Coal mining (Total resources, Production and import)

Subject: Economy/Geography

Context:

Government has announced the auction of 41 coal blocks that have a capacity to produce 225 million tonnes of coal per year after removing the end-use restrictions and relaxed prior mining experience as bidding criteria.

Concept:

• India imports nearly 250 million tonnes of coal from other countries despite having the world’s fourth largest coal reserve.

• Commercial mining allows the private sector to mine coal commercially without placing any end-use restrictions. The private firms have the option of either gasification of the coal or exporting it.
• Further, with 100 per cent foreign direct investment allowed in the coal sector, global companies can also participate in the auctions.
• The complete freedom to decide on sale, pricing, and captive utilisation is expected to attract many private sector firms to participate in the auction process.
• The government expects these steps will generate employment and reduce India’s import bill.
• Private sector participation was permitted until the early 1970s. Then government has announced the nationalization of the coal blocks in two phases between 1971 and 1973.
• The government is hoping that the involvement of the private sector will increase production and make India self-sufficient in meeting its internal coal requirements.