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Sunday, 9 September 2012

True Depth Of Coalgate Scam

Whether the problem is coal, or iron ore, or other natural resources, reform will have to be on multiple fronts

Coalgate barely plumbs the depths of the coal problem. ET tells you how the current mess extends well beyond Coalgate and the vested interests involved.

First, the good news. Even as every morning brings with it fresh revelations on how India's coal reserves have been mismanaged by the Manmohan Singh government, India is also seeing a set of institutional responses towards addressing some of the ills that have been highlighted.

The Central Bureau of Investigation (CBI) filed its first FIRs this week. According to media reports, at least 10 more are expected soon. The Inter-Ministerial Group, comprising bureaucrats from ministries like steel, power and finance, and chaired by additional secretary (coal) Zohra Chatterji, is in the process of deciding what to do with errant captive blocks. Even at the time of going to press, the group is quizzing the companies whose 58 blocks are running badly behind schedule.

And then, there is the Public Accounts Committee(PAC) chaired by BJP leader Murli Manohar Joshi which will look into the report of the Comptroller and Auditor General on the coal mess. And it is the PAC which will vet whether the CAG's observations on captive coal block allocations are valid or not.

However, these institutional responses invite a large question: are these institutional responses we are seeing are enough to clean the sector up? And the short answer to that question is: no, they aren't. The remedial measures we are seeing focus largely on how captive coal blocks were allocated. But the mess in coal runs way deeper.

Any attempt to fix this mess though, will run into a heavy set of vested interests. There is of course, most visibly, the political class, which has over the years built up a deep relationship with a set of private sector and other players in the sector. Politics in India has become more competitive, complicated and costly. Like any business it needs funds and investment. Increasingly that 'funding' is coming from the resource sectors - energy, coal, mining and of course, telecom spectrum.

Any attempt at reform in the coal sector will have to deal with this problem. But there are other interests too which reform will have to deal with- from state companies, to coal ministry bureaucrats to a relatively unknown, but increasingly powerful set of private sector players who have everything to gain from the status quo.

Ultimately, it is unlikely to be one big reform which will solve the problem. Rather, whether the problem is coal, or iron ore, or other natural resources, reform will have to be on multiple fronts.

In this story, ET describes the main players and the institutions in the coal mess and how they play the game.

EXPLORE:  World News        India          Coalgate Scams         Indian President       2G Scam          Chidambaram            Bal Thackeray

Edited By Cen Fox Post Team

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