G. Kishan Reddy: The coal sector has been fired up to fuel India's growth

Mint

25-05-2025

This month, as India's conflict with Pakistan was peaking, the Cabinet Committee on Economic Affairs (CCEA) approved revisions to the country's Shakti Policy. These were part of a set of coal sector reforms that aim to transparently allocate coal to thermal power plants, while simplifying the processes around it.
This comes on the back of India's double achievement of surpassing 1 billion tonnes in coal production and despatch in 2024-25, a testament to the hard work of about 500,000 workers directly involved in mining, apart from several more who indirectly contribute to the sector.
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India's journey to 1 billion tonnes is by no means an overnight transformation, but a result of a decade of deep reforms. In 2014, the coal sector was in complete disarray. There was a severe deficit in coal production, given its dramatically rising demand. Coal and lignite production saw a modest increase from 566 million tonnes in 2009-10 to 610 million tonnes in 2013-14. A cumulative annual growth rate of 1.89% was far from sufficient for our needs as a fast-growing economy.
This was being pegged as one of the biggest challenges for the newly elected Narendra Modi government.
The Supreme Court's cancellation of 204 coal blocks in 2015 gave the government an opportunity to seek transformational changes. The introduction of commercial coal mining followed in 2020, marking a new era of transparency and competition.
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Ten years down the line, till March 2025, about 150 coal mines have been auctioned. As for commercial coal mining, 11 auction rounds have been completed since June 2020 and the 12th round is in progress. The results? India's coal production has seen a 70% growth over the last decade. State governments have been major beneficiaries. Auction premiums and royalties have added close to ₹4.4 trillion from the entire mining sector and ₹1.6 trillion from just the coal sector to state coffers.
The private sector as a strategic partner: After independence, coal output expansion was slow. A freight equalization policy provided no incentive to set up industries close to mines. On 17 May 1957, the then minister of steel, mines and fuel, Sardar Swaran Singh, introduced the Coal Bearing Areas (Acquisition and Development) Bill in the Lok Sabha with the aim of greater public control over the coal mining industry. India's coal production at the end of the First Five Year Plan for 1951 to 1956 stood at 38 million tonnes.
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The Centre's policy was marked by distrust of the private sector. A lack of trust in the risk-taking and innovation capacity of the private sector kept the expansion of India's coal production slow, In 1990, it hovered around 200 million tonnes. The commercial auction regime introduced three decades later can be counted as a significant departure from the past.
The environmental and sustainability challenge: For decades, environmental concerns in the coal and mines sector were brushed under the carpet. However, over the past decade, sustainability has moved to the forefront. Diversification has gathered pace, with ongoing solar and wind projects, pumped storage plants and Coal India's first-ever non-coal critical mineral block acquisition.
Further, the Cabinet has green-lit auction premiums and royalties being received by various state government exchequers. A ₹8,500 crore coal gasification programme is underway and there are plans to increase investment further. Over the next few years, mine closure will remain a core priority. Guidelines are being revised to enable smooth mine closures.
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Recognizing the environmental advantages of underground mining, as opposed to open-cast mines, we have set a roadmap to reach 100 million tonnes by 2029-30, with its implementation in full swing. Furthermore, the ministry is fast-tracking first-mile connectivity projects to ensure that 90% of coal will be loaded through mechanized and eco-friendly systems such as conveyor belts.
The future of coal usage: Despite record coal production, India's per capita use of coal energy remains far below that of China, Europe and the US. Over the past decade, coal's contribution to the overall installed capacity of electricity generation has been on a downward glide path. From 60% of India's installed power capacity in 2014-15, the share of coal-fired generation capacity has now reduced to 47%, while solar and other renewable sources have ramped up. However, the coal sector still caters to almost 79% of power consumption in India, which makes it critical to our energy mix.
Meeting summer demand: Every year, a detailed action plan is prepared to meet peak summer-time demand. This year, as of 21 May, the coal stock at thermal power plants stood at 54.56 million tonnes, which is sufficient for about 20 days.
Coal usage for Viksit Bharat: India's per capita electricity consumption is less than one-third the world average. As our economy continues to grow, with a GDP of $5 trillion on the near-term horizon and output of $35 trillion expected by 2047, by when India aims to reach developed-country status, our energy needs will expand. Even as India plans to achieve carbon-emission neutrality by 2070, coal will continue to be a critical pillar in our energy mix for the foreseeable future.
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India's coal sector is not just fuelling India's economic growth, it is also rewriting the rules of what is possible in modern mining. With innovative initiatives such as a coal trading exchange, digital platforms are now deploying AI, 5G, GPS tracking and other advanced technologies in the coal sector, along with enhanced safety and efficiency measures.
Once dismissed as a corruption-laden, bloated and inefficient monolith, the coal and mines sector has undergone a seismic shift over the last decade. As we look to the future, with a sustained focus on modernization, international collaborations and sustainable practices, the journey ahead will see India achieve greater milestones, solidifying the country's role as a global leader in making good use of underground resources.
The author is union minister of coal and mines and represents the Secunderabad Lok Sabha constituency.