Govt lost Rs 10.7 lakh crore by not auctioning coal blocks: CAG

[Yusuf]

Sire really? I mean WTH. What was the price of the charges on 2G when they were first released in India? Only after several competitiors like MTS,Uninor a VIdeocon and others came did the prices come down.

So wait for three more years and 3G prices will fall.

So not auctioning it has nothing to do with the benefit the customers but more to do with the money these corporates and politicos make.

I have been paying the same 1ps per second since its launch.

 

[Mad Indian]

I have been paying the same 1ps per second since its launch.

AFAIK, when the network was first introduced in india, the call rates were 5Rs. per min. they even charged the incoming calls at some 1Rs. per min. But now, the call rates are just 1 paise per 2 seconds. What does that tell you?

 

[Yusuf]

AFAIK, when the network was first introduced in india, the call rates were 5Rs. per min. they even charged the incoming calls at some 1Rs. per min. But now, the call rates are just 1 paise per 2 seconds. What does that tell you?

Check when 2G licenses were issued.
The call rates that you are talking about are 10 years old.

 

[Mad Indian]

Check when 2G licenses were issued.
The call rates that you are talking about are 10 years old.

Oops, must have confused 1G with 2G my bad

 

[Yusuf]

Oops, must have confused 1G with 2G my bad

Keep emotions in check

 

[sehwag1830]

By the way things are going, by the time UPA-2 government's time is over, nothing will be left of Indian resources to auction!

After the completion of term, all UPA-2 members (Cong and allies) will be boarding flights to go to different foreign countries to enjoy their loot in leisure!

I doubt even God can save India from UPA-2!

 

[Mad Indian]

By the way things are going, by the time UPA-2 government's time is over, nothing will be left of Indian resources to auction!

After the completion of term, all UPA-2 members (Cong and allies) will be boarding flights to go to different foreign countries to enjoy their loot in leisure!

I doubt even God can save India from UPA-2!

How dare you attack UPA you communal bigot. Whatever UPA does is for our benifit, from 2G scam to mining scams. Also the CWG. All for the benefit of the consumers:bounce:

 

[Yusuf]

I am calling bullshit on you man. Adani group bid for coal mines in Australia and Indonesia (that they bought by auction only), bought several ships to transport that coal to their own private port in India (near Gujju), created own railway lines from their port to their own private power plant, and generated electricity at the power plant is sold at market prices at Gujarat and Maharashtra. This is a fact.

Auction bites into the PROFITS of the multinational corporations. Who oppose auction.

Auctions don't affect the daily consumer electricity prices. That's the bottomline.

Secondly, I don't know off hand the electricity prices for China and India, but China's electricity prices are a politically sensitive topic there. Chinese govt has a upper cap on how much corporations can charge for electricity. That is lower than the market rate. Therefore, they have an a lot of power outages for load shedding purposes.

Thirdly, think about how Gujarat is handling the electricity issue. No power cuts, but peak electricity charges extra. That's all.

I was checking up on the Adani coal mines.

Says nothing about winning in auction.

http://www.ft.com/cms/s/0/a02bb018-7573-11e0-8492-00144feabdc0.html#axzz1prKxv6GY

http://leeuniversal.blogspot.in/2012/02/adani-to-spend-heavily-on-australian.html?m=1

 

[A chauhan]

A relevant cross post :- http://defenceforumindia.com/forum/...ress-turned-india-into-banana-republic-6.html

 

[Mad Indian]

'Coalgate': NTPC denies any windfall profit

NEW DELHI: State-run NTPC on Thursday denied it has reaped any windfall profit from the coal mines allocated during 2004-09, amid uproar in Parliament over a CAG report pegging Rs 10.67 lakh loss to the exchequer on account of coal allocation during that period.

"There is no way by which NTPC can make windfall profit out of the coal produced from these mines as under the CERC regulated regime the cost of coal from these mines will be pass-through in the power tariff," NTPC chairman and managing director Arup Roy Choudhury said.

"Therefore, it will only help to reduce the ultimate cost of power at the end-user," he noted, adding, "We have not seen the details of the CAG report, therefore, we are not able to give any comment on this matter".

'Coalgate': NTPC denies any windfall profit - The Times of India

 

[ant80]

I was checking up on the Adani coal mines.

Says nothing about winning in auction.

Adani buys Australian coal port for $1.98bn - FT.com

Lee Universal Enterprises: Adani to spend heavily on Australian coal assets

Read that in a NYT article 6-8 months ago. Info about Chinese rates are from a NYT article as well. Too lazy to go back and look. Besides, I've used up my 20 NYT articles per month as well for this month.

