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| Edited By: |Source: DNA |Updated: Mar 11, 2015, 02:52 PM IST
By promulgating an ordinance to auction coal mines, the government has taken the much-needed first step to set right the adverse implications of a Supreme Court judgment cancelling all coal block allocations since 1993. Fighting corruption is no doubt important. But in that process bringing the economy to its knees, is an altogether different matter. While prescribing exemplary punishment for gross irregularities in coal allocations, the Supreme Court judgment had not taken into account the multiple consequences that follow from its judgment.
First, the cancellation of allocations would have brought all mining in the blocks in question to a halt, in six months. This would have meant job losses for the miners and other workers employed in these mines. Coal mining generates even more indirect employment. Thus, Supreme Court was punishing the weakest sections for no fault of theirs. The court should have given at least some thought to this serious aspect that stemmed from the cancellation verdict.
Hopefully, the government order would now restart the mines after six months and employment will be restored. This is no small achievement. The ordinance empowering the takeover of coal mines and their re-auction by the Union government restores the confidence of public sector banks which had lent money to numerous units in mining, power utilities and coal based industries like steel and cement. Rough and ready estimates putting the loan amount at an exorbitant Rs5,00,000 crore, had exposed the banks to enormous risks. The banks had lent the money against coal licence and coal linkages, which in effect means lending against the imprimatur of the government of India. If the government of India’s imprimatur is no longer sacrosanct, then what are we left with?
Had these loans of the largest lending public sector banks turned bad, it would have decidedly hurt the interests of ordinary people. A study of bank deposit ownership would reveal that these funds have been provided by, say, the common readers of this newspaper, if not by the even more economically weaker sections. After all, the super-rich, with other options of savings at their disposal, do not maintain fixed deposits with the public sector banks.
The ordinance would at least secure the banks’ credit to these numerous economic agents who have been doing legitimate business in coal, power or cement. The obligation to pay back loans would be transferred to the successful bidders. That is why, the nationalised banking industry, including the largest public sector bank, has been extra quick in welcoming the move.
Last, the decision to re-start the coal sector by launching the prospectively inactivated mines would help Indian industry and the economy. Faced with coal shortage, India, ironically having fourth-largest coal reserves in the world, was importing around $20 billion worth of coal every year. Coal imports accounted for one-fourth of the uncovered current account deficit.
When close to 80% of our electricity is generated from coal, its shortage deals a body blow to economic activity. Few new coal mines have been opened in the last several years. How can coal production keep up with the development of the Indian economy unless new mines come up? Auction of these coal blocks should now catalyse renewed activity in the coal sector. And the government must commit itself to not importing coal on such a massive scale, as it recently did. This will call for privatising the coal industry along the lines of telecommunications or power generation. But for now, the government should gear up to ensure a flawless process of auction.
