India lost up to $211 billion in revenue by selling coal deposits too cheaply, a government auditor’s draft report says, renewing pressure on Prime Minister Manmohan Singh, who is already reeling from a slew of policy missteps.
Opposition parties reacted with outrage in parliament on Thursday to the report, which was leaked to the Times of India. The assembly session was briefly adjourned and the government said it would respond once it had verified the facts.
“We are examining the news report and I have called for records. After that I will reply,” Coal Minister Sriprakash Jaiswal told reporters. The government said the auditor had not yet presented it with the report.
Singh’s government has lurched from crisis to crisis since massive graft in the sale of telecoms spectrum surfaced two years ago. Voters punished the ruling Congress party in regional elections last month and its coalition partners are increasingly rebellious.
The published excerpts of the coal report stop short of direct accusations of graft, but will further drive home the impression of a government in freefall.
The leaked draft from the Comptroller and Auditor General’s (CAG) office criticises the allocation of 155 coalfields to about 100 private and some state-run firms, including a subsidiary of the world’s largest steel maker ArcelorMittal , between 2004 and 2009 instead of auctioning them off to the highest bidder.
It said the policy undervalued the coal by at least 10.7 trillion rupees, or $210 billion at today’s exchange rate.
India is the world’s third-largest coal producer in the world after China and the United States.
“This is the mother of all scams,” said Venkaiah Naidu, a senior leader in the opposition Bharatiya Janata Party. “The prime minister should reply.”
Prime Minister Singh, who himself oversaw the coal ministry during some of the period in question, did not respond to questions by reporters at parliament.
The report said the government had extended “undue benefits” to the companies. It said the sale of the blocks was subjective and allowed windfall gains, but appeared to make no direct accusation of illegality or bribe-taking.
The coalfields were allocated mainly to power, steel and cement companies. State-run power company NTPC told Reuters it had made no windfall profits from the allocations and that the lower costs meant cheaper electricity for consumers.
A similar investigation over the allocation of telecoms licenses led to huge protests that rocked Singh’s government last year and landed a minister and several company executives in jail. In the telecoms scandal, officials are accused of taking bribes to favour certain companies.
The Indian subsidiary of ArcelorMittal, and Indian steel makers Tata and Jindal Steel and Power, are among the companies named in the report.
Jindal’s controlling shareholder Naveen Jindal defended the policy of direct allocations, saying it had allowed private companies to jump-start production at mines left idle by state-run Coal India Limited, the world’s single largest producer.
Jindal Steel And Power stock fell 5.65 percent at 555.80 rupees on Thursday, dragging down an Indian steel stocks index by 0.8 percent.
Coal Minister Jaiswal said he was not serving as minister during the period under scrutiny and that the government policy was now to auction coal blocks.