Economy & Nation Exclusive
Social groups, others also targeting UPA over CAG report on coal

Several social groups have been asking the Prime Minister to take responsibility of the coal gate and other financial scams as the head of the UPA government

Apart from the main opposition party, social group and others are also reacting to the Comptroller and Auditor General (CAG) report on coal. While some members of erstwhile Team Anna has threatened to file public interest litigation (PIL), Medha Patkar-led National Alliance of People's Movements (NAPM) has demanded resignation of the Prime Minister as it feels that the United Progressive Alliance has lost its mandate. Lok Satta Party, on the other hand has suggested imposition of windfall profits tax on private players which profit enormously from the allocation of public natural resources such as coal.


NAPM, in a statement said, "In the Coal scam too the government is trying to convince the nation, that the coal sale should not be treated as a commercial proposition. The government’s version is that cheap coal to corporates will boost power generation which is necessary for growth. As the 2G scam has proved it is impossible to fool people this time. It's time UPA government and its leadership faced to the reality and put its house in order. Prime Minister must explain and own responsibility for the same."


Instead of indulging in allegations and counter-allegations over the CAG report on allocation of coal blocks, Lok Satta president N Jayaprakash Narayan appealed to political parties, Parliament and the Government to consider imposing a windfall profit tax on private players. Narayan said allocation of coal blocks to private parties for captive mining could not be faulted, as the public sector Coal India has failed to meet the demand for coal and forced the country to spend precious foreign exchange on import of the fuel. The shortfall was as much as 100 million tonnes a year, he said.


According to CAG, the difference between cost of production and market price in 2010-11 worked out to Rs295 per tonne. As the difference fetched undue returns to private parties, the Government could legitimately levy a tax on such windfall profits. Britain had imposed such a tax when it allocated natural gas blocks in the North Sea, he said.


A windfall profits tax is a higher tax rate on profits that ensue from a sudden windfall gain to a particular company or industry.


Meanwhile, some members of erstwhile Team Anna threatened to file a PIL in court and carry out a referendum to "expose" the UPA on coal block allocations if the government does not constitute a special team to probe allegations.


"We demand cancellation of allotments of coal blocks. Lodge FIR, constitute an SIT, failing which we will file PIL in court and carry out referendum on the issue to expose the government," Kejriwal told reporters after a meeting of India Against Corruption (IAC). Prashant Bhushan was also present in the meeting.


According to NAPM, the CAG estimate of loss of Rs3,700 crore in the Delhi Airport issue looks like pittance before the mega scams of coal gate and ultra mega power plants. "But what the report exposes is the massive favouritism and bending of rules to benefit the corporations through models like public-private partnership (PPP). It is a matter of extreme concern for the nation since there is a massive attempt at pushing PPP as the favoured model of work in every sector now. It is no wonder that government is openly pushing for land acquisition for PPP projects under the new Land Acquisition Bill. We completely oppose any such move and demand that there is a need for now to audit all the major projects implemented under the PPP scheme," the NAPM said.


The CAG, in its report submitted in the Parliament has estimated "undue benefits" of over Rs3.8 lakh crore to private parties in coal blocks allotment without bidding, Delhi airport development and diversion of coal to a power project. 


The CAG, however, brought down the estimated loss in the allocation of 142 coal blocks since July 2004 from Rs10.7 lakh crore in the draft report to over Rs1.85 lakh crore being the benefit to private allottees.


The beneficiaries of coal block allocation included Essar Group, Jindal, Adani, ArcelorMittal and Tata Steel.


The CAG has estimated a potential earning capacity of Rs1.63 lakh crore to Delhi International Airport Ltd (DIAL) when it was given Delhi airport land on a concessional lease. The CAG was also critical of allowing Reliance Power to divert coal meant for Sasan ultra mega power project in Madhya Pradesh to its other plant, thereby giving it a benefit of Rs29,033 crore.


The CAG was also critical of allowing Reliance Power to divert coal meant for Sasan ultra mega power project in Madhya Pradesh to its other plant, thereby giving it a benefit of Rs29,033 crore.




4 years ago

Mr.Chidambaram, the then and Presant Finance Manager in his Press Conferance to enlighten Indians Directly as Parliament is not functioning,stated that out of 57 allotments Coal is Lifted in only one Block and Hence Where is the LOSS ?.It is shocking for Audit / Finance Professionals, as Loss is Estimated based on Coal Blocks alloted and their Capacities.Mr.Chidambaram is misleading Indians by NOT Cancelling those Allotments and then telling about Loss but estimating loss on Coal lifted till now eventhough Coal Can be Lifted for Entire Lease Period till Cancelled.(2)FM also shows 5 Letters of 2005 and says BJP opposed Acutioning and hence alloted by nominations.7 years passed since then.FM did not say subsequent developments for swiching to auctioning.Political 1st reaction by 5 out of 30 states can not be convinvincing Reason.(3)FM did agree that Govt.Wheels are Dead Slow in its Movememt. PM is telling Administrative Reforms from 2 Deacades.No Progress at all.(4) SC's Cancellation of 122 Allotments of 2G Spectrum can be taken as Guideance and Coal Allotments Cancelled(5)Coal Minister Jaiswal's statement that 3 Different Legal Opinions are received is not an Excuse for 8 years Delay.(6)PM's Defence may not be a Political Slippery.(7)JPC & PAC are no use ,as our Politics do not aloow them with correct Reports,as Proved in 2GM scam case ,As SC gave its Interim Orders of Cancellation long back but JPC enquiry is yet Out.(8)Our Politicans are making a mockery of our Democracy.


