Indian Railways to go for Bio-Diesel in a Big Way - Gowda

With a concern for cleaner environment, Indian Railways has decided to promote use of alternative fuels like bio-diesel in a big way for powering our vast fleet of over 4000 Diesel locomotives. This was stated by the Minister of Railways Shri D.V.Sadananda Gowda at the inauguration of Bio-Fuels – 2014 Conference with a theme ‘Energize growth & Business opportunities in Biodiesel sector in India’ organized by Bio-Diesel Association of India (BDAI) here today, Shri Gowda said that Indian Railways, is the single largest bulk consumer of diesel in the country and as mentioned in Railway Budget 2014-15, Indian Railways will start using Bio-Diesel up to 5% of the total fuel consumption in diesel locomotives. This will save precious foreign exchange substantially. Diesel locomotives cater to a large segment of rail traffic in the country, hauling both passenger and freight trains. Indian Railways consume over two billion litres of diesel every year. For this Railways have to foot a bill of over Rs.15000 crore annually. Therefore, even a small reduction in fuel consumption through blending with Bio-Diesel will result in a substantial savings in the fuel bill. In addition, the attendant benefits of a cleaner environment would also accrue on account of lower carbon emission, without requiring any change in the locomotive design. Extensive trials have already been conducted by RDSO using bio-diesel in different proportions on railway locomotives and results have been found very encouraging, Shri Gowda said. Railway Minister said that Indian Railways initially attempted blending of High Speed Diesel (HSD) with Bio-Diesel extracted from the Jatropha plant. Jatropha oil had been used in India as biodiesel in remote rural and forest communities; Jatropha oil can be used directly after extraction i.e. without refining in diesel generators and engines. The Minister said that Indian Railways will consider exploring possibilities of planting Jatropha plants along the railway tracks. However, these forays by Indian Railways met with limited success. Indian Railways have also set up an Indian Railways Organisation for Alternate Fuels (IROAF) to promote Bio-Diesels and other environmentally benign alternate fuels. They have also been given the mandate to facilitate setting up of trans-etherification facilities for converting plant residues into Bio-Diesels. These facilities could be set up in the country on the PPP mode. Shri Gowda further said that Bio-fuels also have a role to play in our efforts to address environmental concerns, particularly where we cannot otherwise easily decarbonise, like in the transport sector. However, it is crucial that the bio-fuels used must be genuinely sustainable and cost effective. Unless these two imperatives are met, we would not be able to proliferate Bio-Diesels in the manner we intend to. Shri Gowda hoped that the deliberations in this conference would bring out solutions needed to chalk out a path, both by the policy makers and the industry to make this environmentally benign natural resource our fuel of the future. Speaking on the occasion, the Minister of State for Railways, Shri Manoj Sinha said that in order to generate interest in bio-diesel, adequate quantities of bio-diesel will have to be made available at competitive and attractive prices. To achieve this, setting up of raw material supply chain would be necessary. This is a big challenge in a country where neither edible oils nor other oils are surplus to the requirement. In case the availability is unsatisfactory, the interest of common user would not get generated. Shri Sinha said that as of now there is no retail of bio diesel and thus no network for countrywide availability of bio diesel. In case it is to be made popular with not only with railways but with road transport also, countrywide distribution and storage infrastructure will have be set up.

Raising the authorized share capital of Indian Renewable Energy Development Agency

