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LATEST NEWS UPDATES | CAG reports, instead of shedding light, increasingly spread confusion

CAG reports, instead of shedding light, increasingly spread confusion

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published Published on Aug 21, 2012   modified Modified on Aug 21, 2012
-The Economic Times

The three reports of the Comptroller and Auditor General (CAG) on coal, ultra-mega power projects and airports, playing out in the public discourse as major indictments of corruption and of the government, serve only to spread confusion and convert infrastructure building into a political battleground. The reports are ill-informed by commercial logic, sometimes deficient in factual detail.

However, since they bear the authority of a constitutional body, the reports have credibility in public perception and will be used by the Opposition toaccuse the government of corruption. The collateral damage will be civil servants in charge of clearing major infrastructure projects avoiding taking any decisions. This trend must stop. The CAG must be held to account for the veracity of its reports and conclusions.

Take the report on coal. It is true that undue benefit accrues to companies from allocation of captive mines. But it is not true that this can be undone, as the report suggests, by allocation of the mining blocks via auction. Howsoever allocated, a captive block vests undue benefit on the allottee.

The only sensible reform in coal is to scrap the Coal Mines (Nationalisation) Act of 1973 and open up mining to professional miners, from whom all coal users should buy their requirement. Auctioning coal blocks as captive mines for different end-users with different markets - steel and cement are not regulated while power is, and the regulator does not allow fuel costs beyond its own arbitrary limit - is fraught with problems of logic and, possibly, of law.

In the case of ultra-mega power projects, the CAG faults the government for a post-bidding concession to Reliance Power in regard to use of surplus coal.

The Delhi High Court had dismissed a Tata Power appeal on the subject, citing a government letter of November 20, 2006, to all bidders which made it clear that the central government could permit diversion of surplus coal to other uses. The CAG report chooses to not take notice of this fact for reasons that deserve to be probed.

The only redeeming feature of either report is the urgency it lends to scrapping state monopoly in coal and opening it up to professional mining companies.

The Economic Times, 20 August, 2012, http://economictimes.indiatimes.com/opinion/editorial/cag-reports-instead-of-shedding-light-increasingly-spread-confusion/articleshow/15564650.cms?


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