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Current Affairs

Coal block allocation

Date: 15 October 2020 Tags: Miscellaneous


Last week, a special CBI court convicted Dilip Ray, former Minister of State for Coal, for his alleged involvement in the coal block allocation scandal.



  • It relates to allocation of a coal block in Giridih district of Jharkhand to a private company in violation of guidelines.

  • The CBI had noted that the Coal Ministry through its guidelines had specifically said no company engaged in production of iron and steel or sponge iron could get a captive coal mine if its production capacity was less than 1 metric tonne per annum (MTPA) in opencast mining.

  • However, when private company Castron Technologies Ltd applied for Brahmadiha Coal Block in Giridih, the minister agreed to relax guidelines and allow the grant despite it not being eligible.

  • In the early 1990s, the government decided to allocate such coal blocks to private companies that were not part of the production plan of PSUs Coal India Ltd and Singareni Collieries Company Limited (SCCL). 

  • At that time there were no concrete guidelines for allocation of blocks as coal mining was largely restricted to PSUs and many geographic locations were seen as unsuitable for profitable mining.

  • In March 2012, a leaked draft report of the CAG revealed irregularities in the allocation of blocks and pegged the loss to the exchequer at Rs 10.76 lakh crore, which subsequently was reduced to 1.8 lakh crore.

  • The CAG had argued that the government had the authority to auction the coal blocks but chose not to and as a result allocatees received a “windfall gain”.

  • The coal blocks allocation cases are among the CBI’s longest running probes, with the agency last registering a fresh FIR in the case in January 2020.

  • It has since 2012 filed multiple charge-sheets and even closed many cases for lack of evidence or culpability.

  • Unlike the 2G spectrum case, where all the accused have been acquitted, CBI has secured multiple convictions in the coal cases. 

  • In the Vini Iron and Steel case, where HC Gupta had been convicted, the court also convicted and sentenced former Jharkhand chief minister Madhu Koda to three years of imprisonment.