On 25 August 2014, the Supreme Court declared that all coal mining rights distributed between 1993 and 2010 were assigned illegally by the government in a process that lacked transparency in the absence of a competitive bidding system.
The allocation of coal licenses had been the subject of a CBI investigation that is being monitored by the Supreme Court since 2012 when the State auditor said that 1.83 lakh crores had been lost because coal rights were not auctioned. They were instead assigned by a government committee. The CBI is looking at possible collusion by officials to give blocks at low prices to companies, some of which never developed them.
The finding of the Comptroller and Auditor General forms the basis of the scandal dubbed “Coal-Gate”.
The CBI has post-mortemed the assignment of 194 coal blocks allocations since 1992. Of these, 39 were assigned to companies before Dr Singh’s coalition government first took office in 2004 (it won a second term in 2009).
India is the world’s third-largest coal producer after China and the United States, but output has struggled to keep up with consumer demand for electricity. The government handed out the coalfields for a nominal cost to operators who promised to use the coal for their own power, steel and cement projects. Many of the allotted fields were not handed to the companies because of bureaucratic wrangles and environmental regulations.