Coal scam: government cites Manmohan Singh's 1991 'crisis' speech

Under unprecedented attack over the 'Coal-Gate scam', the government today cited the 1991 economic crisis in India to justify the allocation of coal mining blocks to private parties.

In the Supreme Court today, the Attorney General Goolam Vahanvati said the privatization of coal mining was one of the policies to tide over a major economic crisis.

He also quoted from a speech on by Prime Minister Manmohan Singh, who was then the Finance Minister, on the country's economic turmoil.

"In 1991, the country had only Rs 2,500 crore in foreign exchange to run the country for a fortnight. We needed 1, 25,000 crores for to generate power," said the government's top lawyer.

"The Planning Commission said there was no objection to privatizing coal mining for power generation."

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The Supreme Court said: "But we are concerned whether these policies have legal sanction."

The government said laws were amended to privatize coal blocks for power companies which would supply power to states at regulated tariff.

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The UPA government has been fighting allegations that precious coal mining blocks were allocated illegally to private parties and individuals close to the government at throwaway prices, costing the country hundreds of crores in revenue.

The controversy over coal allocation files sought by the CBI that are missing, stalled much of Parliament's last session with the Opposition alleging that most of the missing files are from the time the PM was in charge of the coal ministry.

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After reports that an officer investigating the coal scam wanted to examine Dr Singh, but was overruled by the CBI chief, the BJP said the PM should volunteer himself for questioning.