The Cabinet today at the meeting chaired by the Prime Minister, Shri Narendra Modi gave its approval to raise the authorized share capital of the Indian Renewable Energy Development Agency Ltd. (IREDA) from the existing level of Rs.1000 crore to Rs.6000 crore. The approval does not involve any immediate requirement of funding. Infusion of equity, as and when required, would be based on level of operations. During the 12th Five Year Plan, Ministry of New and Renewable Energy (MNRE) has targeted 30,000 MW from various renewable energy projects out of which IREDA aims to finance projects of an aggregate capacity of 4800 MW. For this, IREDA would need to mobilize financial resources to the tune of Rs.14,000 crore. A higher level of authorised share capital would facilitate in leveraging higher levels of debt from the market. The MNRE has recommended strengthening of the equity base of IREDA by infusion of Rs.5000 crore through rights issue and the IPO route during the 12th Five Year Plan, in line with the Integrated Energy Policy (IEP) of the Government. Background :  IREDA is a public financial institution established in March, 1987 under the Company`s Act, 1956. IREDA is registered as a Non-Banking Financial Company with the Reserve Bank of India. Since its inception, IREDA has played a pioneering role in supporting and facilitating the policies and programs of the MNRE that has nurtured the renewable energy industry in the country. IREDA has primarily worked with private sector enterprises operating in the power sector. For over two and half decades, IREDA has been supporting the establishment of renewable energy projects and has greatly succeeded in the commercialization of sustainable energy technologies in the country. Subsequently, its business operations have been widened to extend term loans to energy efficiency and energy conservation projects as well.

