the extant procedure for the allocation of coal blocks administratively may continue till the new competitive bidding procedure is operational by amending the Act. It is clear that the Secretary (Coal) was overruled on his recommendation for not allocating coal blocks through the administrative procedure. It was also not possible to raise the matter to a higher level for review as the PMO had not concurred with the view-point of the secretary.

There is an important fact regarding the total time taken in the passage of MMDR Amendment Bill. The process that began in 2004 was finalised on September 9, 2006 when the PMO was informed that the Ministry of Coal would initiate measures for the amendment of the Act. However, it took two years to introduce the Bill in Parliament. In spite of recommendation by the Standing Committee of the Parliament, the amendment could only be passed after a lapse of two years in July, 2010. It took another two years for the notification of the amendment of the Act and Rules favouring competitive bidding. This is a major systemic failure. The entire procedure for obtaining a Cabinet decision needs total overhaul. Apart from detailed examination in the ministry informal and formal consultation with the finance ministry and planning commission, the Cabinet note itself is circulated to various concerned ministries for their comments. Though the Cabinet Secretariat has set a time limit for obtaining comments, the departments invariably wait for the comments of the key ministries before forwarding it to the Cabinet Secretariat. The process can be shortened to maximum four weeks’ time for obtaining Cabinet decision.

The advisory role of law ministry is no less controversial. The coal ministry was advised by the law ministry in June 2004 and again in July and August 2006 that the competitive bidding could be introduced by an administrative fiat and such a process could be governed by the provisions of the Indian Contract Act, 1872. However, the law ministry played safe by suggesting that a legislative amendment would place the allotment process on a sound legal footing. Thus, the option of competitive bidding through a departmental decision was available.

In this entire episode, the performance of screening committee is unworthy. It appears that many records forming the basis of the decision of the screening committee are unavailable. The comparative merits of the applications have not been thoroughly examined and lastly the verification of applicants to satisfy their capacity and genuineness is grossly inadequate.

In today’s complex global economy, the systemic reforms cannot wait any further and decisions must appear transparent, well-reasoned and serving the larger interest of society. The relevant prescribed procedures need to be reviewed like a zero based budgeting. In a parliamentary democracy, the accountability of the political and the permanent executive need to be fixed. A judicial inquiry to examine the lapses in procedures and systems would be in order.

Nripendra Misra is ex-chairman, TRAI and director, Public Interest Foundation.

E-mail: director@publicinterestfoundation.com

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