MINI PROJECT REPORT -2

ON
“COAL INDUSTRY”

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE

DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

SHRISHTI SHARMA
FILE NO.- 22MBA40
Roll No.- 2203410700054
(2022-24)
Under the guidance Under the Supervision
Mr.Amant Hussain Dr.Saurabh Kumar Singh
(Assistant Professor) (Head of the Department)

1
 AFFILITED TO DR.A.P.J ABDUL KALAM TECHNICAL
UNIVERSITY, LUCKNOW (U.P)

CERTIFICATE

This is to certify that the project entitled, “COAL INDUSTRY ” by

Shrishti Sharma , is a bona-fide record of work done under my guidance
and supervision in partial fulfillment of the requirement for the award of the
degree of Master of Business Administration.
___________________ _______________
Dr.SAURABH KUMAR SINGH Mr. AMANAT HUSSAIN
(Head of the Department) (Assistant Professor)
(Project Guide)

2
 DECLARATION

This is to certify that I have completed mini project report titled

“COAL INDUSTRY”, under the guidance of Mr. Amanat Hussain in
partial fulfillment of the requirement for the award of Degree of
Master of Business Administration at Institute of Technology &
Management, Aligarh. This is an original piece of work and I have not
submitted it earlier elsewhere.

____________
Place: Aligarh SHRISHTI SHARMA
Date:

3
 ACKNOWLEDGEMENT

In the praise of Almighty, the most merciful and beneficent , who showed us the
path of rightness and blessed us to get the strength to embark upon this task.

If I unquote the name of Mr. DEV PRAKASH AGRAWAL, The Chairman of

Institute of Technology & Management, Aligarh, it will be inequitable because
her contribution for the upliftment of the society is quite remarkable.

It gives me immense pleasure to express my profound gratitude and sincere thanks

to Mr. DINKAL AGARWAL (Secretary), PROF. SABIH AHMAD
(Director), Dr.SAURABH KUMAR SINGH (HOD, Department of Business
Administration), and all the faculty members for their excellent guidance,
sympathetic and inspiring attitude and constant encouragement throughout the
course of this study. It is indeed their commitment and dedication that made me
able to write this project.

I am greatly indebted to my parents and friends for their love and affection. Their
wishes have been the source of encouragement throughout my study.

Shrishti Sharma
MBA 2nd Semester
4
 Table of Content
Justify........................................................................................................................................ 65
Objective…………………………….……………..…….………………………………………..

1. Overview of coal sector in India....................................................................................................7

1.1. Industry organization.......................................................................................................7
1.2. Legal & regulatory framework........................................................................................8
1.3. Institutional structure ......................................................................................................
2. Major players of coal industry………………………………………………………………..…

3. Emerging technologies ……………………………………..,…………………………………..

4. Industry structure and the resulting challenges in the coal sector..................................................13

4.1. Delays in receiving approvals and clearances................................................................16

4.2. Lack of level playing field..............................................................................................17

4.3. impediments.................................................................................................................18

4.4. Poor quality of captive blocks offered to private players...............................................18

4.5. Presence of opaque & flawed policies............................................................................19

4.6. Priceortions & absence of independent regulator...........................................................20

5. Overcome issues and challenges of coal industry……………………………,…………………….
5.1. lower- impact mining techniques…………………………………………………………

5.2.Reusing mining waste…………………………………………………………………….

5.3.Eco-Friendly equipment……………………………………………………………….….
5.4.Rehabiltating mining sites……………………………………………………………….
5.5. Shutting down illegal mining……………………………………………………………

6.Environmental problems, the policies, and the governance issues................................................23

6.1.Environmental problems associated with coal mining ....................................................
7.Governance issues with regard to environmental management ......................................................

7.1.Methodology used for field survey……………………………………………………...