Vice President Inaugurates 7th South Asia Economic Summit

The Vice President of India Shri M. Hamid Ansari has said that the leaders of SAARC countries have been continually emphasising the importance of enhancing economic cooperation for regional integration. At the 17th SAARC Summit, held at Maldives in 2011, South Asian leaders spoke about the need to work on a vision for future development of South Asia, including the goal and elements of a South Asian Economic Union (SAEU). Delivering inaugural address at the “7th South Asia Economic Summit organised by Research and Information System for Developing Countries” here today, he said that in this regard, Think-tanks have to stay ahead of governments and generate ideas and come up with possible ways forward. Therefore, this summit of regional think-tanks focusing on this ambitious theme is a welcome initiative.   He said that Intra-regional trade in South Asia has doubled since the region implemented the Agreement on South Asian Free Trade Area (SAFTA). The intra-regional exports have increased to about US$ 22 billion in 2013 from US$ 10 billion in 2006 (data source: IMF).  South Asia is expected to achieve substantial tariff reduction by 2016 as SAFTA implementation makes further progress. This should lead to a greater increase in intra-regional trade.  The Vice President said that while SAEU would require greater regional economic policy coordination, SAARC would benefit from the experiences of other groupings, such as the European Union and ASEAN. Some prioritised progression may be useful, beginning from completing the on-going trade liberalisation process. Another priority would be to undertake investment in regional infrastructure, especially transport connectivity that would facilitate ease of travel and trade. He said that some of the regional trade facilitation projects may ease the way for an economic union. These could be (i) coordinated border management, such as co-location of facilities, delegation of administrative authority, cross-designation of officials, and effective information sharing; (ii) regional single window which is a digital interface that allows traders to submit all information and documentation required by regulatory agencies via a single electronic gateway; and (iii) regional transit, which would help the region to move the goods and services move freely, thereby strengthening production networks in South Asia. The Vice President said that creation of South Asian Economic Union (SAEU) would prove to be a milestone in regional cooperation efforts. Most regions in the world are moving towards greater economic integration, as South Asia lags behind. The logic of economic union lies in re-distribution of common and shared resources within the region in a most efficient and effective manner. Economic union enhances manifold the bargaining power of member countries in the global arena and helps in realising the full potential of trade complementarities. There are definite advantages of moving towards an economic union but the roadmap has to be well thought out and a strategy has to be in place, which is ambitious but realistic. Following is the text of Vice President’s inaugural address :  “I am happy to be here today for the inauguration of the 7th South Asia Economic Summit (SAES) on ‘Towards South Asia Economic Union’, organized by the Research and Information System for Developing Countries (RIS) in association with prominent think-tanks of South Asia. The South Asian Association for Regional Cooperation (SAARC) has achieved almost three decades of partnership at the Summit level since the first Summit was held in Dhaka in December 1985. During this period, our region has made some progress towards greater regional economic cooperation, even if somewhat gradually and not to the full extent. At the same time, the economic size of South Asia has also witnessed significant expansion. South Asia was one of the high performing regions of the world during the period from 2003-2010. Growth has slowed somewhat following the global economic crisis and recession but even then it has remained above the world average. The regional growth outlook now appears to have improved with economic indicators pointing to recovery, including in India.  The leaders of SAARC countries have been continually emphasising the importance of enhancing economic cooperation for regional integration. At the 17th SAARC Summit, held at Maldives in 2011, South Asian leaders spoke about the need to work on a vision for future development of South Asia, including the goal and elements of a South Asian Economic Union (SAEU). In this regard, Think-tanks have to stay ahead of governments and generate ideas and come up with possible ways forward. Therefore, this summit of regional think-tanks focusing on this ambitious theme is a welcome initiative. Intra-regional trade in South Asia has doubled since the region implemented the Agreement on South Asian Free Trade Area (SAFTA). The intra-regional exports have increased to about US$ 22 billion in 2013 from US$ 10 billion in 2006 (data source: IMF).  South Asia is expected to achieve substantial tariff reduction by 2016 as SAFTA implementation makes further progress. This should lead to a greater increase in intra-regional trade.  