{"id":9172,"date":"2020-07-24T19:57:57","date_gmt":"2020-07-24T14:27:57","guid":{"rendered":"https:\/\/triumphias.com\/blog\/?p=9172"},"modified":"2023-04-11T13:12:29","modified_gmt":"2023-04-11T07:42:29","slug":"the-coal-sector-in-india-and-the-reform-it-requires","status":"publish","type":"post","link":"https:\/\/triumphias.com\/blog\/the-coal-sector-in-india-and-the-reform-it-requires\/","title":{"rendered":"The Coal Sector In India and the reform It requires"},"content":{"rendered":"<h1>The Coal Sector In India and the reform It requires<\/h1>\n<p><span style=\"color: #0000ff;\"><strong>Relevance: Mains: General Studies 2, 3:\u00a0<\/strong><strong>Government policies and interventions for development in various sectors and issues arising out of their design and implementation.\u00a0<\/strong><\/span><\/p>\n<p><span style=\"text-decoration: underline; color: #ff0000;\"><strong>Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.<\/strong><\/span><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.iasexpress.net\/wp-content\/uploads\/2020\/02\/coal-sector-in-india-upsc-notes-mindmap-essay-1.jpg\" alt=\"Updated] Coal Sector in India - Reserves, Significance, Issues ...\" \/><\/p>\n<p><strong>Why In News?<\/strong><\/p>\n<p>The Centre launched the auction of 41 coal blocks for commercial mining, with the Prime Minister formally giving the green signal and expressed optimism that it will help in reducing dependency on imports.<\/p>\n<ul>\n<li>The move is aimed at reviving the auction process, which has remained in limbo with only 31 coal blocks having been auctioned since 2014.<\/li>\n<li>Centre has allowed commercial mining under its Aatmanirbhar Bharat package, with the aim of making India among the biggest exporters of the dry fuel.<\/li>\n<li>India is the second largest coal importer, despite having the world\u2019s fourth largest coal reserves and being the second largest producer.<\/li>\n<\/ul>\n<p><img decoding=\"async\" src=\"https:\/\/www.jatinverma.org\/uploads\/2020_06\/pasted_image_022.png\" alt=\"Coal and mining sectors fully open for competition\" \/><\/p>\n<p><strong>Coal Sector in India<\/strong><\/p>\n<p><strong><em>1973:<\/em><\/strong>\u00a0Coal sector was nationalised in 1973 which meant that\u00a0<strong>domestic coal could be mined only by public sector companies<\/strong>. While State-owned coal companies improved production, safety and prioritised employee welfare, the country\u2019s coal demand continued to grow at a very faster rate and often neglected modernization of mining technologies.<\/p>\n<p><strong><em>Post liberalisation reforms in 1993<\/em><\/strong><strong>:\u00a0<\/strong>Government decided to\u00a0<strong>allocate coal mines<\/strong>\u00a0to various players for captive consumption\u00a0(in captive mining coal is taken out by a company for its own use and it won\u2019t be able to sell it in the market). Despite private sector participation in a restricted manner, state run Coal India Ltd continued to dominate the market (but with inefficiency)<\/p>\n<p><strong><em>During the high growth years of 2000s<\/em><\/strong>\u00a0the increasing demand of Coal could not be fulfilled by the state run Coal India Ltd., leading to\u00a0<strong>higher demand-supply gap<\/strong>.<\/p>\n<ul>\n<li><strong>Increased imports:<\/strong>\u00a0Demand Supply gap, procedural delays, environmental clearances led to increase in imports \u2013 the CAGR of coal import from 2009-10 to 2013-14 was 23%<\/li>\n<li><strong>Coal Auction Scam:<\/strong>\u00a0The CAG report followed by the Supreme Court verdict in 2014 resulted into cancellation of allocation near all coal mines allocated after 1993.