5
8.Recenty and institutional reforms, the impact and the missing gaps.............................................35
9.SWOT analysis……………………………………………………………………………………..
10. Conclusion…...............................................................................................................................39

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Justify:

The growth of any country is dependent on its ability to

provide affordable and sustainable supply of energy. Given the
strong linkage between economic growth and energy demand, India
is set to witness one of the highest growths in energy demand,
largely based on buoyant economy and rising population. Coal is a
pre-dominant source of energy in India and constitutes the largest
share in India’s energy production and consumption. Despite the
recent focus on promoting other energy sources (in particular
renewables), it is clear that the current coal-centric energy structure
will continue for at least next two or three decades owing to
technical and cost-related factors. The coal sector in India, in the
past few years, has been subject to various controversies and issues,
which raise question on the overall governance of the sector. These
governance issues, if unaddressed, can hamper the sustainable
growth of the sector and in turn the overall growth and
development of the economy.

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 While there are various governance issues associated with
different stages of coal life-cycle (i.e. exploration, planning,
mining, washing, transportation, distribution, & combustion), the
paper aims to look at the key governance challenges associated
with coal mining. In particular, the focus is on competition issues,
environmental management, and social issues in the sector. The
paper discusses the problems resulting from the current institutional
set up and the industrial structure, the various factors impeding
competition in the sector, and the need for statutory reforms.

The paper also discusses socio-environmental management in

the mining sector, the regulatory and policy framework in place,
and the issues and challenges associated with the current
framework. The paper also talks about policies and institutional
innovations that have been initiated in the recent years in the
mining sector and their likely impact. It also highlights issues that
remain to be resolved in order to ensure effective governance in the
coal mining sector. The paper is based on field surveys and
extensive stakeholder consultations with industry, regulatory
agencies, policy makers, local communities, NGOs, researchers and
academicians.

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OBJECTIVES:

1. Plan & design projects w ith due consideration to environmental

concerns for Sustainable Development.

2. Conduct mining and associated operation in an environmentally

responsible manner to comply with applicable law s and other
requirements related to environmental aspects.

3. revent pollution of surrounding habitation by continuous

monitoring and adopting suitable

4. Implement Environment Management Plans in all our mines

/projects effectively to mitigate pollution, conservation of natural
resources and restoration of ecology & biodiversity.

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5. Ensure compliance of all applicable Environmental Clearance&
Forestry Clearance conditions and other statutory conditions issued
by regulatory agencies.

6. Recycling of wastes on the principle of REDUCE, REUSE and

RECYCLE.

7. Implementation of activities applicable to CIL arising out of

International Conventions.

8. Create environmental aw areness among the employees and the

local communities through pro-active communication and training.

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 1. Overview of coal industry:

Coal is a pre-dominant source of energy in India and has contributed

significantly to the rapid industrialization of the country. The
importance of coal in the energy basket of India stems from the belief
of its relative abundance vis-à-vis other energy sources and current
nonviability of large scale implementation of several of the alternate
sources of energy. Coal currently accounts for 55% of India’s total
energy consumption, and according to most projections, it will remain
the most viable fuel for driving sustained economic growth for many
years to come (see TERI and PSA 2006; MoC 2005 and Planning
Commission 2005). Accordingly, affordable and sustainable supply of
coal is inextricably linked to the goal of ensuring energy security for
India.

About 75% of total coal consumed in the country is used for

power generation. Other end-use industries include cement, iron
and steel, fertilizers, chemicals, etc. India is currently the third
largest producer of coal, and contributes 8% of the total coal

11
production in the world (IBM 2012). Coal mining in India
constitutes a share of

12
80% in the total mining, with the rest 20% distributed among
various raw materials such as gold, copper, iron, lead, bauxite, zinc,
etc. The coal industry, in 2007, had a turnover of Rs. 340 billion,
which was around 1.2% of the GDP (KL Dutt 2007)