South Asian countries have taken other steps to increase trade regionally. India has reduced the sensitive list under SAFTA for LDCs before the scheduled deadline. Over time, India’s bilateral trade with some of the South Asian countries, like Afghanistan, Bangladesh, Bhutan and Nepal, has grown faster than South Asia’s total regional trade during the period 2006 and 2013. This indicates that South Asia, in parts, is trading more within the region. There is also a rise in cross-border production networks. The FTA between India and Sri Lanka has successfully narrowed the trade gap between the two countries. Varied progress has been made in other areas such as SAARC Agreement on Trade in Services, as also on trade facilitation measures. However, there are many challenges, including persistence of restrictive Non-Tariff Measures, the need to harmonise standards and customs procedures and poor connectivity. Some other major elements that are holding back South Asian integration include high transportation costs, inadequate cross-border infrastructure, and absence of regional transit. As a result, South Asian goods often lose competitiveness before they can reach world markets. Intra-regional trade is also inhibited due to limited availability of short term trade finance in the region. The region needs to strengthen its institutional mechanism to augment short term trade financing to encourage regional trade. Average time and costs of trading across borders in South Asia is still relatively high in comparison with other developing regions of the world. Moreover, in South Asia, the costs of trade with countries outside the region appear to be lower than that for carrying out intra-regional trade. Clearly, a truly integrated region would not be achievable until we overcome these challenges. Many other issues also come in the way of trade competitiveness and exploitation of trade complementarities in South Asia. Foremost is the presence of two-fifths of world’s poor in South Asia. The region is faced with major developmental challenges of poverty, inequality, illiteracy, disease, hunger and homelessness. South Asia is also vulnerable to major natural disasters such as floods, draughts, cyclones, earthquakes, etc. An inclusive and stronger regional integration would greatly help in overcoming some of these common challenges. The overall objective of South Asian Economic Union (SAEU) is to ensure the transformation of South Asia into a peaceful, stable, and prosperous region. SAARC countries must consider the mutual benefits that could be derived from greater economic integration and thereby contribute to the furtherance of their common developmental agenda. They should, therefore, collectively address the challenges that confront them in the process of regional integration. While SAEU would require greater regional economic policy coordination, SAARC would benefit from the experiences of other groupings, such as the European Union and ASEAN. Some prioritised progression may be useful, beginning from completing the on-going trade liberalisation process. Another priority would be to undertake investment in regional infrastructure, especially transport connectivity that would facilitate ease of travel and trade. The 18th SAARC Summit later this month will be focussing on ‘Deeper Integration for Peace and Prosperity’.  Building on enhanced connectivity, we need to also encourage proliferation of regional value chains that can pool together competitiveness of each of our economies, at various stages of production. These would require greater flow of financial capital and intra-regional investments. An efficient, secure and integrated transport network is essential to support the realisation of South Asian Economic Union. Regional trade liberalization (for example, SAFTA) alone has not been able to achieve increased intra-regional trade. Infrastructure development, capacity-building measures, removal of NTBs, and supportive policies and institutions that promote economic activities along identified transport corridors are essential to increase regional trade. Some of the regional trade facilitation projects may ease the way for an economic union. These could be (i) coordinated border management, such as co-location of facilities, delegation of administrative authority, cross-designation of officials, and effective information sharing; (ii) regional single window which is a digital interface that allows traders to submit all information and documentation required by regulatory agencies via a single electronic gateway; and (iii) regional transit, which would help the region to move the goods and services move freely, thereby strengthening production networks in South Asia. South Asia has set-up many regional organisations, such as SAARC Development Fund (SDF) to finance regional development projects, a South Asia Regional Standards Organization (SARSO) to harmonize standards and reduce time taken in customs clearance, a South Asian University in Delhi to promote higher education, to mention a few. Regional institutions like the SAARC Food Bank and SAARC Disaster Management Centre have the potential to help address the common regional challenges.  Proposed institutions such as SAARC Satellite or SAARC Corridor or SAARC Development Bank deserve more attention, as we contemplate moving towards an economic union. Creation of South Asian Economic Union (SAEU) would prove to be a milestone in regional cooperation efforts. Most regions in the world are moving towards greater economic integration, as South Asia lags behind. The logic of economic union lies in re-distribution of common and shared resources within the region in a most efficient and effective manner. Economic union enhances manifold the bargaining power of member countries in the global arena and helps in realising the full potential of trade complementarities. There are definite advantages of moving towards an economic union but the roadmap has to be well thought out and a strategy has to be in place, which is ambitious but realistic. The next SAARC Summit will be held in Nepal later this month. I am sure that the outcomes of this 7th South Asia Economic Summit will provide important policy inputs to the forthcoming SAARC Summit and also guide the regional integration process.

