THE JAIRAM RAMESH COAL SCANDAL
The real coal scandal has cost the country several times more than Rs 1.86 lakh crore. It was not conjured, like the CAG says, by the Prime Minister between 2004 and 2009. It was instead engineered largely between 2009 and 2011 by the incompetent environment minister Jairam Ramesh and facilitated by an impotent Prime Minister Manmohan Singh. Even if one were to accept the CAG’s questionable mathematics, its loss estimate from the allocation of 57 coal blocks to the private sector is a one- off two per cent of GDP— roughly equivalent to the Government’s subsidy bill for just one financial year. The cost to the economy of a 10- 15 per cent shortage in power supply year after year is a sum far greater than 2 per cent of GDP. India is short of power not because capacity has not been added. India is a power deficit country because it is short of 85 million tonnes of coal to fire the power plants. That shortage is forecast to more than double in the next five years.
As environment minister, Ramesh demarcated large tracts of forest land as no- go areas for mining, with little concern for its economic implications. Singh should have objected to Ramesh’s arbitrary style of policymaking, but he did not. As coal minister for a significant period between 2004 and 2009, the Prime Minister would have been well aware of the projected shortages. That should have prompted him to take a harder line with a junior colleague. He only reacted in 2011, in typical UPA style, by rewarding Ramesh with a pro- motion for all the damage he had done.
Singh could also have done more for reform as coal minister. In his defence, Singh will say that he was the one who first proposed auctions. But his suggestion was limited to only those coal blocks which were to be given out for captive mining by private sector companies in power and steel. Coal India Limited ( CIL), the public sector monopoly, remained the only entity allowed to sell coal on the open market. CIL earns handsome profits because it is a monopoly. Like all monopolies, it is lazy and inefficient. It has no incentive to mine coal more aggressively. If Singh was serious about reform, he would have denationalised coal and ended CIL’s monopoly, a proposal that was first mooted by the NDA government.
Manmohan Singh may, or may not, be guilty of corruption in the allocation of 57 coal blocks, but he sure is guilty of incompetence. In my book, incompetence on this scale is reason more than even corruption to vote out a government. The UPA’s incompetence has forced Gautam Adani, an alleged beneficiary of the coal scam, to commit Rs 75,000 crore of investment in coal mines in Australia and Indonesia. It forced Naveen Jindal, another supposed beneficiary, to commit Rs 10,000 crore in Bolivia, before his deal turned sour. Why would Indian businessmen incur huge debts chasing expensive coal overseas if they had easy windfalls in India?
The real scandal in coal is not about what was given away corruptly. It is instead about the coal still trapped in Mother Earth because of UPA’s incompetence.
AS ENVIRONMENT MINISTER, JAIRAM RAMESH DEMARCATED LARGE TRACTS OF FOREST LAND AS NO- GO AREAS FOR MINING, WITH LITTLE CONCERN FOR ITS ECONOMIC IMPLICATIONS. SINGH SHOULD HAVE OBJECTED TO RAMESH’S ARBITRARY STYLE OF POLICYMAKING, BUT HE DID NOT.