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The 'Rs 10 lakh cr coal scam' is just Rs 10 lakh cr of nonsense

The 'price tag' attached to the latest 'scandal' is pure fiction. It's what someone with no understanding of how markets work thinks the assets should be worth.

Tossing big numbers and screaming of scandals isn't helpful. Reuters

27 Mar 05:17 am IST

     

by Derek Scissors

Two years ago, the United States Department of Defense "discovered" mineral deposits in Afghanistan-gold, iron, copper, cobalt-that it claimed were worth almost $1 trillion. Actually, the deposits were worth almost nothing, they had previously been worth almost nothing, and they are still worth almost nothing. They will have value only when someone wants them.

The newest scandal in India involves sweetheart concessions involving the country's nationalised coal industry-assets sold due to personal relationships or perhaps even outright graft. This is an important issue, well worth discussing. But the $210 billion (Rs 10 lakh crore)tag that was attached to the scandal by the government auditors themselves is off by probably $200 billion. Worse, it is deflecting attention from problems costing India far more than $200 billion.

Consider three related questions. First, where is this money? Which companies have it? What individuals? Does anyone actually think there is $1 trillion about to be invested in Afghanistan minerals or $210 billion waiting desperately to enter the Indian coal industry? The $210 billion is fiction. It's what someone with no understanding of how markets work thinks the assets should be worth.

Second, why isn't the money there? Why would local conglomerates and global energy giants laugh, privately, at the idea of truly spending $200 billion on Indian coal? The answer does actually represent huge sums lost-in coal and many other sectors.

The answer is tied to graft and....
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#CAG #Coal India Ltd #coal scam #Coal Blocks