A scheme guaranteeing subsidised coal for MSMEs was formulated in 2007–08 under the Manmohan Singh govt. Its implementation in Gujarat has spawned allegations of corruption.
Ahmedabad: As an MSME, Ahmedabad-based Modern Rubber Industries was eligible for cheap coal — at much below the market rates — under a central government scheme meant to boost this segment of industry.
The company did approach an agency appointed by the Gujarat government to implement the scheme, but claimed to have received coal at the market price.
Anmol Traders, an MSME brick kiln, had a different experience.
The Gandhinagar-based company said it purchased coal from a trader associated with another agency engaged for the scheme, in 2015, but was offered prices higher than the market rates.
Meanwhile, even though A&F Foods is listed as a beneficiary of the scheme (2017–18), it told The Print it had never dealt with any of the coal agencies tasked with implementing the scheme.
In Gujarat, a shadow looms over the implementation of a Manmohan Singh-era scheme meant to provide coal to MSMEs across India at a cheaper rate.
All the three aforementioned companies are named on the website of Coal India as beneficiaries of the scheme, but claim to have derived no benefit from it.
This gives rise to questions: If some eligible companies were indeed given coal at market prices instead of subsidised rates, why are they listed as beneficiaries of the scheme? If the coal in question was sold at prices higher than market rates — as alleged, for example, by Anmol Traders — what became of the extra money paid?
There are allegations, including by the Congress, of the scheme spawning a Rs 6,000 crore “scam” in Gujarat over the last 14 years that saw more than 60 lakh tonnes of subsidised coal “diverted and sold to industries in other states at a higher price”.
The charges have been denied by officials in the Gujarat MSME department, which is in charge of coal allocation. But they have started an internal investigation nevertheless in light of a Dainik Bhaskar report last month.
Speaking to ThePrint, Ranjeeth Kumar, Commissioner of the MSME department, called the accusations “a figment of imagination, imputing baseless, unfounded and defamatory allegations”.
Even so, interviews with the alleged beneficiaries of the scheme and an on-ground assessment suggest not everything adds up.
A visit to the purported premises of one of the implementing agencies — New Saurashtra Briquetting Industries Association — revealed a travel agency operating from the address instead.
The office of a second agency, Gujarat Coal Coke Traders & Consumers Association, appeared to lack full-time staff, bar an accountant, and didn’t have a formal name board.
Apart from the 3 companies named above, a fourth “beneficiary” could not be traced at the stated address.
Some “representatives” of the implementing agencies told ThePrint they were buying subsidised coal “as cheap as Rs 3,500–4,000 per tonne” but refused to reveal the rate at which they were selling to the MSMEs.
The issue gains urgency because a coal crisis that saw prices surge over the past few months has hit the MSME sector particularly hard.
In October 2021, over 400 textile units in Surat, employing close to 5,00,000 people, had to cut down production because of the rising coal prices. In the same month, five paper mills in Vapi had to shut down temporarily, leading to hundreds of job losses.
Commissioner Kumar, however, dismissed all the allegations.
Sunil Kumar, head of corporate communications at Coal India, which allocates coal under the scheme, did not respond to ThePrint’s queries on messages, or calls.
A helping hand for MSMEs
The scheme guaranteeing subsidised coal for MSMEs was formulated in 2007–08.
Under the policy, for small industries in Gujarat, coal is extracted every month from Coal India’s Western Coalfields and South Eastern Coalfields.
In order to ensure wide distribution of coal, states were asked to select agencies — state-nominated agencies or SNAs — and appoint a state official to monitor the process.
The additional industry commissioner is the designated officer in charge of allocation and distribution of coal. But in Gujarat this post has been vacant since 2015, and the job has been given to the state MSME department.
Under the policy, the SNAs have been tasked with giving an estimate for annual coal demand to the state MSME department, which is to then notify Coal India.
The amount of coal then allocated by Coal India, the public sector behemoth, is sent to the SNAs on a monthly basis.
According to the Coal India website, 4 companies — New Saurashtra Briquetting Industries Association (believed to have shut shop seven years ago), Gujarat Coal Coke Traders & Consumers Association, Kathiawad Coal & Coke Consumers & Traders Association and South Gujarat Federation of Industries — have handled supply of coal in Gujarat under the scheme since 2007–08.
The SNAs are given a contract by the state to buy subsidised coal from Coal India and sell it to MSMEs at prices below the prevailing market rates.
Under Coal India guidelines, the SNAs can make a profit of 5 per cent and charge the end user for taxes and transport.
Data available on the Coal India website shows that MSMEs in Gujarat were allocated 2,16,000 tonnes of coal annually between 2015 and 2019. This allocation was increased in 2020 and 2021 to 15,00,000 tonnes.
State MSME Commissioner Kumar explained the higher allocation thus: “The Centre revised the definition of MSMEs in 2020, which… increased the umbrella of MSMEs in Gujarat.
“Additionally, there has been a spurt in economic activity post-Covid. The coal quota for the state having remained stagnant since 2013–14, a need was felt to increase the allocation.”
Industry experts told The Print that while a textile processing unit uses about 30–50 tonnes of coal per day, a brick kiln can use up to 400–600 tonnes of coal annually in prosperous times.
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