India loses $210 bn in coal sales in 'mother of all scams'

India lost up to $210 billion in revenue by selling coal deposits too cheaply, according to the Comptroller and Auditor General (CAG), renewing pressure on Prime Minister Manmohan Singh, who is already reeling from corruption scandals.

Opposition parties reacted with outrage in parliament on Thursday to the report, which was leaked to a prominent Indian newspaper. The session was adjourned and the government said it would respond once it had verified the facts.

"We are examining the news report and I have called for records. After that I will reply," Coal Minister Sriprakash Jaiswal told reporters.

The leaked draft from CAG office criticises the government for allocating 155 valuable coalfields to about 100 private and some state-run miners instead of auctioning them off to the highest bidder.

It said the policy undervalued the coal by at least 10.7 trillion rupees, or $210 billion at today's exchange rate.

"This is the mother of all scams," said Venkaiah Naidu, a senior leader in the opposition Bharatiya Janata Party. "The prime minister should reply."

Prime Minister Singh, who himself oversaw the coal ministry during some of the period in question, declined to reply to questions by reporters at parliament.

A similar investigation over the allocation of telecoms licences led to huge protests that rocked Singh's government last year and landed a minister and several company executives in jail. In the telecoms scandal, officials are accused of taking bribes to favour certain companies.

Jaiswal said he was not serving as minister during the period under scrutiny and that the government policy was now to auction coal blocks.

The coal minister was expected to reply in parliament later on Thursday after consulting with the prime minister's office. A CAG source said the report would probably be presented to parliament in the next few days.

Copyright @ Thomson Reuters 2012