Fast-Forward Coal Reforms for Power
Prime Minister-elect Narendra Modi is reportedly keen to fast-forward reforms long on the back-burner in the vexed coal sector that is marred with declining output, attendant shortages, a stodgy public sector monopoly and fast-rising imports — the world’s third largest — despite the fact that India has the fifth largest reserves of what remains our main source of commercial energy. The proposed move makes eminent sense and brooks no delay. The game plan is to hive-off Coal India Ltd into independent subsidiaries, attract foreign direct investment into the sector, and also make the respective state governments equity holders. The Bill to repeal the Coal Mines (Nationalisation) Act, 1973 has been pending in the Rajya Sabha for over a decade now and can be promptly made into law, if required in a joint setting of both Houses. We have had captive joint ventures in coal for two decades now, and the idea of continuing public sector monopoly is plain outdated and anachronistic. In any case, captive coal mines simply discourage scale economies and scuttle transparency. Instead, we need multiple coal producers competing for custom, so as to have timely supply and rev up fuel quality. Note also that the productivity in India’s coal mining and evacuation remains one of the lowest globally, and we do need to solicit foreign expertise and investment to shore up output. In tandem, we clearly need to overhaul the umpteen opaque, governmental approval processes for forest, environmental clearance and land acquisition. The way ahead is to put in place clear-cut norms including for afforestation, and go for time-bound approvals, junking the case-by-case approach. A thriving coal sector is vitally necessary to boost power pan-India. And creating it is fairly straightforward.