In any case, I maintain that auctioning cuts into the profits of the MNC's that vie for them. However, the price is not affected by it. The government loses income, which cuts into the fiscal deficit much deeper.

I mentioned the peak electricity charges in Gujrat. That is the way to deal with it, in a power hungry nation like ourselves.

 

[Mad Indian]

'Coalgate': NTPC denies any windfall profit



'Coalgate': NTPC denies any windfall profit - The Times of India

After this these idoits say, the coal blocks will be auctioned. WTF. then why was it not auctioned in the first place?

NEW DELHI:

Govt: Coal block auction in 4 months

The government is almost ready to auction coal blocks through competitive bidding and the guidelines for this are likely in 2-4 months, coal minister Sriprakash Jaiswal said on Thursday.

"We will start the process of coal block auction through competitive bidding soon after finalizing the guidelines for auction. The guidelines are almost ready and are expected in two to four months," Jaiswal said.

The remarks come amid furore in Parliament over an initial audit report estimating Rs 10.67 lakh crore loss to the exchequer on account of allotment of blocks to firms during 2004 to 2009 without auction. Jaiswal said views were obtained from different ministries on the draft guidelines and once the process starts it will bring transparency in the allotment.

In a bid to expedite competitive bidding, the government has already begun the process of hiring a consultant to come out with a methodology of fixing the minimum price for blocks on offer.

Coal India subsidiary CMPDI has been assigned the task for hiring a consultant to come out with a methodology of fixing the reserve price of blocks and finalizing the bid document, and assist in bidding process.Sources say that the government is ready with over 50 blocks.

Govt: Coal block auction in 4 months - The Times of India

Can some explain this to me please?

 

[sob]

The main problem is that whether the Companies with the captive coal mines do not mine beyond their requirement.The Cabinet has taken cognizance oh this in December and has formulated policy for this.

Coal Ministry to bar captive miners from producing beyond approved level - Economic Times

However in the past some private coal companies have mined beyond their limits and have caused severe ecological damage.

Tehelka - India's Independent Weekly News Magazine

 

[Singh]

11 lakh crore

 

[sob]

2 G scam from 1.76 Lakh Crores has now come down to 40,000 Crores as stated in the budget.

So this scam is a measly Rs. 2-3 lakh crore..........................

 

[ejazr]

Well the CAG official who was actually running the audit had pegged it at 3000 crores. The SC judgment and the CBI pegged the loss at Rs 30,984.55 crores. But ofcourse the the figure "1.76 lakh crore" is here to stay now. Just like this figure of 11 lakh crore will be bandied about even though the CAG them self tried to rectify and reject the news report.

The main question that most people will not understand is you can take a policy decision and compare it with another policy decision and declare that difference in the revenue as a loss. For example every year since the GFC, we have a section called revenue foregone that amounts to 5 lakh crore ANNUALLY as part of a stimulus package to corporates in lesser taxes and duties. In the last 4 years it would be almost 20 lakh crore of loss to the exchequer. Will the CAG now after auditing this declare it to be an even more massive 20 lakh crore scam? After all , it is a policy decision by the govt. where by this revenue was forgone, This is direct hard cash that the govt. is loosing rather than the presumptive losses based on 3G auctions for 2G for example.
Quite possible they might and not even realize that this stimulus was part of the reason why corporates in India could continue running their operations, give jobs to people and keep India growing at 7-8%.

Similarly, for example the Gujarat govt. has given large amounts of land in SEZs to private companies for nominal amounts and below market value. Now that was a policy decision and not a scam because it allowed industry to come in and start making a profit and hire workers quickly. But according to CAG logic the land should have been auctioned to the highest bidder and what was done here is a scam. Same thing we see in other state govt. like AP, TN e.t.c.
And this is not just speculation some overzealous CVC officer actually made the same charge that there is a 2lakh crore land scam in Kandhla
Gujarat: Land scam worth Rs 2 lakh crore exposed at Kandla Port : West News - India Today

Bhalla actually had a good article on the flights of fancy we see the Indian media take on these issues.

Where donkeys fly - Indian Express

First the retrospective amendment in the Budget; now something more bizarre — the loot in the CAG coal report

Incredible India. Unique India. But in a country like India. India the Incomparable. In the name of the poor India. Argumentative India. All of the above; now add economically illiterate India, EIL, pronounced ill.

What's the proof? The latest illiteracy from the prestigious (take a bow), independent (and non-Congress?), Comptroller Auditor General (CAG) report on national coal assets being sold too cheaply to top Indian industrialists.

