Industrialist and Congress MP Naveen Jindal is due to be grilled by the CBI this week, on charges of his firm illegally colluding with former minister of state for coal Dasari Narayana Rao to garner coal block allocations for itself. Similarly, there are a number of other corruption charges waiting to be investigated. The CBI enquiries, however, have turned the spotlight on the arbitrariness of the coal block allocation policy itself. It’s a situation tailor-made for exploitation, making corruption almost inevitable in the process.

Allocation of coalmines was done by a screening committee set up by an administrative order of the coal ministry, comprising representatives of central ministries and the concerned state chief secretaries and Coal India Ltd. But the coal ministry has not been forthcoming about the basis on which allocations are made. CBI apprehensions about the allocation process reiterate the findings of other institutional bodies like the parliamentary standing committee and the Comptroller and Auditor General, which have highlighted the arbitrary allocation of coalmines through an opaque process.

As is well known, the demand for coal for industry and power generation has far outstripped coal production. Coal India Limited, the major supplier of coal in the open market, has been unable to meet demand, forcing increasing amount of coal imports at much higher prices. This is absurd considering that India has one of the largest reserves of coal. Growing coal imports are also one of the reasons behind growing trade imbalances and the current account deficit.

It’s to circumvent the problems caused by Coal India’s monopoly on mining coal that the captive coalmine policy was conceived. But the policy hasn’t helped much in meeting coal shortages, while its opacity has become a strong incentive for corruption and influence peddling. Removing the supply constraints on coal requires the rollback of coal nationalisation itself and fully opening up the coal sector to private industry. This can happen by ensuring an early passage of the Coal Mines (Nationalisation) Amendment Bill of 2000, stuck in Parliament for more than a decade. This, together with a simplification of the regulatory procedures and time-bound clearance of coal mining applications, would encourage large private sector investments, including from large foreign coal miners. If India’s bleak energy situation is to be turned round – and its bleak corruption situation addressed as well – it’s no longer possible to overlook the elephant in the room.