India may have lost $210 billion in 'mother of all scams'

By msnbc.com staff and news services

India may have lost $210 billion in what one opposition politician described as the "mother of all scams," according to reports.

A draft report by government auditors estimated the sum was lost when state-owned coalfields were sold to private operators too cheaply because of a lack of competitive bidding.

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The draft from the Comptroller and Auditor General's (CAG) office, leaked and reported by the Times of India, criticized the allocation of 155 coalfields to about 100 private and some state-run firms between 2004 and 2009, questioning why they were not auctioned off to the highest bidder.

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However, while the published excerpts criticized the government's methods, they stopped short of direct accusations of corruption and the auditor also later backed away from the loss calculation and said its thinking had changed.

Reuters reported that the revelations had provoked fury in India's parliament, where lawmakers are angry at a string of?recent scandals and policy missteps by Prime Minister Manmohan Singh.

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Singh, who oversaw the coal ministry during some of the period covered by the report, made no comment during his appearance in parliament on Thursday but his office called the leaked report's estimated loss "exceedingly misleading."

Opposition party leader Prakash Javadekar described the coalfield sale as the "mother of all scams" and the government as "the government of looters" in comments reprinted in the Times of India.

Singh has lurched from crisis to crisis since massive corruption in the sale of telecoms spectrum surfaced two years ago, culminating in the quashing of licenses. The telecoms sale may have cost the government up to $36 billion.

The uncertainty over the coal contracts will add to investors' confusion about doing business in one of the world's fastest-growing economies.

Any suggestion of lost revenues also underlines the weakening state of the central government's finances. The budget deficit is expected to blow out to 5.9 percent of GDP this fiscal year from a goal of 4.6 percent, leaving the government financially stretched for the upcoming year and ahead of elections due by 2014.

Reuters and msnbc.com's Alastair Jamieson contributed to this report.

Source: http://worldnews.msnbc.msn.com/_news/2012/03/22/10811013-auditor-indian-government-may-have-lost-210-billion-in-mother-of-all-scams

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