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Millennium Post

Coal, victim of inertia

Continuing obsession with coal scam tends to promote a feeling that coal is meant only to corrupt people and has no other role in our economy. A full throated condemnation of the allocations of coal resources has only made the country witness a good running after real or imaginary villains – a pursuit that underestimates the damage a resultant governance paralysis has caused to the economy. A country having huge reserve of coal, has been importing huge quantity of coal to meet its requirement and the import is only adding to the current account deficit. A large number of coal deposits allocated, remain unexploited for years due to lackadaisical approach to the regime of regulatory approvals.

It is time to look at our ailing economy with greater seriousness and professionalism. Whether we like it or not, our oversized government system is slow in response. It takes time to make it change its course. There is resistance to innovations. Soon after joining the ministry in late 2002, I heard the prevailing signature tune in the corridors of Shastri Bhavan that spoke of India’s Coal sector being synonymous with Coal India. It took time to make the concerned people see the sector beyond Coal India. Certain hard decisions had to be taken before opening up the sector to introduce new stakeholders to ensure energy security. When we should sing the tune that glorified higher
production; streamlined regulatory regime and expeditious approvals, we seem to have wilted by relentless condemnations. The system is now possessed by negativism and aprehension.

Law provided for allocation of coal resources to producers of end products like power, steel. oil and cement. The blocks which are to be made available to these producers are placed in the public domain. Interested eligible parties make applications for grant of Blocks. The proposals are scrutinised in the concerned ministries which convey their views to the coal ministry. Concerned state governments also make available their views on the applications to the coal ministry. After this is done, are the proposals placed before an Inter-Ministerial Committee presided over by the coal secretary. The applicants are given the opportunity to justify their cases. Taking these inputs to consideration, the committee makes its recommendations and final decision is taken by the minister. This arrangement stood the test of time without compromising transparency and objectivity.
Confusion seems to have started by in house bureaucratic hair-splitting which led some people to make theoretical forays into the realm of a utopia. When the task is to free river Ganga of pollution, one need not write a scholarly treatise on the issue; one needs prompt getting into the river and clean it. The utopia-seekers looked for the ideal arrangement for allocation of coal blocks for captive use. After laborious deliberations, a decision was taken to go in for auction. But this decision was easier taken than implemented. One has to make adequate arrangements to make such a decision operational. It takes time to do so. Energy security being a serious issue for our economy, we cannot be dependent on a near monopolistic arrangement where an important and critical raw material like coal could have only one major producer – Coal India. Unforeseen operational issues can cause serious mismatch between demand and supply. Induction of new producers of coal is very much in national interest. It would not have been proper for a government to sit idle and put a stop to allocation of coal blocks till the law was amended. Government is duty bound to ensure a satisfactory economic growth. I therefore feel the government did the right thing by not keeping on hold the process of allotment of the coal blocks. I see no rationale why the policy that was followed till the law got amended, would be found fault with. It would be palpably wrong to hold that government should have stopped allocating coal blocks till they were ready to do it through auction.
Let me touch upon the validity of the assumption that auction is always preferable mode to assign a natural resource like coal. Suppose we conduct an auction. Who wins it other than the richest among the eligible bidders? Is it an acceptable proposition, from the point of view of equity?

When the existing arrangement did provide for transparency, I would be inclined to say that government was not at fault. The existing arrangement also provided for review. If an allottee faulted and did not utilise the coal block in time, government does have the authority to withdraw the allocation. I would always hold that government works with a sense of objectivity. Cases of individual malfeasance and malafide, if any, can and should, always be looked into. While opinion makers should articulate about real scam in any sector of government activity, they should not look the other way and sit silent to the slowing down of indigenous coal production. Crying loud even about the ghost is an indicator of our growing love for sensationalism. Let us avoid it for the sake of our motherland.

The author is a former Coal Secretary to Government of India
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