A Timely Warning to Crony Capitalists

The development once again emphasises the need for the ethical conduct of governance

The mass cancellation of coal blocks by India’s Supreme Court has vindicated the findings of the CAG and sent out a warning to a political class that perpetrates crony capitalism. But the decision of the court to quash allocation of 214 of the 218 blocks allotted to various companies since 1993 could adversely affect the health of banks as their exposure to the sector is estimated to be over Rs 1 lakh crore.

Industry bodies have described the court order as ‘too harsh’. This assessment is not off the mark as the country’s largest lender, State Bank of India, alone has lent around Rs 4,000 crore to power plants that were put up based on coal from the cancelled coal blocks.

The development once again emphasises the need for the ethical conduct of governance. The Government should work out transparent guidelines for the allocation of natural resources so that the economy is spared such shocks in the future.

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