Nitin Sethi Ishan Bakshi
The Narendra Modi-led National Democratic Alliance (NDA) government has made much of its claim that state governments stand to make windfall gains, upwards of Rs 2 lakh crore, from auction of coal blocks - more than the loss to the exchequer, as estimated by the Comptroller and Auditor General (CAG), because of random allocation of blocks by the previous government.
April 21, 2015
The Narendra Modi-led National Democratic Alliance (NDA) government has made much of its claim that state governments stand to make windfall gains, upwards of Rs 2 lakh crore, from auction of coal blocks - more than the loss to the exchequer, as estimated by the Comptroller and Auditor General (CAG), because of random allocation of blocks by the previous government.
Clearly, an auction will generate larger sums than the allocations did during the United Progressive Alliance (UPA) regime, when states got only the royalties. But the government's claims over the auction proceeds do not seem to stand the test of a closer scrutiny.
Only when all auctioned blocks actually begin to produce in full steam, in line with existing mining plans, will coal-bearing states make an annual Rs 6,284 crore from the auction, shows a Business Standard analysis of government data. Over the lifetime of the mining plan for the auctioned blocks or over 30 years, whichever is lower, states stand to earn Rs 1.77 lakh crore. This is perhaps why the government has always claimed in its official communications that it is 'potential revenue' for states from auctions, and not 'revenue'.
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