The unfortunate social costs of Coalgate and such scams

India’s scams and corruption are perennially ubiquitous – they keep recurring time and again. There is hardly a month that goes unnoticed without any major scam breaking out. It is not that there isn’t any scam elsewhere, but barring some sub-Saharan and Asian rogue states ruled by the junta, the scale and magnitude of Indian scams have outperformed every other nation by an unprecedented margin of frequency and scale. Typically, a scam exposé starts off with media frenzy and then gets lost into thin air! The typical Indian middle class’ short memories, inevitably brushes the scam off, and then the judiciary typically bails out the accused, and everything is business as usual. Even though media spotlight continues on the case for a while, the same mostly focuses on the economic aspect of it, largely ignoring the enormous social impact. Mostly, the multi-million dollar scams that prop up every now and then have huge negative externalities both at the regional and national level.

Let me talk a little about the recent scam, which has been rocking the nation – Coalgate! Coal mining – the lifeline of thermal power that constitutes around 66 per cent of installed capacities in power generation in India – is very inefficiently run, and I’m being graciously modest when I say that. The sector is marred by massive pilferage and corruption with open disregard to environment and conservation. However, there are many other serious ground concerns that have been missed amidst the entire current hullabaloo. To start with, the mandatory regulation of open cast and underground mining requirement is flouted openly, causing health hazards on account of environmental degradation per se. The corruption level is beyond one’s wildest imagination. Sample this: even the sand purchased to fill the old mines is being sold in the open markets for petty gains!

There have been waves of protests in most of the coal mining states – particularly socially conscious Maharashtra – against pollution, environment hazards, and land acquisition... but nothing much was done. Land procurement is done by the government, and also by the private coal mining companies, which have very little respect for the laws, and who have very little good-faith negotiations with the land owners! And mind you, these activities are on since decades, even before any coal scam was discovered.

Take the case of Coal India Limited (CIL) for instance. CIL, which controls almost half of the country’s energy requirement, dishes out freebies like selling around 80 per cent of the coal with up to 70 per cent discounts on landed cost, ostensibly so that the poor can get subsidized coal! In reality, the gain actually goes to the power companies, who sell power at market determined rates despite sourcing coal from CIL at discounted rates. Non power companies too don’t allow the CIL discount to be passed on to the end user. They either sell the discounted coal to third parties in the value chain or sell them directly to final consumers at market prices and at huge profits. And yet, the government defends CIL as a body that is committed to provide subsidized coal to the poor.

The coal mines also ruin the environment by destroying forest cover and even encroaching on animal reserves. Most of these mines are in ‘no go zones’. The coal mines of Madhya Pradesh, Chhattisgarh, Jharkhand and eastern Maharashtra are cases in point that brought the humans in direct confrontation with tiger reserves. The provocations of coal mines are also having telling effects on the tribal groups in these areas, whose sole source of livelihood is the forests. And this is the same story everywhere and every time – that after a few years, a once green belt turns into a rocky terrain, which eventually becomes unfit for human habitation. Thus, inhabitants of the region are literally being forced to divorce their livelihoods, their homes and their way of life. Occasionally, the uprooted tribal groups are offered menial jobs in the coalfields, but that’s hardly any compensation considering the damage bestowed upon them by coal mining companies. The counterbalance behind the wisdom of coal mining, which is electricity, still leaves 40 per cent of India’s population in perpetual darkness! So, the bottom half of the population clearly is not the beneficiary of thermal electricity – either directly or even indirectly. Add to this, the money spent by the poor in the mining areas for treating ailments caused by inhaling coal residuals that are left in the open; not to forget untimely death, which is still a norm in such regions.

The story of the social cost of the coal mining scam does not end here. Surprisingly, only 50 per cent of electricity generated in India is billed, of which only 40 per cent of consumers pay the bill regularly. Power theft costs the nation around Rs.40,000 crores annually. Today, even a rich politician gets free power. And of those who don’t pay bills, rich MPs and their ministries top the chart. Even government departments don’t pay bills (including courts); and above all, vote-hungry politicians are found waiving off electricity bills to the tune of thousands of crores. This, in the light of the fact that hundreds of villages are yet to see some kind of light. In simple words, the losses faced by power companies due to thefts, waivers and free electricity lunches are passed on to the bottom 80 per cent through high electricity costs per unit, erratic power supply, blackouts, frequent power cuts, inflated bills, and above all, opportunity costs. Imagine the economic and social loss a small businessman would face due to such power failures or the additional cost he has to bear as he eventually has to rely on a diesel-based generator! This is evident from rising electricity costs per unit since the last half a decade! And mind you, I have not even started talking about the indirect cost one has to bear with respect to increased fuel prices and food prices – both of which have a direct correlation with power supply and power cost.

What makes Coalgate and similar scams different from their counterparts is the way they impact the common man’s life. Scams today have become inevitable and are a sacrosanct fact of the Indian economy. Like every other notable scam, Coalgate also vividly paints the dark hues of the Indian business environment. For one single Coalgate to happen, the entire social cost is forced down the throats of the poor. For the poor, it is a perennial battle for their lives and livelihood. And that too without even getting to bear the fruits in the process – thanks to the artificially created power shortages. It is no secret that without power, the fruits of development cannot percolate down, which otherwise could have enriched the lives of families living below the poverty line and helped them to climb up the social ladder.

So it is not just about the crores that get swindled with every such Coalgate scam; it is more about the social costs that the nation bears... costs that have a wider impact and almost always go unnoticed.