CAG conclusions flawed: Assocham
25 Aug 2012
Assocham said yesterday that the conclusion drawn by CAG without taking full facts into account over allocation of 57 coal blocks had created an environment of "suspicion and distrust".
The chamber said it was "deeply concerned" over the Comptroller and Auditor General's (CAG) conclusions that had not taken all facts into account.
"Only one of the 57 coal blocks has gone into production. Several of the blocks were allocated to power, steel and cement companies for captive use.
"If the blocks were auctioned, they would have pushed up the sale price of these basic industries,crucial to the entire economic value-chain," the chamber said in a statement here.
According to the report, private firms had benefited to the tune of Rs 1.86 lakh crore in the allocation of 57 coal blocks.
"When government should encourage private sector investment and remove constraints to it, the CAG reports by way of erroneous conclusion have made any liberal reform a political risk," Assocham said.
Meanwhile, the government said that CAG's concept of presumptive loss was flawed and there was no loss because no mining had taken place as yet.
Coal minister Sriprakash Jaiswal also rejected the findings of the report, stating that of the 57 blocks allocated to private firms, only one has come into production.
Assocham added it was in disagreement at the manner in which CAG had arrived at the loss figures.
"To extrapolate the current price to the prospective coal output from these blocks and then arriving at a figure of over Rs1.86-lakh crore as the loss to the government, does not seem to be correct application of accepted principles of economic value assessment," it said.
It also said that the same extrapolation had been used by CAG in the matter of the terms on which the land was given to the Delhi airport builder, DIAL.
"No investment would have come if the market price for the extensive land required for the project was to be paid upfront. Public utilities are not built on the principles that CAG has applied in this case, anywhere in the world," Assocham said.
According to Asscham, the notion that auction was the most transparent way of allocating natural resources was not totally correct, the case in point being 3G spectrum auctions.
"The inability of the successful bidders to push the 3G service to a large base of subscribers partly due to the high costs imposed by the bid price, puts a question mark on the claimed advantages of the auction process. This has also exposed the telecom sector to a huge debt that continues to constrain its expansion."
