SC remarks on coal allocation could end privilege of PSUs

Whatever be the law and its interpretation, the current practice is that coal blocks are “allocated” by the Centre while mining leases are granted by the states concerned. The SC observed that the existing policy amounted to putting the cart before the horse as states have no choice but to grant mining leases to whoever is allocated the block by the Centre. It felt that the Centre has a lot of "legal explanation" to do as the statutory Act empowers only the states to undertake the task of allocation (licensing).

Under the Seventh Schedule of the Constitution, management of mineral resources vests with both the Centre and state governments but its says that regulation and development of minerals would be the states’ job, except to the extent that Parliament, by law, makes a specific provision. The question of development and regulation is distinct from that of ownership. Ownership of minerals (except offshore minerals) is also with the states and in all cases, the licensing and leasing power is with the states only.

The question is whether the Coal Mines Nationalisation Act or the MMDR Act has been changed to give the Centre power to “allocate” coal blocks. The SC doesn’t think they have.

However, there is no assurance that states will be able to allocate coal blocks in a better way than the Centre given the mining controversy in states like Karnataka, feel experts. What is required is

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