India, a country blessed with vast coal reserves, has been marred by a series of corruption scandals that have spoiled the coal industry. The ill-reputed coal scam, which unfolded over the past decade, has had far-reaching consequences on both the economy and the political fields. In this article, we will look at the history and the roots of the coal scam in India.
Roots of the problem
The roots of the coal scam can be traced back to the nationalization of India’s coal industry in 1973. To promote efficiency and equitable distribution, the government took control of coal mining operations. However, over time, this centralized approach led to bureaucratic inefficiencies and corruption.
The seeds of the scam were sown in the early 2000s. India’s coal reserves are vast but geographically concentrated. To streamline allocation, the government bypassed auctioning and instead, allocated coal blocks directly to public sector companies (PSUs) for captive power plants. This seemingly efficient system lacked transparency.
The 2G Spectrum Scandal Connection:
The coal scam bore striking similarities to the 2G spectrum scandal, another high-profile corruption case in India. Both scandals involved the auctioning of valuable resources, with politicians and businessmen exploiting their positions for personal gain. The 2G spectrum scandal, which erupted in 2008, served as a precursor to the coal scam, shedding light on the systemic corruption prevalent in the country.
The core issue lies in the opaque process of identifying beneficiaries. Criteria for coal block allocation were poorly defined, creating room for manipulation. Companies, often lacking experience in coal mining, lobbied for allocations. Accusations flew of political influence with companies allegedly inflating project costs to justify larger allocations.
The Scam Come Under Notice
The Comptroller and Auditor General of India (CAG), the national auditor, unearthed the scandal in 2012. Their report exposed a staggering loss to the exchequer – an estimated $34 billion – due to undervalued coal block allocations. Also, many allotted blocks remained unutilized for years, causing a further strain on India’s coal needs.
Public anger erupted as the magnitude of the scam unfolded. The citizens, disillusioned by the extensive corruption, took to the streets demanding accountability and justice. This extraordinary wave of public sentiment forced the government to take action and address the issue.
Legal Proceedings and Investigations:
The coal scam prompted multiple investigations by government agencies, including the Central Bureau of Investigation (CBI) and the Comptroller and Auditor General (CAG). These investigations revealed a web of corruption, exposing the involvement of prominent politicians, bureaucrats, and business tycoons.
After that, the coal scam witnessed the cancellation of numerous coal block allocations, resulting in a legal battle between the government and the affected companies.
The coal scam acted as a wake-up call for India, emphasizing the urgent need for systemic reforms and transparency in resource allocation. The government introduced measures to smoothen the process of coal block allocations, ensuring fairness and accountability. The introduction of e-auctions and the establishment of an independent regulatory body for the coal sector were steps taken to prevent future scams.
