How corruption in coal is closely linked to political funding
It was a roundtable on ‘campaign finance reforms in India‘, but it brought up a mathematical equation that showed how corruption in coal could ultimately be traced to political funding. Speaking at the Observer Research Foundation event in February, BJP MP Rajiv Pratap Rudy said: “In Goa (which was going to elections then), each candidate, whether from the Congress or the BJP (or other political parties), would be spending Rs 5-7 crore.” The official Election Commission ceiling is Rs 16 lakh.
At the roundtable, Congress MP Manish Tewari said there were reports of candidates spending Rs 18-20 crore each during the Punjab elections in January. “The vigilance of the Election Commission (on spending ceilings) is driving a lot of this money underground.” The average was Rs 3-5 crore per candidate, added Niranjan Sahoo, a senior fellow at the Foundation researching electoral funding.
An extrapolation of this across the political spectrum throws up some humungous numbers— and a gaping hole between revenues and expenses of political parties. In the 2009 general elections, the Congress contested 403 seats.
Rs 5 crore for each seat adds up to Rs 2,000 crore. India’s 5,000 assembly seats, says Sahoo, are even more keenly contested, and more money is spent here.
Even at Rs 5 crore per seat, that’s Rs 25,000 crore. Or, a total of Rs 27,000 crore.
Yet, for the five years to 2011-12, the Congress declared revenues of Rs 1,662 crore.
The BJP, the other national party, declared Rs 852 crore. Sahoo estimates parties are declaring no more than 10-20% of their incomes.
If so, where do parties and politicians get the remaining 80-90% from? According to Sahoo, increasingly, they are not extracting rent from programmes that are politically beneficial like NREGA and PDS.
Instead, he adds, they are moving to minerals and natural resources.
“This is a form of corruption the common man stays more or less oblivious to,” he says.
The scent of such corruption hovered over the allotment of 150 coal blocks to private players between 2005 and 2010 for captive use, and their subsequent commissioning, aspects of which are currently being probed by India’s apex investigating agency.
“Rent-seeking has been rampant,” says a former senior bureaucrat in the coal ministry, not wanting to be identified.
It wasn’t so always. When the coal industry began, it was distant from politics. But as it transited through its four distinct phases, that connection became progressively stronger, and culminated in the 2005-10 allotments.
PRE-NATIONALISATION (TILL 1973)
This is the period depicted in the first part of Anurag Kashyap’s two-part film Gangs of Wasseypur. Coal mines were controlled by local mafias and business families, some of whom were asked by the Centre to step in after the British left.
This arrangement had its problems, says a former official of Coal India Limited (CIL), not wanting to be named. “Miners were not selling to core users (namely, power, steel and cement), but to whoever could pay the most,” he says. “Some would shut down the mine whenever it was not profitable for them. On the whole, there was a problem matching coal supply with the government’s development plans and needs. Labour, too, was treated harshly.”
However, national politics accessed little money from mines, says Sahoo. “In some cases, like the Dhanbad coal mafia, the miners entered politics. But the reasons were mainly to protect their own local interests—by controlling the appointment of local bureaucrats, etc.”
“It was very local,” adds a Union cabinet minister who has headed the coal ministry previously and spoke on the condition of anonymity. “Some politicians, local leaders used to take money from these mafia. But you did not have national leaders going down there.”
This began to change after Indira Gandhi nationalised coal—coking coal in 1973 and non-coking coal in 1974-75—and brought everything under CIL and its subsidiaries. According to AK Singh, a former general manager of Western Coalfields, a CIL subsidiary, coal was nationalised for three main reasons: “To exploit coal more scientifically and increase production; to curb unethical practices; and to take better care of employees and develop nearby communities.”
For some time, says Singh, the plan worked well. Production gradually rose from 70 million tonnes (MT), and stood at 431 MT in 2010. However, with nationalisation, the presence of politicians also increased. Singh also traces this to the rise of coalition politics. Buying and selling of MPs picked up, because of which parties’ need for cash increased.
Ministers began treating the PSU, says the ex-CIL employee quoted earlier, as “no more than their private colony.” Posts of MD and chairman began to be sold. “This started in the late-nineties when two people with vigilance cases against them were made acting heads of coal PSUs,” says a former CIL chairman.
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