The current gross geological coal resources are estimated at

286 billion tonnes (IBM 2012) and if these estimates are correct,
coal supply should be sufficient to meet India’s demand for at least
the next hundred years. However, these estimates do not take into
account technical, economic, and geological constraints associated
with coal mining. Not all of this over-estimated coal is technically
and economically feasible to mine. According to Batra and Chand
(2011), the estimated coal resources include coal that is inaccessible
as it lies in protected areas or beneath forests, villages, towns, or
water bodies, and even includes coal that has been extracted and
burnt during the past 200 years (estimated at about 10 billion). It
also includes coal lying at a depth of 1200 m, whereas mining of
coal, either currently or in the near future, is not likely to go
beyond 300
m. Also, before nationalization, almost all coal came from
underground mines which had low recovery rates. Once these
mines were closed due to exhaustion, the left over coal was
sterilized but is still included in the resource estimation.

13
 Chikkatur et al (2009) have estimated the coal reserves i.e. the
resources that can be economically mined given the current
technology and prices, at only 44 billion tonnes. According to them,
these reserves will last between 30 and 60 years, depending on the
rate of domestic coal production. These figures put in doubt the
notion of abundant coal reserves, and create concerns and
uncertainties with regard to adequacy of coal supplies necessary to
meet the growing energy demand of India.

1.1. Industry organization

With the advent of independence in 1947, India embarked
upon the five year development plans, and the generation of
electricity to nurture industrial growth was the main task before the
nation. At that time, India’s total power generation capacity was
only about 1500 MW (megawatt), mostly consisting of small hydro
and high- gradelumpy-coal-fired thermal power stations. The
production of coal was a little over 30 million tonnes. Due to
factors like low cost of production, easy availability of technology,
large indigenous reserves, existing railway network and the
minimal amount of specialized requirements for transport, coal
became a natural starter and the need for larger and efficient
production of coal was stressed. The formation of National Coal
Development Corporation (NCDC)

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in 1956 was the first major step towards planned development of
Indian coal industry.

Owing to implementation of several legal and institutional

changes in the sector, coal production increased from over 30
million tonnes in 1947 to around 60 million tonnes in late 1960s.
However, in the late 1960s, coal industry faced a demand shortfall
due to low prices of petroleum products. With a view to analyze the
causes and to suggest a comprehensive energy policy, Fuel Policy
Committee (FPC) was set up in 1970. FPC made a comprehensive
analysis of energy sector and concluded that coal should be
considered as primary source of energy in the country.
Subsequently, coal industry was nationalized in two phases-coking
coal mines in 1971 and noncoking coal mines in 1973. Coal Mines
(Nationalization) Act enacted in 1973 brought coal resources under
the control of public sector.

In 1975, the nationalized coal industry was restructured with

the establishment of Coal India Limited (CIL). CIL now has eight
subsidiaries. Seven of the subsidiaries of CIL (i.e. Bharat Coking
Coal Ltd, Central Coalfields Ltd, Eastern Coalfields Ltd, Mahanadi
Coalfield Ltd, Northern Coalfield Ltd, South-Eastern Coalfield Ltd,
and Western Coalfields Ltd) are coal producing companies engaged

15
in raising & distribution of coal. The eight subsidiary i.e. Central

16
Mine Planning and Design Institute Ltd (CMPDIL) is solely
engaged in mine planning and designing in the coal sector and
rendering mining and engineering consultancy services. Ministry of
Coal (MoC), which has the overall responsibility for developing
policies and strategies for the coal sector, exercises its functions
through CIL & its subsidiaries, and another public sector
undertaking called Singareni Collieries Company Limited (SCCL)
[which is jointly managed by Andhra Pradesh Government and the
Central
Government (equity sharing is 51:49)].

Although Coal Mines (Nationalization) Act 1973 restricted

the role of private players in mining, subsequent amendments to the
Act allowed captive mining by private companies in selected end-
use sectors and sub-leasing of isolated pockets to them provided the
blocks are not amenable to economic development and do not
require rail transport. As a result of various amendments in 1976,
1993, 1996, captive mining by private players is allowed in iron
and steel, power generation, coal washing, and cement production.
In 2007, gasification of coal was allowed as one of the end uses for
captive use.

