Singh Resignation Sought by India’s Opposition on Auditor Report

India’s opposition party demanded that Prime Minister Manmohan Singh resign after a report by the chief auditor last week said the government may have lost $33 billion by giving away coal blocks rather than auctioning them.

Both houses of parliament were adjourned today after protests and disruptions by groups led by the Bharatiya Janata Party, threatening to deepen the political impasse that has stalled legislation and cabinet decisions. The auditor’s report said the government gave undue benefit to companies including Jindal Steel & Power Ltd. and Tata Steel Ltd. by awarding mining contracts at negotiated prices.

The latest report is another blow to Singh, 79, whose government has been roiled by a series of corruption allegations with two years left in its second term before facing national elections, said N. Bhaskara Rao, chairman of the New Delhi-based Centre for Media Studies. A new survey by Nielsen Holdings NV showed Singh’s Congress party will lose power if voters were to go to the polls today.

“This reduces the likelihood the government will be able to pass any meaningful reforms,” Rao said. “It will be further pushed to a corner, emboldening the opposition and coalition allies to demand their pound of flesh in return for support.”

Downgrade Threat

Singh is battling to prevent the nation’s sovereign rating from slipping to junk status after Standard & Poor’s and Fitch Ratings cut the outlook this year to negative, citing slowing economic growth and his inability to rein in the budget and current-account deficits.

The opposition personally blames Singh for the losses because he was in charge of the coal ministry for part of the period under review. Lawmakers stormed into the well of the chamber in India’s lower house today shouting slogans, prompting Speaker Meira Kumar to defer the proceedings to tomorrow. The upper house was also adjourned.

The Comptroller & Auditor General said on Aug. 17 the government lost 1.86 trillion rupees over a five-year period by allocating the coal mining blocks. The auditor arrived at the loss, calculating the difference between the average price of coal and cost of production at Coal India’s mines in the year ended March 31, 2011.

“The nation’s money is being looted,” said M. Venkaiah Naidu, a leader of the BJP. “The prime minister and the government should resign. There’s no alternative.”

‘Political Mileage’

Coal Minister Sriprakash Jaiswal, and Singh’s cabinet colleague, rejected the auditor’s report saying the government had been fully transparent and needed the help of private companies to boost production.

“It isn’t that somebody has been caught red-handed,” said B.G. Verghese, an independent political analyst and an aide to former prime minister Indira Gandhi. The BJP move is “purely to make political mileage out of the issue,” he said.

This isn’t the first time the opposition has demanded the resignation of Singh. A similar audit review two years ago into the sale of phone permits in 2008 sparked the country’s biggest graft probe, eliciting calls for him to step down.

The auditor said in 2010 that the licenses to operate mobile networks were awarded at “unbelievably low” prices, resulting in a loss of as much as $31 billion to the exchequer. The investigation led to the arrest of a cabinet minister, government and company officials. All those charged deny any wrongdoing.

Opposition parties led by the BJP are set to snatch power if elections were to be held today, an opinion poll carried out by Nielsen and India Today showed the same day the auditor’s coal report was released. It forecast that Singh’s coalition may win 78 fewer seats than the 259 it secured in May 2009, while parties led by the BJP may win as many as 205, the poll showed.

Nielsen questioned almost 16,000 people in 19 states at the beginning of July. No margin of error was given.

To contact the reporters on this story: Andrew Macaskill in New Delhi at amacaskill@bloomberg.net; Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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