The recent furore over CAG report
on mishandling of coal block allocation and then on its estimate of loss to exchequer at around 1.86 lakh crore has
created ripples across the nation. Let us examine this issue together with the
2G issue and try to draw some parallels and differences across the two.
The minister for telecom decided
to allocate spectrum on first come first serve basis instead of resorting to
auctioning the spectrum which could have helped in actual price discovery. It
has been argued that based on 3G auction estimates, the 2G auction might have
netted around 24,000 crore or so for the Government. But by resorting to first come first serve
basis; minister enabled a set of players to get access to spectrum, many of
whom did not even set-up the network as stipulated by the overall licensing
conditions. However, with only limited consortiums who actually qualify for the
tedious and expensive spectrum auction mostly players with some serious
standing were a part of this allocation. Although a couple of firms that did
not put up network were sitting on spectrum, they were not allowed to sell off
their spectrum to other players given the regulations already put in place by
TRAI. Thus the arbitrage based on entry and exit without spending money was not
possible. As for justification on the part of government, our PM Dr. Singh has
himself expressed in an interview that this was like a subsidy to the telecom
sector that enabled low call rates and rapid expansion of telephony in the
country. The argument cannot be completely falsified and definitely has an element
of logic to it and undoubtedly low call rates did play an important role in the
expansion of mobile telephony in the country.
Now let us look at the coal block
allocation. Unlike minimum stringent requirements set forth by TRAI for
licensing and spectrum allocation (such as strong technological capability for
putting up a network, previous experience of running a network either self or
through a partner), coal ministry was a lot lax. Almost anyone could have
applied for a license and could acquire one if one was on good terms with the
state government or the central government as allocation was completely based
on judgment of the presiding ministries. As a result groups with no previous
experience in power projects or coal handling applied, were allocated blocks
and then they were quick to sell the blocks to others and exit from the scene
without spending much in the process.
Although a lot better entire
telecom ministry was put to task for the 2G issue, however, we see nothing of
the sort happening for coal ministry???? The most amusing argument from
government was that CAG has miscalculated the extent of loss. Even if that is
the case and we give or take a few thousand crores, it is still upwards of 1
lakh crore, which is unprecedented in the history of this country!!!!!!!!!!!
I do hope the PAC takes this
seriously and guilty are taken to task, but more importantly there is a need to
address ad-hocism in the policy making space in this country, it is high time
we adopt a consistent policy line and toe it without compromise.
