Coalgate, or allotting coal mines free of cost to private companies in India, is back in media headlines. CAG estimates private coal block allottees might gain nearly $35 billion over the years, due to this largesse by the Government of India.

Unlike in the West, where media keeps a constant watch on Government actions, and reports anything wrong as soon as it happens, Indian media acts as middle-men of news. The matter of exposing government policies that fundamentally go against the interests of the citizens lies with the Institutional and Constitutional authorities, or at best with activists.

An important question is to ask, if the CAG/SC too fails as the Government routinely fails, who is supposed to protect Indian citizens from the gross and open mismanagement of the economy, by vested lobbies – part of which have been entrenched strongly in Indian politics and democracy.

An unfortunate point has also resurfaced where Indian media as well as Indian ministers are not accurate about the facts. Call it deliberately misleading, or ignorance and/or lack of capabilities;  it is difficult to segregate baseless allegations that routinely engage in ‘character assassination’ from the genuine ones that demand impartial probe in highest levels. The high-pitched Indian media further magnifies the surrounding noise, and thereby does not clarify in differentiating among ‘lies, damned lies and statistics’; or between enemies of truth as seen by J F Kennedy, ‘deliberate, contrived and dishonest lie’ and the ‘myth’ of continuation of past policies. Judiciary takes years, and the high-and-the-mighty culprits often go scot-free.

One of those misleading arguments have recently been, that, had coalmines been auctioned, prices of power would have been higher, hitting poor Indians. Irrespective of the fact that 35.5% of Indian households are yet to have electricity, as per International Energy Association (year not given), and as quoted in Wikipedia, and assuming most of these 35.5% belong to the officially recognized ‘Below the Poverty’ section, the subsidy in tariff for end-users through undesired input subsidy of coal does not reach the poorest of the poor Indians.

More importantly, if inputs are subsidized against global practices, outputs should also be available at proportionately lesser prices to end-consumers, particularly for the deserving poorer households. If it is so, Indian manufacturing should be able to export with cost-advantages abroad.

A graphic here, with data source from CERC of India, SERC of China and EIA of the US clearly shows that the power tariff in India is highest. Although I am not sure whether similar free mining rights are given in the US or in China, I am making a realistic assumption that no such free lunch for miners/power producers exists in these two nations, even for state-owned firms, as it may be in the case of China. Even the retail power tariff is highest in India.  Unfortunately, India does not feature in nation-wide electricity pricing, but my personal experience shows that as an individual, I pay much higher tariffs than the rates in many of these nations.

India has failed to provide universal education to all, universal healthcare to all. India has failed to provide these two vital services even to the deserving poor citizens, which comprise anywhere between 40-70% of the population, depending on definition of poverty, and depending on whom you believe. It is understood that a poor nation like India, and its government cannot afford such expenses in a hugely populated nation, where fiscal deficit already runs at four times that of the other emerging economies.

But, given the same context, can the nation afford offering free lunch, in the name of economic reform and liberalization, and in pursuit of faster growth, to India Inc., year after year, and cases after cases? Unfortunately political ‘connections’ in India still matters much more than basic electricity connections to each household, and lobbyists in New Delhi now are even more active than they had been before 1991, as the size of mismanagement with natural resources grows post crony-capitalism dominated economic liberalization.

At the same time, and more unfortunately reputed global companies think about leaving India, whereas India Inc. enjoys the mismanagement of the economy. India Inc. would probably be happier if more of the globally reputed firms leave India, but that would not be beneficial for the citizens of India.

A clear policy from industry lobbies like CII, FICCI, ASSOCHAM and respected business houses in India on auction vs. allotment of natural resources would help the nation know what type of competition and growth they seek here.

Prof. Ranjit Goswami works as the Director of School of Management of RK University. Opinion expressed in this article is personal. He invites you to visit his blog, Wondering Man (or take a look at his book, Wondering Man, Money & Go(l)d). You are also invited to join him on Twitter

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