The CAG gained notoriety in 2010 by accusing this very same government of losing Rs 1.76 lakh crore by not holding an auction for 2G licences. There was considerable truth in the assertion that corruption was involved. Most independent non-CAG estimates centred on a figure about one-fifth of the amount. One lakh crore is a trillion; one fifth of 1.76 trillion would be 0.35 trillion or 350 billion, or Rs 35,000 crore. Still a lot of money but nowhere close to the absurd figure (Rs 1,76,000 crore) given by the CAG. But the number was offered in economically illiterate India, so it flew into the hearts and minds of many an EIL Indian, especially of the political opposition and the shrieking journalist variety. Even the Supreme Court got involved in this travesty by denying bail to the accused for months on end. Talk about the influence of gross miscalculations.

The CAG learnt that in India donkeys indeed do fly, so it has come out with an even more outlandish assertion. In a leaked report, it has pronounced that industrialists in India were favoured to the tune of Rs 10.7 trillion in the years 2004-2009, just coincidentally chosen to be the years during which the Congress has been ruling, and for part of which time the prime minister, Dr Manmohan Singh, was also the coal minister. Incidentally, more than 60 per cent of these favoured industrialists are government-owned corporations! But to proceed with the EIL CAG report. It does appear to be somewhat tendentious, and extremely "one-sided". And there is enough in the leaked report to damn the CAG as a phenomenally economically illiterate institution. But in a country like India that is not likely to be a disadvantage — indeed, as soon as the political opposition comes to power, Bharat Ratnas are likely to be conferred on the writers of the report.

What are some of the economic facts pertaining to the "coal looting of the country" during 2004-2009? Several facts are documented in the table. You can object to so many numbers — the shriekers will say there was loot and drown you out. In case you are a shrieker, stop right here — your time is better spent shouting without knowing. Others, read about the illiteracy whose name is CAG.

All data are presented as averages for the six years 2004-2009. GDP averaged Rs 45 trillion a year. The popular CAG coal scam figure is of a loot of Rs 10.7 trillion. But this figure is in 2011 prices — in average 2004-2009 prices, the alleged loot is Rs 6.3 trillion or Rs 1.05 trillion a year. This is not the revenue from production — it is the excess profit, or windfall, that has possibly accrued to the power industrialists (all puns intended).

In 2004-2009, all-India corporate taxes averaged Rs 1.2 trillion a year. So the hypothetical coal loot was almost equal to all corporate taxes gathered in India? Plausible, but not likely.

But this is for the economy as a whole — the CAG loot windfall calculation is with respect to only one sector of the economy. Coal production a year averaged 472 million tonnes, coal prices Rs 720 a metric tonne, for average coal revenue of Rs 0.34 trillion a year. All coal revenue, therefore, is a third of the CAG excess profit calculation (Rs 0.34 trillion versus Rs 1.05 trillion). Furthermore, the coal sector production value averaged less than 0.8 per cent of GDP and less than 7 per cent of "corporate" production. But the windfall loot revenue is near equal to all corporate taxes. So it seems that all of India's deficit problems can be solved by just taxing the coal sector — no corruption and even less deficit. Maybe the CAG bosses should become governors of RBI, failing which surely minister of finance.

Before deciding on these appointments, let us proceed a little bit further. World coal production averaged 6.4 billion tonnes during 2004-2009. International coal prices averaged $74/tonne, yielding a global per year revenue of Rs 21.1 trillion. But at Indian administered prices, global coal revenue was only Rs 4.6 trillion. Assuming a hefty profit margin of 30 per cent, this yields average profit per year equal to Rs 1.4 trillion. So the CAG is suggesting that global coal production, which is 14 times the level of Indian production, yields the same windfall as the profit from licences given to Indian corporations (again public and private).

One final point. The states that have the most coal in India are Jharkhand, Orissa, Chhattisgarh, West Bengal, Andhra Pradesh, Madhya Pradesh and Maharashtra. Andhra Pradesh and Maharashtra, two Congress-ruled states, together account for only about 10 per cent of the geological reserves. The administration of non-auction licences involves the assent and cooperation of the respective state governments. So opposition politicians, be careful before you join in the chorus on looting and the rest of the EIL nonsense. Most of the fictitious loot, if not all of it, is in your corruption coffers!

The writer is chairman of Oxus Investments, an emerging market advisory firm

 

[Mad Indian]

90% issues in CAG's initial reports are dropped: Pranab on coal block allocation - The Times of India

90% issues in CAG's initial reports are dropped: Pranab on coal block allocation

NEW DELHI: The government on Saturday downplayed the draft CAG report on coal block allocations with finance minister Pranab Mukerjee stating that 90% of the issues raised by the auditor at the initial stage are dropped.