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1.2. Legal & regulatory framework
In general, resources in India are jointly managed by central
and state government. The proprietary title vests in the federating
states while the center has jurisdiction over mines and minerals
development. With regard to coal, Mines and Minerals (Regulation
and Development) Act (MMRDA) was enacted in 1957 where in
coal is listed as a schedule one mineral. This implies that while
ownership of coal resources vests with state, prospecting and
mining are controlled by central government

There are large number of laws and regulations that govern

various aspects of coal sector. Some of these have been extended to
coal mining and some are only incidental to the sector. The general
legislative framework for coal is given in Figure-1. MMRDA 1957
and Mines Act 1952, together with rules framed under them,
constitute the basic laws governing coal mining.. Forest
Conservation Act 1980 and Environment Protection Act 1986
enacted for the protection of forest and environment, are also
applicable to coal mining.

The MMRDA and other legislations are guided by the overall

National Mineral Policy (NMP) of the Government of India, which
was first outlined in 1993 and subsequently revised in 2002 and

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further in 2008 based on Hoda Committee’s recommendations. In

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order to give effect to the new National Mineral Policy, 2008, the
MMDRA is being amended to ensure that the development of
mineral resources is in consonance with the national policy goals.

Figure 1: Legislations governing coal mining in India

1.3. Institutional structure
The institutional structure of the coal sector in India
comprises of various institutions at the central, state, and local
level. In addition to them, trade unions play a significant role in
coal sector. Over the years, they have achieved significant
representation and a powerful voice in the political process. These
institutions, and their functions and responsibilities are given
below:

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1.3.1. Central level institutions

At the center, the key institutions involved in the management

of sector include Ministry of coal, Ministry of Environment and
Forest, Ministry of Mines, and Ministry of labour. Ministry of Coal
(MOC) has the overall responsibility for developing policies and
strategies on exploration and development of coal. The bodies
under the administrative control of MoC include Coal Controller,
various committees, the Coal Mines Provident Fund Organization,
and the Commissioner of Payments Office. Ministry of
Environment and Forest (MoEF) is responsible for formulating
legislations to mitigate and control environmental pollution and
planning. It is also responsiblefor promoting
and coordinating environmental programs. Agencies
such as Regional offices of MoEF and Central Pollution Control
Board (CPCB) assist MoEF in executing its assigned
responsibilities. Within Ministry of Labor (MoL),
Directorate General of Mines Safety (DGMS) is responsible for
enforcing all statutory provisions on safety, health, and welfare in
the workplace.

There are also a number of ministries with no direct

regulatory responsibility for the coal sector but may take decisions

21
that have the potential to impact the competitiveness of coal
industry. These include Ministry of Finance (MoF), Ministry of
Railways (MoR),

22
Ministry of Power (MoP), Ministry of Industry (MoI) , Ministry of
Surface Transportation (MoST), and Ministry of Steel (MoS).

1.3.2. State level institutions

At the state level, the key institutions include Department for
mining, Department for forest, Department for environment, and
State Pollution Control Boards. The department for mining is
theoretically responsible for reviewing application for mineral
titles, supervising compliance with the requirements and collecting
the data submitted. The department of forests plays an important
role in the grant of forest clearances and compensatory
afforestation. Department of environment mostly functions as small
entities, generally devoid of skills which are required for policy
planning and implementation and therefore are restricted to perform
routine budgetary functions for State Pollution Control Boards
(SPCBs). SPCBs are larger institutions by virtue of their traditional
role, and were constituted to implement the Water Act in the states
of the Indian union. Their functions include ensuring compliance
with provision of relevant Acts; laying down, modifying or
annulling effluent and emission standards; planning and execution
of programs for prevention, control, or abatement of pollution and
advising state governments on the same.

