February 18, 2020
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Tunnel Vision, Darkly

The irregularity of allocation and the inability to exploit the mines don't seem like chance outcomes or mere procedural delays.

Tunnel Vision, Darkly
Tunnel Vision, Darkly

The reversal in policy terms of the Coal Nationalisation Act of 1973 and the allocation of coal to private players is at the heart of the current impasse in Parliament. It will, however, not be analysed at that level if the issue is turned into a poll plank as the country’s two main national parties take their slugfest to the campaign trail. In Parliament—as indeed in the ‘official’ press conferences that purport to make up for the absence of parliamentary deliberation—the squabbling has revolved around two things: the CAG’s observation that coal deposits were distributed in an irregular, arbitrary manner, and the Rs 1.85 lakh crore estimated value of these ‘undue benefits’. I argue for shifting the terms of this debate. Even at the risk of tilting the argument somewhat in favour of the government’s defence, I concede that the policy of allocation rather than bidding has some basis in reason—as also in law. Regardless of this, there can be no denying that its opaque and wilful implementation, lack of superintendence, and ‘zero’ outcome have diminished the image of India’s tallest reform leader. Such shortfalls also lead one to question why the prime minister should be left out of the net of accountability—even when policy intents go horribly off-track.

The policy choice favouring non-competitive allocation is not completely faulty, and for good reasons. For one, we would not have had a pure, end-to-end, market-based competitive process in any case. There is government intervention in fixing the price of power—the ‘end use’ to which the mined coal would be put. Also, there exists a high local variability that would have rendered the ‘average pricing’ method adopted by the CAG unworkable in practice. The most significant of these are the local difficulties in land acquisition owing to differences in ownership and possession, multiple pattas for any given tract and entrenched Naxal control over large parts of tribal/forest land. The availability of road and/or rail networks and the capacity to harness local labour also vary greatly. Viewed in this light, it wasn’t unreasonable for the PM to have relied on the judgement of the “many participants in the screening committee acting collectively”.

As to the legal basis, the landmark 1982 judgement of the Supreme Court in the Sanjeev Coke Manufacturing case upheld these matters to be essentially state policy, ‘inherently inappropriate’ for judicial review. Coal was viewed as a ‘material resource of the community’, capable of producing ‘wealth for the community’, and where competing social and economic factors have to be weighed, ‘legislative wisdom’ must prevail. The PM reaffirmed this vision when he posited higher energy production and GDP growth rates as the justification for his policy. Measured against these ideals, however, the irregularity of allocation and the inability to exploit the mines cease to seem like chance outcomes or mere procedural delays.

Firstly, the government did nothing about the very foreseeable procedural bottlenecks—in particular, the forest and environmental clearances. Though some of the hold-ups can be attributed to state governments, pre-mining environmental clearances or forest clearances could have really been facilitated by the Centre in a single window clearance, alongside allocations, or by simply expanding the ‘collective wisdom’ of the committee by including some more experts on these matters. Mending policy tangents—instead of just ‘rolling back nationalisation’ (a la Maggie Thatcher)—would have been the act of a visionary leader. Imagine the contingent nature of these allocations—if the land above the mines were tribal-owned, the clearance of the concerned DC would still be required even though allocations were made under a ministry led by the PM himself!

Second, why did the policy stop short of conceiving a modality for supervision following the allocations? Surely, complaints on irregularities (like Hansraj Ahir and Prakash Javadekar’s, which led to CBI investigations) couldn’t have been envisaged as the first stop for catching policy offenders. Simple instrumentalities, like a model for long-term revenue-sharing between the government and private players, could have achieved this. And not just allocations, even the exploitation should have been targeted. A participatory, but more importantly, a supervised process.

Third, while the nationalisation of India’s coal mines in 1973 represented an act of ‘command’ politics under Indira Gandhi, and was a precursor to the build-up of authoritarian state power culminating in the Emergency in 1975, the current approach does nothing to reverse the ills of nationalisation. On the ground, mafia stranglehold on transportation, casual labour, and now a large body of unemployed youth continues. Since the government hasn’t paid up many of its old dues to the community (for mines acquired earlier), the trust gap is wide. And in the absence of a land acquisition policy, the poor people who live on the ground above the mines hold on to it as their only means of livelihood.

I had hoped that a Manmohan Singh government would add to the country’s wealth; what we got instead can be best characterised as policy doodling, while the drain of wealth continues unabated in India’s flaming coal fields.

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