Anatomy of Gujarat’s ‘Rs 6,000-cr coal scam’: UPA-era MSME subsidy that beneficiaries ‘never got’

 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 ThePrint 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.