India's union coal ministry ahs said that an assessment by the Comptroller and Auditor General's (CAG) in a leaked draft report that the government's handing of coal field s have resulted in windfall profits to private and state-run entities, is `fallacious and erroneous'.

The ministry dismissed observation of the auditor that due process was not followed in allocating blocks and insisted that a fair and transparent system was followed in deciding upon the allocation of coal blocks. The ministry officials also said that the decision of coal block allocations ere only taken after intense scrutiny and extensive deliberations.

The leaked report had pointed out that the government had give undue profits to commercial entities amounting to Rs 10.67 lakh crore by allotting them 155 coal blocks without auctions between 2004 and 2009.

Coal Minister Sriprakash Jaiswal responded by saying that the observations of CAG are notional and imaginary and pointed out that the allocation process is open to all parties. He said that firms with technical and financial competence were given the coal blocks.

"Right from the inception, the government did not reckon the coal blocks allocation system as a revenue generating process. When the clamour for blocks grew and a sufficient need to switch over to the competitive bidding process was felt, action was initiated, albeit belatedly, which culminated in the legislative changes," he said.

The union government is likely to speed up the process of setting up a new coal regulatory body in the country and also auction of coal mining blocks in wake of the allegations that faulty policies cost billions of dollars in lost revenues to the country.

A leaked report by CAG that published by section of media said that the nation lost Rs 10.7 lakh crore of revenue by allotting coal blocks to companies directly and not conduction auctions.