Speech by the President of India Shri Pranab Mukherjee at the Presentation of the SCOPE Meritorious Awards

I am indeed happy to be amidst you on this occasion of the presentation of the SCOPE Meritorious Awards for the year 2012-13. 2. I would like to compliment the Department of Public Enterprises (DPE) and Standing Conference of Public Enterprises (SCOPE) for organizing this event which provides recognition to the efforts being made by our CPSEs in a variety of areas such as Environmental Excellence & Sustainable Development; Corporate Governance; Corporate Social Responsibility & Responsiveness; Research and Development and Technology Development & Innovation. 3. The Central Public Sector Enterprises were set up immediately after independence to occupy the commanding heights of the economy and to channelize investment in areas which were critical to our efforts at development and self-reliance. The total investment in our 277 CPSEs stood at more than Rs. 8.5 lakh crores as on 31stMarch, 2013. Operational CPSEs had a turnover of approximately Rs. 19.45 lakh crores, with the aggregate net profit of profit-making CPSEs amounting to Rs. 1.43 lakh crores during 2012-13. Market capitalization of 46 listed CPSEs stood at more than Rs. 11.16 lakh crores as on 31st March, 2013. These figures clearly demonstrate the pivotal role that the CPSEs play in our economy. As envisaged at the time of their creation, they have proved to be the backbone of our developmental effort and are rightly recognized as drivers of growth in infrastructure and other critical sectors of the economy. 4. The Government has taken a number of steps to improve the functioning of CPSEs. These include empowerment of Boards of Maharatna, Navratna and Miniratna CPSEs, professionalization of Boards of CPSEs and strengthening of performance evaluation systems. These steps have contributed significantly in creating a positive and conducive policy framework for CPSEs. 5. Ladies and Gentlemen, India today stands at the cusp of a transformative phase which, I firmly believe, will successfully place us in the league of developed nations over the next two decades. In the last ten years itself, we have scripted a wonderful success story emerging as one of the leading economies of the world and the third largest economy in terms of purchasing power parity. From 2004-05 to 2013-14, our economy grew at an average rate of 7.6 per cent per year. Due to the continuing global economic slowdown and other factors, our GDP growth rate was subdued at below five per cent during the last two years. I am, however, happy to share that the green shoots of recovery are already visible. In the first quarter of the current financial year, the Indian economy achieved a growth rate of 5.7 per cent. Various steps taken towards fiscal consolidation have shown positive results. Inflation has decelerated over the past three months and we hope to contain it below 5% through a judicious mix of policy measures. India now ranks second in the world in both wheat and rice production. A record food grains production last year helped the agriculture sector to register a growth of 4.7 per cent in 2013-14. A number of measures aimed at investment revival, strengthening macro-economic stability and ramping up infrastructure will certainly posit India back into the high growth trajectory of 7-8 per cent. 6. I must, in this context, make special mention to the Prime Minister’s ‘Make in India’ campaign which has recently been launched by Government to transform India into a truly world-class, global manufacturing hub. I believe that our CPSEs have a vital role in making this a reality. They have, over the years, established excellent manufacturing facilities in various parts of the country. We have one of the largest markets in the world and there is no dearth of demand for competitively priced, quality products. We should aim not only at catering to our huge domestic demand but also towards high quality product development and greater access to foreign markets. This would not only create adequate employment opportunities for our youth but also raise standards of living across. 7. This expansion of operations to cater to both domestic and foreign markets can only come after making a realistic assessment of business potential and ensuring that our products conform to international standards. For this purpose, latest technology needs to be harnessed, both through suitable industry-academia linkages and by entering into strategic alliances with entities which possess these technologies. It is also imperative that attention is focused on vendor development and mandatory procurement through small and medium enterprises. This would not only develop local industry but also boost domestic manufacturing and usher in a culture of entrepreneurship in the country. 8. I would, in particular, draw your attention on the need to innovate while doing business. An ever changing and dynamic business scenario throws up newer and complex challenges which call for innovative solutions. Over the years our CPSEs have developed a certain way of doing business. In today’s scenario it is critical to re-examine, re-engineer and reinvent processes in order to continuously stay ahead of market requirements and expectations. I would, accordingly, advise all of you to critically re-appraise existing systems and procedures and develop newer, more efficient ways of doing business with a view to taking full advantage of the latent potentialities that exist, both on the material and human front, in your organisations. 9. The CPSEs have actively partnered Government in implementing its social and economic policies. I am confident they will continue to take the lead in the ‘Swachh Bharat’ campaign and other socially oriented schemes being launched by the Government. At the same time, I may point out that CPSEs are custodians of public wealth and, as such, they necessarily need to ensure continued compliance with the best standards of corporate governance and transparency. 10. The CPSEs have, over time, contributed greatly towards fulfilling their Corporate Social Responsibility obligations. I am sure they will continue with these activities, designed for the upliftment of needy sections of our society, in the future also as mandated under the Companies Act, 2013. 11. I once again compliment SCOPE for its initiative in instituting the SCOPE Meritorious Awards with the objective of identifying and recognizing outstanding performers in various segments of business activity. I am informed that a distinguished jury has selected the award winners this year after a rigorous exercise. I congratulate all the award winners and wish them the very best in their future endeavours. I also encourage others to emulate the example set by those who have won awards today.

The India-Russia Working Group on Culture and Tourism Meets

Both the Countries to Renew the Cultrual Exchange Programme

India and Russia have expressed their keenness for   cultural exchanges/cooperation in the fields of exhibitions, libraries, visits of crafts persons, visit of writers’ delegation, contemporary and visual arts, archives, theatre art, contemporary visual art etc. Both the countries will renew the Cultural Exchange Programme 2015-2018. This was decided in the 20th meeting of the India-Russia Working Group on Culture and Tourism of India-Russia Inter-Governmental Commission on trade, economic, scientific, technical and cultural cooperation held here today.  The meeting was chaired by Joint Secretary Culture, Shri V. Srinivas. Apart from Ministry of Culture the other participants from the Indian side comprised of Ministry of Tourism, Ministry of External Affairs, Ministry of I & B.  From the Russian side, Mrs. Elena Milovzorova, Deputy Minister, Ministry of Culture of the Russian Federation headed the five member delegation. The meeting is alternatively held in India and Russia every years as per the provisions laid down in the Russian-India Inter-Governmental Commission on Trade and Economic, Scientific and Technical and Cultural Cooperation.  Both the side expressed satisfaction on the successful implementation of the Protocol of the 19th Meeting of the Programme of Cultural Exchange between the two Governments for the years 2013-15. Both the sides agreed to assist each other in sending information on forthcoming international book fairs in both countries and also for exchange of film related events, reciprocal participation in the International Film Festivals to be held in both countries in accordance with their respective  regulations.  The two sides agreed to hold the following activities and 2015: ·        To hold Festival of India in Russia in Russian Federation in 2015. ·        To renew the Cultural Exchange Programme 2015-2018 ·        To strengthen links with Roerich International Memorial Trust in the village of Naggar in Kullu Valley. ·        To provide assistance in the development of direct ties  and contacts between the Prasar Bharati and the All Russian State Television and Radio Company.

