India’s Miners Will Be Its Keepers

The Economic Times     14th December 2020     Save    
QEP Pocket Notes

Context: With the launch of commercial coal mining in India, by removing restrictions for participation of bids, investments for across the sectors have been made possible.

Potential of the liberalized coal sector in India:

  • Positive sentiments of states: has helped in attracting bidders, as they reap the benefits of revenue.
    • Madhya Pradesh had the most number of blocks on offer, accounting for almost 29% and witnessed an almost 73% success rate in bids.
    • Many states received offers well above the floor prices; more than 66% for a mine in Chhattisgarh.

Need of Commercial Auction of Coal Mines

  • Radical boost to infrastructure creation: Liberalizing coal sector will generate employment opportunities, reducing the need for people to migrate to other states in search of better jobs.
    • Decades of misgovernance, especially in eastern parts of the country, has led to a lower industrial base in areas where many of India’s coal mines lie.
  • Imperative to ensure sufficient resource of coal: for industry while transitioning into a green economy and recognizing that the natural resources are finite and India’s electricity consumption is meagre.
    • India’s average electricity consumption is a meagre 1,181-kilowatt hours (KWh) per year, and it still aspires to produce 1 BT (billion tonnes) coal in 2023-24.
    • In the US, the average electricity consumption is 10,649 KWh per year.
    • China’s per capita electricity consumption is 4,475 KWh per year.
  • Substituting coal imports: Since coal is the cheapest source, its demand is going to go up through the decade and India will need an estimated 2,000 million tonnes of coal by 2030.
  • Diversification with optimal utilization:
    • International Energy Agency is expecting doubling or trebling of India’s per capita electricity consumption by 2040.
    • New business areas include setting up of solar and thermal power projects, solar wafer production units, and entering in the alumina refinery and smelter business.
    • Rs 31,000 crore investment planned by coal PSUs on gasification and coal-bed methane projects.

Conclusion: Before phasing out coal, India must first bridge the demand-supply gap, until then, while owning the fourth-largest reserves in the world, GoI’s emphasis on ‘aatmanirbharta’ in coal is the way forward.

QEP Pocket Notes