March 23, 2012 / 11:31 AM / 8 years ago

Short breather for India leaders in "$211 billion" coal row

* Auditor says final report likely completed by April

* Opposition to allow budget vote, criticise coal allocation

By Satarupa Bhattacharjya

NEW DELHI, March 23 (Reuters) - The Indian government has doused a row over up to $211 billion in lost revenue from underpriced coal sales but the opposition will pile on the pressure when a report on the matter reaches parliament.

The Times of India newspaper published on Thursday a leaked draft report by a government auditor, saying faulty policies on selling coalfields to private and state companies may have cost the exchequer billions of dollars in lost revenue.

The report caused uproar in parliament and sent markets down on fear this could balloon into the latest in a series of corruption scandals to hit Prime Minister Manmohan Singh in his second term, derailing economic reforms at a time of slowing growth.

But the leaked draft was swiftly denounced as “exceedingly misleading” by the Comptroller and Auditor General (CAG), which argued that the leak did not present the body’s final view. The prime minister also weighed in to criticise the leak.

After the initial outcry, the opposition agreed to allow parliament to function until both houses have voted on the federal budget next week.

A spokesman for the auditor said on Friday the final report would likely be ready in time for the second part of the parliamentary session in April.

“The report on the performance audit of coal block allocations is under the process of finalisation and is likely to be sent to the government for tabling in the second leg of the ongoing budget session,” B.S. Chauhan, spokesman for the Comptroller and Auditor General told Reuters.

The government and the CAG have had tense relations since the auditor reported estimated losses of up to $36 billion from the underpriced sale of telecom licenses.


Opposition parties, including the main opposition Bharatiya Janata Party (BJP), are likely to pounce on the final report as further evidence of corruption in the allocation of national resources under Singh’s government.

“The government may present the coal report towards the end of the budget session. We can’t really comment on the report until it is in parliament. But, we have been raising the issue of improper allocation of coal fields for the past three years,” a BJP leader, Prakash Javadekar, told Reuters.

Singh has lurched from crisis to crisis since graft in the sale of telecoms spectrum surfaced two years ago, culminating in the quashing of licenses. The telecoms sale may have cost the government up to $36 billion.

Uncertainty over the coal contracts is likely to add to investor confusion about doing business in one of the world’s fastest-growing economies.

In the leaked draft the government auditor criticised the allocation of 155 coalfields to about 100 private and some state-run firms between 2004 and 2009, questioning why they were not auctioned off to the highest bidder.

Any suggestion of lost revenues also underlines the weakening state of the central government’s finances. The budget deficit is expected to blow out to 5.9 percent of gross domestic product this fiscal year from a goal of 4.6 percent, leaving the government stretched for the upcoming year and ahead of elections due by 2014. (Writing by Matthias Williams; Additional reporting by Nigam Prusty; Editing by Frank Jack Daniel and Robert Birsel)

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