NEW DELHI: Rankled by CBI action against top industrialist KM Birla in relation to coal scam, corporate leaders on Thursday said businessmen cannot be made scapegoats on the basis of mere suspicion and such incidents would further widen the government-industry trust deficit.

"Such developments dent the national psyche and dampen investor confidence, both domestic and foreign. With repeated episodes of a trust deficit between industry and government, the business sentiment and the investment environment would be vitiated," leading industry chamber Ficci's president and senior banker Naina Lal Kidwai said.

"Capable and highly regarded business leaders cannot be made scapegoats of mere suspicion and misconstrued actions," she added.

Another senior industry leader Adi Godrej said the Birla issue has further created a negative perception in the country, which was already vitiated by cases like Vodafone, and the country risks edging towards a scenario where it would lose investors' confidence with such incidents.

Kanoria Chemicals CMD RV Kanoria also said that the government needs to recognise the role played by businesses in the economy.

"If we can just implement the policy framework and create a positive environment our country has an immense potential," he added.

The action against $40-billion Aditya Birla group chairman Kumar Mangalam Birla has also come for criticism by some union ministers, including corporate affairs minister Sachin Pilot and trade and industry minister Anand Sharma.

Other industry leaders who have criticised the action include Deepak Parekh and Ajay Piramal , as also industry chambers like Assocham and PHD Chamber of Commerce.

The CBI earlier this week filed a case against Birla as a representative of Aditya Birla Group and his group company, aluminium maker Hindalco, for alleged corruption in the allocation of Talabira two coal blocks in Odisha which was allotted to it on November 10, 2005.

The agency also named former coal secretary PC Parakh in the FIR on charges of criminal conspiracy and corruption in connection with alleged irregularities in allocation of coal blocks eight years back.

"The root cause of the problem is we don't have transparent and clear methodology for allocating natural resources in our country ... whether it is spectrum or gas or coal, what we need is clear and simple laws so that the people of this country can be assured of competition and transparency and the best possible price," Meera Sanyal, former country head RBS India, said.

Ministers rush in to defend Manmohan

Meanwhile, three Union ministers on Thursday came out in defence of Prime Minister Manmohan Singh in the coal block allocations scam case, saying he needs no certificate of honesty and that the allotments were made on recommendations of state governments.

"The entire nation knows about the commitment and honesty of the Prime Minister. He does not need any certificate from any quarter to prove his honesty," coal minister Sriprakash Jaiswal told reporters.

The opposition BJP has demanded the Prime Minister's resignation following allegations by former coal secretary PC Parakh that Singh knew about the allocation of coal blocks to companies and that he too should be named as a "conspirator" and made an "accused".

Parakh on Wednesday had said that the final decision lay with the Prime Minister who held the coal portfolio at the time.

When asked about Parakh's allegation, commerce and industry minister Anand Sharma said the Prime Minister has not committed a crime by signing the letter. He also said agencies like CBI should not undermine investor sentiment.

The government has nothing to hide, minister of state for Prime Minister's Office V Narayanasamy said.

"As far as the government is concerned, we have made it very clear that the allocation of coal blocks have been made to public sector undertakings and also to some of the private sector on the recommendation of the state governments," he told reporters here.

The chief secretaries of state governments where coal blocks are available are members of the committee.

"The committee has cleared it (coal blocks allocation)," the minister said.

On the booking of Birla and Parakh, Narayanasamy, whose ministry deals with the CBI on administrative matters, said, "I do not want to go into merits of anything."

"Some of my colleagues also made some observations. The kind of trend is coming is not good for the country. That much alone I can say," the minister said.