"After obtaining comments of the ministries, 90 per cent of the issues raised by the CAG (Comptroller and Auditor General of India) are dropped. That is the normal practice and it is going on for the last 150 years," the finance minister said at a FICCI meeting here.

He said the CAG is a constitutional body created since the time of British rule and its job is to find faults with the government.

"I have repeatedly stated (its job is) to find out fault and not to praise the government and certify that government has done a good job. Why ..unneccessary... sensationalisation takes place," Mukherjee asked and added, "what is new if the irregularities are found out in the CAG report and those are to be addressed by Parliament."

Based on the CAG draft report, he said, some newspapers have stated that there is a Rs 10 lakh crore shortfall in the exchequer because of the coal allocation.

The issue has rocked Parliament after which the Prime Minister Office released a letter received from the CAG stating that report in the newspaper was misleading. Mukherjee said that it is up to Parliament to take a call on the CAG reports.

"The fact of the matter is that it is not a report by itself. CAG is yet to finalise its report", he added. The report, he said, will go to Public Accounts Committee (PAC), which will send its views to Parliament. CAG, he said, "himself explained in its letter to the Prime Minister that no further clarifications are required and needed".

Does it mean that Pranab is accepting the loss or scam to be at 10% of the CAG figures at 1.07 lakh crore per annum?

 

[thakur_ritesh]

I have gone through a part of the CAG report linked up by ToI. On the question, can the UPA be blamed? I am not convinced. For the record, CAG has made no allegation of any corruption.

From '73-'06 coal mining was largely confined to CIL, SCCL, iron/steel producers, power producers, cement manufacturers, with a few private players allowed in during the Congress/3rd front/NDA rule (post '91)but bidding was never introduced back then by any.

From '06-'08 quite a few dramatic changes were brought to the sector, in '06 100% FDI was allowed and in '08 the bidding process was introduced in the sector. Factually, UPA I needs to be credited to bring about the sea change on 2 very important aspects in the sector. That said, the question does arise on why was the bidding process not introduced with the entry of foreign players.

Now there comes a question, should the CAG have calculated the figure for only '04-'09 timeline, which brings the UPA I in the spotlight or should they have done it from '73-'08, I would imagine it should have been the latter to gauge the actual loss to the exchequer as a result of nationalization, to have sustained a highly uncompetitive sector under successive governments for 35 long years, limited private participation, no foreign investment allowed and no bidding allowed in the sector.

And if the latter timeline of '73-'08 is to be taken, the projected figure of Rs. 10 lack crore would pale in front of the actual opportunity cost lost.

On a similar pretext, a lot of other losses can also be calculated where the sectors remain uncompetitive, nationalized, minimum or no private participation, no foreign investment, and so on and so forth. And the over all loss can be projected in trillions of dollars to the economy if one starts calculating from '47 onwards, so there does remain a sense of vagueness in this whole episode.

 

[Yusuf]

I have gone through a part of the CAG report linked up by ToI. On the question, can the UPA be blamed? I am not convinced. For the record, CAG has made no allegation of any corruption.

From '73-'06 coal mining was largely confined to CIL, SCCL, iron/steel producers, power producers, cement manufacturers, with a few private players allowed in during the Congress/3rd front/NDA rule (post '91)but bidding was never introduced back then by any.

From '06-'08 quite a few dramatic changes were brought to the sector, in '06 100% FDI was allowed and in '08 the bidding process was introduced in the sector. Factually, UPA I needs to be credited to bring about the sea change on 2 very important aspects in the sector. That said, the question does arise on why was the bidding process not introduced with the entry of foreign players.

Now there comes a question, should the CAG have calculated the figure for only '04-'09 timeline, which brings the UPA I in the spotlight or should they have done it from '73-'08, I would imagine it should have been the latter to gauge the actual loss to the exchequer as a result of nationalization, to have sustained a highly uncompetitive sector under successive governments for 35 long years, limited private participation, no foreign investment allowed and no bidding allowed in the sector.

And if the latter timeline of '73-'08 is to be taken, the projected figure of Rs. 10 lack crore would pale in front of the actual opportunity cost lost.

On a similar pretext, a lot of other losses can also be calculated where the sectors remain uncompetitive, nationalized, minimum or no private participation, no foreign investment, and so on and so forth. And the over all loss can be projected in trillions of dollars to the economy if one starts calculating from '47 onwards, so there does remain a sense of vagueness in this whole episode.

Exactly right. By similar logic, spectrum too should have from the very beginning should have been auctioned. People are converting all reports into scams.

Like I say, corruption and scam is when under existing guidelines any irregularities have taken place.

 

[Ray]

I believe that there is some dispute over this report.