4 years ago

I doubt whether PM will take any direct responsibility. If it was any other country , PM would have resigned.


4 years ago

The initial response from government spokespersons to the latest revelations in reports of CAG has been on expected lines. First, CAG has exceeded his brief. Then, all his presumptions are not right. Third, even if some findings have some basis, losses are not as huge as are made out. Fourth, and that is the icing, in the given circumstances, there were not many options as several departments/ministries were slow in decision-taking. To the total discomfort of the government, this time around, it looks media is not buying the government story (Remember the zero-loss 2G Spectrum story of Kapil Sibal which was initially swallowed by a section of the media!).
What Vinod Rai has done is just to sharpen the tools of audit by infusing expertise into his team and by training and educating cadres down below making it possible to set priorities and ensure perfection bringing professionalism in the performance of audit function. If similar initiatives had come from heads of departments in government and CEOs of public sector and statutory organizations, the agony the present UPA II government is now going through would have been much less.
Vinod Rai’s approach to audit is consistent with the changes that have happened in the law and practice of accounting and audit and the reforms in the CAG’s office brought about by him and his predecessor, who understood the post-LPG (Liberalisation-Privatisation- Globalisation) scenario better have started paying dividend.
The present political leadership is the ‘who’s who’ of the rich and influential class which has its own constituency interests to protect. We are heavily dependent on government’s other arms like CAG, judiciary and regulators like RBI to come to rescue when extraneous compulsions force government departments and public sector organizations to misappropriate or divert public funds to the advantage of their masters or greedy corporates and individuals. Beyond fighting corruption and black money, ensuring ethical practices in managing nation’s resources and public funds should become a national priority.
M G Warrier, Mumbai


4 years ago

some more shocking info here


4 years ago

Greenpeace is one such social organizational working on this issue. #CoalScam

L&T Financial Services calls for changes in norms for NBFCs

L&T said it expects changes from the RBI, including bank finance being classified under priority sector lending and easy access to other fund raising instruments like external borrowings

Mumbai: Larsen and Toubro (L&T) Financial Services has called for changes in requirements governing the non-bank lending segment and asked the sector regulator not to give step-motherly treatment to it, reports PTI.


"I think they (non banking financial companies-NBFCs) have played an extremely important role. However, the regulator perhaps considers them as a step-child. I think there are very serious issues when it comes to regulation," L&T Financial Services Chairman and Managing Director YM Deosthalee said at an event over the weekend.


He gave out a list of changes which the sector expects from the Reserve Bank of India (RBI), including bank finance being classified under priority sector lending and easy access to other fund raising instruments like external borrowings.


"I don't know why achieving PSL targets through NBFCs is a problem? Ultimately reach is important," he said, stressing that the NBFCs are playing an important role in distribution.


There are many issues which a NBFC faces on the liability side, he said and asked for steps like liberalising the external commercial borrowings (ECB) window in order to reduce NBFCs' dependence on bank lending.


The ex-chief financial officer of engineering and construction major L&T also sought to dispel notions on safety of the sector, stating, "The NBFC model is safer because they have larger capital adequacy. Their net worth is higher. From depositor perspective, they are safe."


"Regulation should be pro-development of a sector, rather than killing the sector," he said.


With over 12,000 NBFCs, the role of the regulator does tend to get difficult, but Deosthalee stressed on the need to look at well established large NBFCs in a different way, without going into specifics.


PSBs may seek more time to comply with bulk deposit norms

Some of the public sector banks are likely to approach the Finance Ministry to seek more time for complying with the norm to reduce bulk deposits to 15% of the total deposits

Mumbai: Some public sector banks (PSBs) are likely to approach the Finance Ministry to seek more time for compliance of the directive regarding reduction of bulk deposit, reports PTI.


"Some of the public sector banks are likely to approach the Finance Ministry to seek more time for complying with the norm to reduce bulk deposits to 15% of the total deposits," a banking source said.


The Finance Ministry has directed public sector banks to reduce their bulk deposits to 15% of the total deposits in order to improve profitability and sound asset-liability management, by end of this fiscal.


Public sector banks like Punjab and Sind Bank, Corporation Bank and Indian Overseas Bank among others have bulk deposits of more than 15% as of now.


"Banks with higher bulk deposit can not reduce it to 15% during this period when deposit mobilisation is slow in the system," the source added.


According to RBI data, while credit growth had grown 17.2% as of 27th July, deposit growth was 13.8%.


The deposit growth was lower than the RBI's projection of 16% for the current financial year.


To mobilise deposits, many public sector banks, including Bank of Baroda and Central Bank of India, have increased deposit rates on long-term tenors.


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