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"Coalgate" scandal brings India's parliament to a halt

Multi-billion rupee scam rocks India

Indian MPs protest outside parliament
Swati Deb

September 6, 2012

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Another scam running into billions of rupees has paralyzed the Indian establishment. With the opposition Bharatiya Janata Party - Indian People’s Party – loudly demanding the resignation of Prime Minister Manmohan Singh, the country’s parliament has been unable to function for the past 12 days. The government’s response has been a series of 30 raids on suspects in the coal industry graft case now known as “Coalgate,” including several companies and at least one congressman. The raids were carried out on September 4 by the Central Bureau of Investigation. The Coal Minister, Sriprakash Jaiswal, told reporters that the investigation showed the government’s commitment for probity in public life. BJP spokesman Prakash Javedkar retorted that it proves there has been wrongdoing. From the top down, the country has been rocked by this latest slew of allegations of kickbacks and nepotism on an unprecedented scale. In a report released in mid-August, the nation’s Comptroller and Auditor General (CAG) estimates a loss to the state exchequer that could amount to US$37 billion. The report states that the government “did not follow” transparent and objective methods. The government defended itself by saying the CAG estimate of the possible loss is only a guess. Finance Minister P Chidambaram went further to say there was “no loss” as no mining of coal has been done yet. The case centers around the government’s allocation of coal deposits suitable for mining, known as coal blocks.  The government made the allocation of several coal blocks without auction, resulting in spectacular windfalls for some private operators. The opposition is keen to point out that Manmohan Singh himself was closely involved at the time on a ministerial level. “The truth is, the corruption and gross impropriety in the coal blocks allocation will end at the prime minister’s doorstep. He has to quit,” Arun Jaitley, leader of the opposition in the upper House of Parliament told Coal block allocations for private firms started in 1993, two years after the government liberalized its economic policies.  “This was done as the government-owned concern, Coal India Ltd, was unable to meet the growing demand,” said a senior official at the coal ministry, who cannot be named. The scandal is the fifth corruption case the ruling establishment has faced in the past eight years. Earlier, the CAG had alluded to kickbacks and dubious deals in the allocation of 2G  telecom licences, leading to a  US$32 billion loss. Corruption on a massive scale was also alleged in the organizing of the Commonwealth Games in Delhi two years ago, as well as a housing scheme for widows of war victims and the privatization of Delhi airport. These scandals all resulted in a round of resignations and the imprisonment of several government ministers and executives. “The fungus of corruption has eaten into all spheres of life in India,” said Hari Jaisingh, a senior journalist in New Delhi.  “The scandals have definitely nosedived the credibility of the prime minister, who was credited till the other day for honesty,” he told This latest case has also turned the mood in the country against the government. The international press such as Time magazine rated Singh as an “under achiever” and more recently The Washington Post called him a “tragic figure.” Related reports Respect dissenting voices on corruption
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