25 June, 2020
6 Min Read
Coal sector reforms
GS-PAPER-2 Governance and Energy PT-MAINS-I.V
India, being a developing country, coal remains one of the most important indigenous energy resources and the dominant fuel for power generation and many industrial applications.
Presently, despite being the world's fourth-largest producer, India is the second-largest importer of the dry-fuel. Therefore, in line with the vision to build an ‘Atma Nirbhar Bharat’, a slew of reforms to promote commercial mining of coal in India, has been announced.
Unlocking coal mining for private players is a step forward to attain self-reliance in the coal sector. However, for sustainable utilization of coal, there is a need to look into these reforms from a multidimensional viewpoint.
Announced Reforms In Coal Sector
Plugging Supply Gap: The nationalisation of coal in 1973 meant that domestic coal could be mined only by public sector companies.
Boost Economy and Employment: Allowing commercial mining may help to address India’s coal production needs, provide investment opportunities and save precious foreign exchange.
Win-Win Situation: The government has introduced a more equitable system of sharing of revenues, moving away from fixed rates to a revenue-sharing model.
Dominance of Coal India: While reforms are aimed at ending the monopoly of Coal India Ltd., that’s unlikely to happen in the near future.
Issue with Non-washing of Coal: Doing away with the regulation requiring power plants to use “washed” coal will have huge environmental and economic costs.
External Challenges: In the era of intense competition from renewables, the rising NPAs of thermal power plants (TPPs) and a massive global withdrawal from fossil fuel for climate and environmental reasons poses a challenge of viability for commercialising coal.
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