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COALGATE SCAM

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Coalgate
Is a Political scandal concerning the Indian Governments allocation of Coal deposits to PSEs or Private Firms. As per the Draft report issued in March 2012, the Comptroller and Auditor General of India (CAG) i. It accuses the Government of India for allocating coal blocks in an inefficient manner. ii. Government had authority to allocate coal in competitive bidding. iii. Public sector enterprise and Private firms paid less. iv. The CAG Final Report tabled in Parliament put the figure at Rs 185,591 Cr (US$33.59 billion) BJP lodged a complain resulting in CBI probe into whether allocation of coal blocks in fact influenced by corruption.

Influenced by Corruption?
The initial report suggested that coal blocks could be allotted for efficiently, at no point did it suggest that corruption was involved. In response to a complaint by the BJP, the Central Vigilance Commission (CVC) directed the CBI to investigate the matter. The CBI named dozen of firms in a FIR.

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Allegations
Against S Jagathrakshakan i. Minister of State for Information and Broadcasting in the UPA government. ii. Part of a company named JR Power Gen Pvt Ltd which was awarded a coal block in Orissa in 2007. iii. The same company which formed a joint venture with a public sector company, Puducherry Industrial Promotion Development and Investment Corporation (PIPDIC), on January 17, 2007 five days after, PIPDIC was allotted a coal block. iv. JR Power had no expertise in thermal power, iron and steel, or cement, the key sectors for consumption of coal. v. In 2010, JR Power sold 51% stake to KSK Energy Ventures, an established player with interests in the energy sector. In this way, the rights for the use of the coal block ultimately passed on to KSK.

Similar allegations were made against i. Subodh Kant Sahai : Tourism Minister in the UPA government. ii. Vijay Darda and Rajendra Darda : Vijay Darda, a Congress MP and his brother Rajendra Darda, the education minister of Maharashtra. iii. Premchand Gupta : Who is the UPA partner Rashtriya Janata Dal's leader.

Manmohan Singh's Rebuttal in Parliament


Typically once a CAG Report has been tabled (submitted to Parliament) it is received by the Public Accounts Committee (PAC). The PAC then calls in the relevant minister to discuss the report, and the PAC prepares its own report, which is then discussed in Parliament as a whole. In an unusual step, on 27 August 2012, the Prime Minister bypassed this process and made a statement to Parliament directly, addressing the findings of the Final CAG Report. Prime Ministers argument makes 3 main points: i. From a policy perspective, he agrees with CAG that all parties consented to a move from allocation by screening committee to competitive bidding should begin. ii. From a legal perspective, he disputes the CAG's understanding of the law, and says, indeed, that such a conclusion could only have been arrived at by a selective reading of the evidence. iii. From a practical perspective, he notes that even were the legal path clear, it was not simply possible to introduce the competitive bidding process by fiat. There were multiple parties whose consensus was required in the transition to competitive bidding with varied, and sometimes divergent interests.

The major coal and lignite bearing states like West Bengal, Chhattisgarh, Jharkhand, Orissa and Rajasthan that were ruled by opposition parties, were strongly opposed to a switch over to the process of competitive bidding as they felt that it would increase the cost of coal, adversely impact value addition and development of industries in their areas and would dilute their prerogative in the selection of lessees.

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References : http://en.wikipedia.org/

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