Syllabus: GS3/Energy
Context
- Coal has long been the backbone of India’s energy sector, fueling industries, power plants, and economic growth. However, the global shift towards sustainability has necessitated a transformation in how coal is utilized.
Brief about the India’s Coal Sector
- India is the 5th largest in coal reserves and 2nd largest coal consumer globally.
- Per capita coal energy consumption remains lower than China, the USA, or OECD nations.
- Coal’s share in installed capacity has decreased from 60% in 2014–15 to 47% today.
- It has crossed the 1 Billion Tonne, both production and dispatch in FY25.
- It reinforces India’s energy security, ensures a reliable and cost-effective power supply.
- The coal industry has contributed significantly to employment, supporting over 5 lakh workers across more than 350 coal mines.
Significance of Coal Sector in India
- Backbone of India’s Energy Security: Coal powers 46.88% of India’s total installed power capacity (as of Nov 2024), making it the single largest contributor to electricity generation.
- Despite the rise of solar and wind energy, coal is projected to retain 55% share of power generation by 2030.
- Strategic Role in Core Industries: Coal dependent steel industry uses coking coal in blast furnaces — India aims to produce 140 MT of domestic coking coal by 2029–30 under Mission Coking Coal.
- Economic Engine of Mineral-Rich Regions: Coal production contributes over ₹70,000 crore annually through royalties, GST, and District Mineral Foundation (DMF) funds.
- Major Employment Provider: The coal sector employs around 5 lakh workers across 350+ mines.
- Railway Revenue Pillar: Coal is the single largest source of freight revenue for Indian Railways, contributing 49% of total freight earnings (FY 2022–23).
- Corporate Social Responsibility and Nation Building: Coal PSUs spend over ₹600 crore annually on CSR — funding schools, hospitals, skill centers, and community welfare in backward regions.
| Geographical Distribution of Coal in India – Gondwana Coals: About 98% of total coal in India is based on Gondwana time; 1. Majorly found in Chhattisgarh, Jharkhand, Odisha, Madhya Pradesh, Andhra Pradesh etc. 2. Major Gondwana Coal Mining Centres: (a). Damodar Valley: Daktonganj, Bokaro, Jharia, Dhanbad, Raniganj, Durgapur (b). Son Valley: Associated with North Koel river, Singrauli (c). Mahanadi Valley: Associated with rivers like Hasdeo, Ib, South Koel etc, Korba, Jhilmil, Talcher (d). Godavari and Wardha Valley: Singreni, Kotagundam (Telangana), Kamptee Valley (Nagpur, Maharashtra) Types of Coal in India – Anthracite: Highest carbon content, rare in India. – Bituminous: Most abundant and commonly used for power generation. – Sub-bituminous: Higher heating value than lignite. – Lignite: Low-grade coal, used mainly in power plants near mining sites. |
| Important Coal Fields | |
| Coal Fields & Location | Importance |
| Jharia Coalfield, Jharkhand | Known for high-quality coking coal. |
| Raniganj Coalfield, West Bengal | India’s oldest coalfield, primarily producing non-coking coal. |
| Talcher Coalfield, Odisha | One of the largest coal reserves in India. |
| Korba Coalfield, Chhattisgarh | A major source of thermal coal. |
| Singrauli Coalfield, Madhya Pradesh & Uttar Pradesh | Important for power generation. |
| Bokaro Coalfield, Jharkhand | Produces both coking and non-coking coal. |
| Singareni Coalfield, Telangana | Major coal field in South India |
| Wardha Valley Coalfield, Maharashtra | Significant for industrial use. |
Challenges India’s Coal Sector Facing
- Coal Supply Shortages: India has experienced periodic coal shortages, leading to power crises.
- Factors such as stagnating domestic production, transportation bottlenecks, and reduced imports have contributed to supply constraints.
- Environmental and Sustainability Issues: These include deforestation, air pollution, and carbon emissions.
- While India is pushing for coal gasification and cleaner mining technologies, the transition remains slow.
- Dependence on Coal Imports: Despite having the fifth-largest coal reserves, India still imports coal to meet demand.
- High import costs and global price fluctuations pose economic challenges.
- Infrastructure and Transportation Bottlenecks: Coal transportation relies heavily on railways, which often face congestion and delays.
- Improving logistics and infrastructure is crucial for ensuring timely coal supply.
- Social and Labor Concerns: Coal mining employs over 5 lakh workers, but safety concerns, displacement of communities, and inadequate rehabilitation programs remain pressing issues.
Recent Key Reforms in the Coal Sector
- Commercial Coal Mining (2020): It allows private players to participate in coal auctions. It increased competition, improved efficiency, and attracted investments, leading to higher production and employment generation.
- The Coal Bearing Areas Act of 1957 signaled state control but lacked trust in private innovation.
- Coal Mines Special Provisions Act (CMSP Act 2015): It was enacted to address the cancellation of coal block allocations by the Supreme Court.
- It introduced a transparent auction process, encouraging private sector involvement and generating revenue for the government.
- SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) Policy for Coal Allocation (revised in 2025): It ensures greater flexibility, wider eligibility, and better accessibility to coal, supporting India’s energy needs.
- Single Window E-Auction Mechanism: It removes market distortions, increases operational efficiency, and ensures fair pricing for all sectors.
- Revival of Abandoned Coal Mines: India has initiated policies to reopen abandoned and discontinued coal mines through private sector participation.
- It aims to optimize coal resources while ensuring environmental sustainability.
- Push for Underground Coal Mining: Incentives like waiving upfront payments and reducing revenue share requirements, to encourage private investment and adoption of advanced mining technologies.
- Coal Gasification and Sustainable Mining: India has set a target to gasify 100 million tonnes of coal by 2030, reducing carbon emissions and fostering cleaner energy solutions.
- Financial support and tax incentives have been introduced to accelerate coal gasification projects.
Tech-Driven Revolution: Coal Exchange and DigiCoal
- India to launch its first coal trading exchange for seamless, transparent access and pricing.
- DigiCoal initiative to digitize coal mines:
- 5G, AI monitoring, GPS tracking, drone surveys
- Digital twins for operational safety and efficiency.
Future Vision: Viksit Bharat 2047
- From 1.10 MWh per capita electricity consumption today to matching or exceeding global averages.
- India’s journey to a $5 trillion economy by 2030 and $35 trillion by 2047 depends on reliable energy access.
- Coal will remain pivotal, complemented by renewables.
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