Introduction: The Centre on Thursday 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. The move is aimed at reviving the auction process, which has remained in limbo with only 31 coal blocks having been auctioned since 2014, when the NDA had first come to power on the promise of bringing transparency in the sector in the aftermath of the 'coalgate' scam. Modi said that the Centre has allowed commercial mining under its Aatmanirbhar Bharat package, with the aim of making India among the biggest exporters of the dry fuel. He also stressed on the irony that India is the second largest coal importer, despite having the world’s fourth largest coal reserves and being the second largest producer.

Its Importance

• Coal is the base of 70% power generation in the country.
• Indian coal has high Ash content and low Sulphur content
• Coal auction will be in online platform to increase the transparency
• Open market that is done now is good move

Facts and Figures:

• Largest reserves of coal in the world is found in the U.S.
• India is the second largest producer of coal.
• India is the second largest importer of coal.
• India is the second largest coal importer, despite having the world’s fourth largest coal reserves and being the second largest producer  but we are importing large coal for billion dollars because we choose monopoly that is incapable of domestic demand.
• Today, India is the second largest producer of coal with its record production at 729 million tonnes (MT) in 2019-20. 
• To overcome this, we gone for captive mining but this will have a Big impact on Coal India and the state which having cold Reserves

Background

• The nationalisation of the coal sector in 1973 meant that domestic coal could be mined only by public sector companies. 
• We have the world’s largest coal miner in Coal India Limited (CIL), which has registered an unprecedented increase in production of 140 MT in the last six years. It will continue to play a major role in ensuring energy security. 
• While State-owned coal companies improved production, safety and prioritised employee welfare, the country’s coal demand continues to grow at a very faster rate. 
• It is a stark reality that the CAGR of coal import from 2009-10 to 2013-14 was 23%. With these interventions, the rate was reduced to 2% in Modi-I (2014-15 to 2018-19). 
• Even so, we imported 251 MT coal in 2019-20 worth ~1,58,865 crore, despite having the fifth largest reserves in the world.

Key Parameters

• India is stepping on the gas today to lay a strong foundation for energy security in the country, while providing large-scale employment and opportunities for investment in the coal sector.
• In line with Prime Minister's vision to build Aatmanirbhar Bharat (self-reliant India), India is marking a fundamental shift to unleash the coal sector as commercial mine auctioning kickstarts. We are re-orienting our approach from focusing on revenue maximisation to making maximum coal available in the market.
• The story of coal in India has been long and eventful. At one end, this ”Black diamond” has powered the aspirations of a growing nation, yet on the other, demand has far outpaced supply. In a way, India’s coal journey reflects both the rise of the economy and also the mismanagement of previous regimes.
• To begin with, a transparent mechanism was set in place through a legislation, the Coal Mines (Special Provisions) Act, 2015, to return the blocks to industry, via auctions. 
• Similarly, in 2014, two-thirds of the major power plants had critical coal stocks of less than seven days. .

Role of private players

• By bringing private players there will be in efficiency in coal sectors and in some other sectors too and there will be a better working practice in country as it makes Coal India to increase its efficiency;
• Core sector should have some benchmark for the players;
• There should be a proper Regulation and allocation for the players;
• The beneficiation of coal should be done before loading;
• More mining and better exploitation, the particular grade coal can also be made;
• Dry beneficiation should be done without polluting the water resource;
• Gasification is also in increasing trend in India and it should be done better;

Established Reforms

• On the process side, the coal ministry has simplified the process of the mining plan approval process from 90 days to 30 days.
• Second, the government has introduced a more equitable system of sharing revenues, moving away from fixed rates to an ad-valorem system. So when the prices go up, the miner shares more with the government and if they decrease, he shares less. This is equitable for both the parties.

Road Ahead

• The coal sector reforms are not just about investments and improving coal production. It has the innate potential to usher in immense job opportunities and provide a boost to the government’s Make in India programme, since coal mining operations require large machines and manpower. 
• Reforms in the coal sector are an ongoing policy evolution. The recent move to untether the sector marks a paradigm shift in the way business in the coal sector will be conducted. While doing this, we have ensured the growth and prosperity of CIL. It has been given a target of producing one billion tonnes of coal by FY 2023-24. For this necessary capital, coal blocks and an expeditious approval giving mechanism have already been put in place.