The bigger changes public banks need

Last fortnight, I asked whether the chowkidar Prime Minister Modi will focus on public-sector banks (PSBs), which are hotbeds of institutionalised corruption. On October 27, the government announced that it has decided to cancel the current selection process of chairmen and managing directors (CMDs), and executive directors (EDs) of PSBs. So eight posts of CMDs and 14 posts of EDs would require to be filled up afresh. Unfortunately, this will make little difference; a completely different approach is needed if PSBs are supposed to be more efficient.

To start with, the decision was a result of a report of a three-member committee - secretary (expenditure), the governor of the Reserve Bank of India (RBI) and, surprisingly, secretary (school education). Note that there were no bankers in the committee. It is unclear what contribution came from the two eminent IAS officers, neither of who have any truck with running banks.

The RBI governor is aware of the rot and hopefully spoke his mind in the committee instead of being politically correct. Unfortunately, he was trying to argue a few months ago that bankers are scared stiff of the sword of vigilance inquiry hanging over their head and are, hence, unable to take decisions. He ignored the fact that no bank chairman has paid a price if banks are found to be horribly short of collateral - a cardinal sin in banking that happens routinely in our nationalised banks.

It appears that a new selection process will be developed and vacancies filled up quickly. The government has announced that the RBI Governor or his nominee of the rank of deputy governor should be a part of the selection process (the governor already is). We don't know yet what the new selection process would involve, but the existing one is a sham.

Bank CMDs and EDs are chosen by a selection board, which is headed by the RBI governor and includes officials from the finance ministry, external experts and sometimes bankers. The real decisions are made by politicians and bureaucrats, mainly those running the finance ministry.

This is why the eligibility criteria are kept vague and changed frequently for mysterious reasons, giving politicians the opportunity to push candidates who agree to ratify their dubious deals. In May 2011, the government suddenly announced that since PSBs were facing a shortage of talent, the criteria for selection of CMDs would be relaxed. In October 2013, the finance ministry relaxed the norms for CMDs yet again. EDs appointed a couple of months earlier were suddenly allowed to appear for interview for the CMD's job.

Most amazingly, even though many vacancies were not to occur before August 2014, well after the general elections, a highly proactive finance ministry under P Chidambaram decided to interview candidates in October-November 2013! What was the big hurry? Banking circles will tell you stories - of fixers and the going rate for appointments.

The interviews themselves are another farce. About 25-30 candidates are called in a single day. The selection panel interviews them for 10 to 15 minutes and asks very basic questions. The biggest travesty is that real banking experience does not count much. Multinational companies put their hotshot recruits from business schools, in the heat and dust of rural India. But bankers who have never worked in a branch have become CMDs of PSBs.

Will the new government be able to stop this mockery? If the Prime Minister's Office is vigilant, it may cut out the quid pro quo and corruption in the process. But that is just a start. The operations of many PSBs are so rotten that merely a clean process of selection (not necessarily a clean man) for the top job will not lead even to the minimal efficiency that PSBs must deliver. After all, PSBs control more than 70 per cent of vast Indian banking but are responsible for sapping tens of thousands of crores a year - either by not contributing by way of dividends or periodically getting capital injection from taxpayers' money.

If the Modi government really wants to play chowkidar it must impose accountability first. India's CEO-style prime minister may be shocked to know that the CMD of a PSB is neither judged by his leadership qualities nor by his profitability record. Have you ever heard any CMD being sacked by the bank board (which are anyway stuffed by political fixers) for poor performance?

Guess who evaluates the CMD currently? No one. Technically, the RBI is expected to do a performance analysis periodically and submit it to the finance ministry. But since the CMD's appointment itself is influenced by the finance ministry, the RBI does not bother.

