The >cancellation of all but four of the coal blocks allocated in an arbitrary manner since 1993, was the only logical course open to the Supreme Court after it held the entire process illegal last month. While corporate India agonises over the development, which undoubtedly will have far-reaching consequences, it is also an opportunity to usher in a fresh, transparent means of apportioning finite natural resources. For far too long the country has been beset by a morally compromised system in which public policy is often overshadowed by power, influence and ‘connections’. Arbitrary, non-transparent and ad hoc processes have eroded public faith in decision-making. The verdict, similar to the earlier one that >cancelled 122 telecom licences allotted illegally , is an affirmation of the principle that the courts will not countenance the undesirable nexus between public office holders and big business, or anyone profiting from venality. The Court was largely encouraged to take the decisive step of scrapping all the 214 coal block allocations because the National Democratic Alliance regime took the unambiguous stand that it is capable of handling the fallout of such a sweeping measure. It has given the government and the functional mines some breathing time by making the cancellations operative from March 31, 2015. Six months on, the public sector Coal India Ltd. will step in to take over the 40 mines that are functional now and the six that are on the verge of starting operations. The Court also wants the ongoing CBI investigations to continue.
While the verdict is quite sound, some questions remain. The Court has accepted the government’s claim that it is prepared to face the consequences of the cancellation of all allocations and move forward. It has based its order solely on its faith that the government and Coal India Ltd. have all the answers. If CIL had the capability to supply the required quantity of coal of sufficient quality to all users, the need for captive mining would not have arisen in the first place. If there is a significant shortfall in supply after CIL takes over, users may have to import coal at high cost. While it has imposed an additional levy of Rs.295 a tonne on the companies, there is no guidance on the fate of the loans advanced by banks. If and when an auction is held to allocate the coal blocks in a fair manner, will the successful bidders be asked to pay for the amount spent by the earlier allottees and also take over the debt owed to banks? The future of end-use projects that have commenced solely on the expectation that these blocks would supply the coal needed for their operation is also not clear. The government will now have to come up with a plan of action to deal with the economic fallout of this extraordinary verdict.