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Coalgate to haunt Tata's?
Mon, 29 Oct Pre-Open

Coal allocation scam or Coalgate has been referred to as the mother of all scams. Between 1993 and 2011, the government of India gave away 206 coal blocks for free to government and private companies. The Comptroller and Auditor General (CAG), in their report, estimated that the losses due to this policy of the government giving out coal blocks for free amounted to Rs 186 trillion. This policy created a windfall for private developers who secured public resources at rock bottom prices.

One such example was of Tata Steel. The company has been allocated a captive mine before independence for an annual rent of Rs 3,250. According to various media reports, Tata Steel has a 999-year lease on a captive coal mine in Jharkhand's Ramgarh district, but the company is allegedly using a part of this coal for commercial sales. It is hard to believe that the company holds 999 year lease because under the Mines and Minerals Development and Regulation Act (MMDR) which came into force in 1957, even leases granted before independence are subject to a 30 year limit.

The company is also alleged to have avoided royalty payments, but has since agreed to pay up. Under the MMDR Act, Tata Steel is supposed to pay royalty on the quantity of coal removed or consumed from the leased area. But actually the company was paying the royalty on the production of coal in the leased area.

Although these are all allegations and investigations are yet to be completed, one thing is clear, the whole scandal surrounding the coal block allocation is a perfect metaphor for how everyone from politicians to bureaucrats to business barons to power brokers are milking India behind the smokescreen of due process and a larger accountability to Parliament.

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Feb 19, 2018 (Close)