<\/li>\n<\/ul>\n<p><strong><em>Reforms undertaken post 2014<\/em><\/strong><\/p>\n<ul>\n<li><strong>Coal Mines (Special Provisions) Act, 2015<\/strong>\u00a0enabled allocation of coal mines through transparent auctions<\/li>\n<\/ul>\n<ul>\n<li>In February 2018, Cabinet Committee on Economic Affairs permitted entry of private firms in\u00a0<strong>commercial coal mining<\/strong>\u00a0in the country<\/li>\n<li>In April 2018, The Ministry of Coal launched\u00a0<strong>UTTAM (<\/strong>Unlocking Transparency by Third Party Assessment of Mined Coal) Application for coal quality monitoring.<\/li>\n<li>Ministry of Coal also developed\u00a0<strong>Online Coal Clearances System<\/strong>\u00a0to provide a single window access to its investors to submit online applications for all the permissions \/ clearances and approvals granted by Ministry of Coal.<\/li>\n<li><strong>Coal Allocation Monitoring System (CAMS)<\/strong>\u00a0was also developed to monitor the allocation of coal by CIL to States, States to State Nominated Agencies (<strong>SNA<\/strong>) and SNA to such consumers in a transparent manner.<\/li>\n<\/ul>\n<p><strong>Recently announced Reforms in Coal Sector<\/strong><\/p>\n<ul>\n<li>Commercial mining of coal allowed, with 41 blocks to be offered to the private sector<\/li>\n<li>The coal mines being auctioned are located in Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra and Odisha. They include partially and fully explored mines.<\/li>\n<li>Simplified the process of the mining plan approval process from 90 days to 30 days.<\/li>\n<li>In previous auctions, only end users of coal, such as companies in the iron and steel and power sectors, were permitted to bid on coal blocks. This restriction has been done away with.<\/li>\n<li>Also, the law earlier excluded companies without mining operations in India from participating in the auctions. This bar has been done away with, paving the way for\u00a0<strong>local and foreign mining majors and non-mining ones, too, to participate<\/strong>\u00a0in the domestic coal sector.<\/li>\n<li>The government has introduced a more\u00a0<strong>equitable system of sharing revenues,<\/strong>\u00a0moving away from fixed rates to an\u00a0<strong>ad-valorem system<\/strong>. So when the prices go up, the miner shares more with the government and if they decrease, he shares less.<\/li>\n<\/ul>\n<p><strong>Are the Reforms going to benefit India \u2013 How?<\/strong><\/p>\n<ul>\n<li><strong>Competitive Sector<\/strong>: It will lead to the induction of new technology and competition in the sector.<\/li>\n<\/ul>\n<ul>\n<li><strong>Revenue maximisation:<\/strong>\u00a0The mines are expected to attract a capital investment of around\u00a0\u20b933,000 crore over the next 5-7 years, adding\u00a0\u20b920,000 crore annually to state government revenues.<\/li>\n<\/ul>\n<ul>\n<li><strong>Increased Production:<\/strong>\u00a0According to the coal ministry, these 41 mines are expected to hit a peak production of 225 mt, generating around 15% of India\u2019s coal output in 2025-26<\/li>\n<\/ul>\n<ul>\n<li><strong>Attract Foreign Firms:<\/strong>\u00a0Global coal mining firms, which were so far forbidden from mining coal in India, can now invest and introduce their best practices.<\/li>\n<\/ul>\n<ul>\n<li><strong>Reduced Imports:<\/strong>\u00a0Indian industry can invest in a commodity business that provides an opportunity to substitute 135 MT coal imports<\/li>\n<\/ul>\n<ul>\n<li><strong>Knock-off Impact:<\/strong>\u00a0With the unlocking of the sector now, companies using coal will be free to focus on their core business while procuring coal from professional miners.<\/li>\n<\/ul>\n<ul>\n<li><strong>Better Utilization of resources:<\/strong>\u00a0Mines will no longer be allotted on the basis of a \u2018match\u2019 with the needs of the single captive user. Rather, it will be auctioned based on economic efficiency.<\/li>\n<\/ul>\n<ul>\n<li><strong>Increased job opportunities<\/strong>:\u00a0It is expected to create employment generation for more than 2.8 lakhs people.