New Delhi: CAG's conclusion over allocation of 57 coal blocks reached without taking full facts into account has created an environment of "suspicion and distrust" industry body Assocham said on Friday. (Agencies)
The chamber said it is "deeply concerned" over the Comptroller and Auditor General (CAG) arriving at the conclusions without considering 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.
A CAG report has estimated Rs 1.86 lakh crore gain to private firms in 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 has taken place as yet.
Coal Minister Sriprakash Jaiswal also rejected the findings of the report,stating of the 57 blocks allocated to private firms, only one has come into production.
Assocham also said it was in disagreement with the way the CAG 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 Rs 1.86 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 extra-polating has been used by CAG about 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.
It said that the impression that auction is the most transparent way of allocating natural resources is not totally correct. The case in point is 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."
New Delhi: CAG's conclusion over allocation of 57 coal blocks reached without taking full facts into account has created an environment of "suspicion and distrust" industry body Assocham said on Friday.