Indian government rapped over £134bn coal giveaway

INDIA lost up to £134 billion in revenue by selling coalfields too cheaply, a government auditor’s draft report has said.

Its findings sparked fury and added to the pressure on premier Manmohan Singh’s government. He yesterday called the estimated loss “exceedingly misleading”, after the report, leaked to the Times of India, prompted questions in parliament.

Mr Singh has lurched from crisis to crisis since corruption in the sale of telecom frequencies surfaced two years ago, culminating in the revoking of licenses. The scam may have cost the government up to £23 billion.

The leaked draft from the Comptroller and Auditor General’s office criticised the allocation of 155 coalfields to about 100 private and some state-run firms between 2004 and 2009, questioning why they were not sold to the highest bidder.

“This is the mother of all scams,” said Venkaiah Naidu, of the opposition Bharatiya Janata Party, which forced parliament to briefly adjourn over the report. “The prime minister should reply,” he said.

However, while the published excerpts criticised the government, they stopped short of alleging corruption. Firms mentioned include a subsidiary of steel maker, ArcelorMittal.

The draft report said the policy undervalued the coal by at least 10.7 trillion rupees, or £134bn. Voters punished the ruling Congress party in regional elections last month. Last week, a coalition partner forced the rail minister to resign and yesterday the government rolled back a plan to raise train fares, despite calls for budget restraint. In recent months, the administration has flip-flopped on everything from foreign investment in supermarkets to a ban on cotton exports. It claimed it handed out the coalfields for a nominal cost to operators who promised to use the coal for their industrial projects to promote growth.