<\/li>\n<\/ul>\n<ul>\n<li><strong>Provides a boost to Make in India<\/strong>\u00a0programme, since coal mining operations require large machines and manpower<\/li>\n<li><strong>Benefits State governments:<\/strong>\u00a0The economies of coal-bearing states like Jharkhand, Chhattisgarh, Madhya Pradesh, Maharashtra and Odisha will also grow since all the revenue from these auctions will accrue exclusively to them.<\/li>\n<\/ul>\n<p><strong>What are the challenges?<\/strong><\/p>\n<p><strong>Federal Challenges<\/strong>: In a writ petition to the SC, Jharkhand has said the Centre\u2019s decision to commence commercial mining process flouts Schedule-V of the Indian Constitution, which refers to the \u2018scheduled areas\u2019 falling under the state government.<\/p>\n<p><strong>Social Impact Assessment:<\/strong>\u00a0Jharkhand has further contested that there is need for fair assessment of the social and environmental impact on the huge tribal population and vast tracks of forest land in the state.<\/p>\n<p><strong>Weak Investment Appetite<\/strong>: The negative global investment climate prevailing due to Covid-19 is unlikely to fetch reasonable returns proportionate to the value of the scarce natural resource<\/p>\n<p><strong>Vulnerable to Foreign Control of resource:<\/strong>\u00a0Covid pandemic and liquidity crunch with the domestic industries might make them uncompetitive in auction process where Global players with huge resources will also be participating<\/p>\n<p><strong>Environmental Challenges:<\/strong>\u00a0One of the proposed auction of a mine site is near Maharashtra\u2019s Tadoba- Andhari Tiger Reserve. The State government has raised concerns that mining at the site can lead to destruction of wildlife corridors.<\/p>\n<p><span style=\"color: #0000ff;\"><strong>For more such notes, Articles, News &amp; Views Join our Telegram Channel.<\/strong><\/span><\/p>\n<p><a title=\"Telegram Link\" href=\"https:\/\/t.me\/triumphias\" target=\"_blank\"><span style=\"color: #ff0000;\"><strong>https:\/\/t.me\/triumphias<\/strong><\/span><\/a><\/p>\n<p><span style=\"color: #0000ff;\"><strong>Click the link below to see the details about the UPSC \u2013Civils courses offered by Triumph IAS.<\/strong> <\/span><span style=\"color: #ff0000;\"><strong><a style=\"color: #ff0000;\" title=\"Courses available\" href=\"https:\/\/triumphias.com\/pages-all-courses.php\">https:\/\/triumphias.com\/pages-all-courses.php<\/a><\/strong><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Coal Sector In India and the reform It requires Relevance: Mains: General Studies 2, 3:\u00a0Government policies and interventions for<\/p>\n","protected":false},"author":1,"featured_media":3299,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[123,42,43],"tags":[3605,3604,3603,3610,3609,1696,3607,3608,2217,3606,392],"class_list":["post-9172","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","category-general-studies-iii-technology-economic-development-bio-diversity-environment-security-and-disaster-management","category-indian-economy","tag-coal-mines","tag-coal-mining","tag-coal-sector","tag-competitive-sector","tag-increased-production","tag-india","tag-job-opportunities","tag-make-in-india-programme","tag-reforms","tag-revenue-maximization","tag-union-public-service-commission-upsc"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/9172","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/comments?post=9172"}],"version-history":[{"count":2,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/9172\/revisions"}],"predecessor-version":[{"id":13893,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/9172\/revisions\/13893"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media\/3299"}],"wp:attachment":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media?parent=9172"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/categories?post=9172"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/tags?post=9172"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}