Another editorial in ET explaining that the CAG is not suppose to critique the policy of the govt. but the IMPLEMENTATION of the policy and audit any deviations from the policy itself. By comparing values from a hypothetical auction policy and an actual policy made by GoI on something, you are comparing apples and oranges.
CAG has no remit over policy, but the coal sector needs reforms - The Economic Times
Adraft report of the Comptroller and Auditor General of India (CAG) saying government had undersold coal blocks during 2004-09 has sparked off a huge controversy; despite the national auditor denying the report. The final report is still awaited; hence, it might be premature to pass judgment.
But the larger point, as in the case of the CAG report on telecom, is that it highlights policy flaws. It questions the government's policy in allocating coal blocks, not its implementation. However, policy formulation is the prerogative of the government, not the CAG's.
The latter's role is to examine if there has been any deviation that has resulted in loss to the exchequer once policy has been formulated, not to critique the policy. Instead, as in the telecom report, where the CAG projected a notional loss of Rs 1,76,000 crore to the exchequer by not auctioning spectrum, the draft report alleges that by not auctioning mines, the government has lost revenue.
The hypothetical loss is based on a calculation of what an auction might have fetched based on estimated profits from mines allotted to private players. The final report, we hope, will take a different tack. It should, and must, pick holes, if any, in policy implementation , not in the policy per se. That said, wide-ranging reforms are needed in the allocation of a scarce natural resource like coal for a powerstarved country.
One, the government should encourage competitive bidding for coal and lignite blocks to enhance supplies. Two, policy of allotting coal mines only for captive use must go as it acts as a disincentive for companies to mine coal in a sustainable way or invest in modern technology.
Companies with their own mines should have the freedom to trade in coal and also use it for their own needs. Allowing independent mining companies to trade in coal, as recommended by the Ashok Chawla committee, also makes sense as they will bring efficient technology and economies of scale to their operations. However, for all this, the government should scrap the Coal Nationalisation Act, 1973. The government needs to muster requisite political courage.
CAG has no remit over policy, but the coal sector needs reforms - The Economic Times
Adraft report of the Comptroller and Auditor General of India (CAG) saying government had undersold coal blocks during 2004-09 has sparked off a huge controversy; despite the national auditor denying the report. The final report is still awaited; hence, it might be premature to pass judgment.
But the larger point, as in the case of the CAG report on telecom, is that it highlights policy flaws. It questions the government's policy in allocating coal blocks, not its implementation. However, policy formulation is the prerogative of the government, not the CAG's.
The latter's role is to examine if there has been any deviation that has resulted in loss to the exchequer once policy has been formulated, not to critique the policy. Instead, as in the telecom report, where the CAG projected a notional loss of Rs 1,76,000 crore to the exchequer by not auctioning spectrum, the draft report alleges that by not auctioning mines, the government has lost revenue.
The hypothetical loss is based on a calculation of what an auction might have fetched based on estimated profits from mines allotted to private players. The final report, we hope, will take a different tack. It should, and must, pick holes, if any, in policy implementation , not in the policy per se. That said, wide-ranging reforms are needed in the allocation of a scarce natural resource like coal for a powerstarved country.
One, the government should encourage competitive bidding for coal and lignite blocks to enhance supplies. Two, policy of allotting coal mines only for captive use must go as it acts as a disincentive for companies to mine coal in a sustainable way or invest in modern technology.
Companies with their own mines should have the freedom to trade in coal and also use it for their own needs. Allowing independent mining companies to trade in coal, as recommended by the Ashok Chawla committee, also makes sense as they will bring efficient technology and economies of scale to their operations. However, for all this, the government should scrap the Coal Nationalisation Act, 1973. The government needs to muster requisite political courage.