But the bigger issue is this: is it even worthwhile for the Modi government to micromanage PSBs? PSBs, like other government-owned and -controlled firms, have been routinely abused by politicians at our expense. A well-meaning and super confident prime minister may feel that he can single-handedly make them more efficient, but that is not a policy reform. It would be dependent on the ability of one strongman. Surely, the prime minister cannot also repair the 200 plus other government companies, many government-funded "autonomous bodies" under various ministries and commissions that constitute the vast wasteland of a big state?

In fact, the prime minister had promised minimum government. If he is serious about this promise, he should set performance targets for PSBs, and seriously revamp bank boards, bringing in independent finance professionals. Having done this, he should make the top management, the board and the RBI fully accountable for performance. Through this hands-off approach, the PMO and the finance ministry will get much more out of PSBs, with much less effort.

Mine over matter

By all accounts, the coal Ordinance that the Narendra Modi government promulgated last week has paved the way for an eventual opening up of commercial coal mining by the private sector. This decision is bold as well as ambitious and the government is being justifiably complimented for its reformist zeal and initiatives.

But has the coal Ordinance succeeded in resolving the primary problem that arose out of the Supreme Court order cancelling the allocation of over 200 coal mines? Not really. Indeed, with the gradual ebbing away of the initial euphoria over the lightning speed at which the government acted on the matter, experts and even some civil servants in infrastructure ministries are coming round to the view that the Ordinance may not be able to address all the problems that arose out of the cancellation of the mines.

The central problem that the Ordinance was expected to tackle was to eliminate or substantially minimise the loss of coal production estimated at over 50 million tonnes in the wake of the cancellation order. Nobody is faulting the process of e-auctioning the cancelled coal mines as mandated by the Ordinance. The problem, however, stems from the acquisition of land and other infrastructure around the mines to be e-auctioned. Will these be allowed to be acquired without the long delays that are usually associated with such a process? As coal miners point out, the problem in mining is not with the actual process of excavation, but with the acquisition of land necessary for evacuation of the mined coal.

Two, how costly will it be for the existing owners of the cancelled mines to secure them through thee-auction process? If a company has a mine linked to a power plant or a cement project, its need to acquire that mine is paramount. In an open e-auction process, this situation can be easily exploited by rivals to make non-serious bids in an attempt to jack up the cost of acquisition. Such instances are not entirely unknown in the auctions that have so far been held in other areas. There is no reason one will not see the repeat of such attempts.

Three, will the e-auction process lead to an optimum utilisation of the country's vast coal assets? This is, of course, a larger question and strikes at the root of the policy on end-use based captive mining of coal blocks. Given the many varieties of coal found in this country - ranging from those with a high calorific value to those with high ash content and a low calorific value - the idea of linking a coal block to a pre-determined project does not always lead to optimum use of coal. It is possible that a coal block, linked to a power project, produces high-quality coal that should ideally be used for a steel plant to achieve optimum results. But with end-use restrictions in place, such diversion would not be permissible. In other words, top-grade coal would be used in a project that does not need that level of fuel quality and could well have met its needs with lower grade coal. The e-auction process may improve transparency in awarding mining blocks, but it will fail to address the basic problem of sub-optimal use of a valuable natural resource like coal.

Could the government have done something better? Some officials point out that the government could have acquired the mines and then e-auctioned them to firms whose primary job would be to mine coal under the supervision of an effective regulator that also should be set up simultaneously. Land acquisition delays would have been obviated in the process because the government would have taken far less time in acquiring them. And then the coal produced by such firms could either be sold or made available through linkages to projects depending on the quality of coal produced there. Even Coal India now tries to ramp up production by using private contractors to do the actual mining. The same principle could have been applied by the government and instead of relying on Coal India, there would have been many private contracting firms mining coal until such time the government chose to allow through a notification private commercial mining of coal.

But then such ideas cannot get discussed when decisions are taken without following a more broad-based consultative process. Quick decisions are welcome, but some more consultation with experts and even think tanks within and outside the government can certainly help.

The Narendra Modi government's coal Ordinance is a bold move, but it may not be able to tackle the central problem of minimising the loss of coal production