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1.3.3. Local level institutions
At local level, Municipalities and Panchayats are expected to
play an increasing role in environmental management at district
level. Their roles and responsibilities include, among others, soil
conservation, land improvement, and management of conjunctive
use of resources such as water. In addition, there are various
institutes that perform indirect regulatory functions such as district
collector/magistrates, department responsible for collecting
taxes/royalties, and department responsible for issuing licenses for
mining operations. District collectors are at the forefront of the land
acquisition process and supervise law and order in the district.

1.3.4. Informal institutions/Trade unions

The constitution, organization, rights and liabilities of trade unions
are governed by Trade Unions Act 1926. The central trade unions
recognized in the coal industry include Indian National Trade
Union Congress (INTUC), All India Trade Union Congress
(AITUC), Centre of Indian Trade Unions (CITU), Hind Mazdoor
Sabha (HMS), and BharatiyaMazdoorSangh (BMS). To these
central unions, a large number of local and regional unions are
affiliated.

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 2. Major players of coal industry:

The India coal market is moderately consolidated. Some of the

major players in the market (in no particular order) include Adani
Group, Coal India Limited, JSW Energy Ltd, NTPC Ltd, and Jindal
Steel & Power Ltd., among others.

 India Coal Market Leaders

 Coal India Limited
 JSW Energy Ltd
 NTPC Ltd
 Jindal Steel & Power Ltd
 Adani Power Limited

25
3. Emerging technologies:

3.1. Clean coal technology

Several generations of technology advances that have led to more
efficient combustion of coal with reduced emmisions of sulfer
dioxide and nitrogen oxides.

3.2. Fule gas

A process in which coal is converted to a gas before it is burned
make it easier to separate CO2 as a relatively pure gas before power
is generated.

3.3. Wet scrubber

Wet air scrubbers are devices used in underground coal mines for
the exhaust air treatment system of various internal combustion
engines, primarily as a spark arrestor.

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3.4. Low-Nox burner
Low NOx burners are designed to control fuel and air mixing at
each burner in order to create larger and more branched flames.
Peak flame temperature is thereby reduced, and results in less NOx
formation. The improved flame structure also reduces the amount
of oxygen available in the hottest part of the flame thus improving
burner efficiency. Combustion, reduction and burnout are achieved
in three stages within a conventional low NOx burner. In the initial
stage, combustion occurs in a fuel rich, oxygen deficient zone
where the NOx are formed. A reducing atmosphere follows where
hydrocarbons are formed which react with the already formed NOx.

3.5. Gasification
Gasification of coal is a process in which coal is partially oxidated
by air, oxygen, steam or carbon dioxide under controlled conditions
to produce a fuel gas.

3.6. Fossil Fuel

Coal is a nonrenewable fossil fuel that is combusted and used to
generate electricity. Mining techniques and combustion are both
dangerous to miners and hazardous to the environment; however,

27
 coal accounts for about half of the electricity generation in the
United States.

3.7. Power plan

The coal is usually pulverized and then burned in a pulverized
coalfired boiler. The furnace heat converts boiler water to steam,
which is then used to spin turbines that turn generators.

4. Industry structure and the resulting challenges

in the coal sector
The coal industry in India has a monopolistic structure with more than
90 per cent of India’s production concentrated in the public sector.
Amongst the public sector companies, CIL accounts for the largest
proportion. Its share in total coal production is more than 80 per cent.
Although the private sector is allowed to mine coal through captive
mining route, they have so far played a very limited role in the Indian
coal industry.

Coal production in India has been unable to meet the demand,

as can be seen from Figure-2. Production by CIL has consistently
fallen short of production targets. In 2011, for instance, CIL
production was 436 million tonnes as against the target of 486
million tonnes, implying the shortfall of 50 million tonnes. In

28
addition to deficits in quantity produced, quality of coal has also
deteriorated over the years. The quality of coal has declined from
5250 K cals/kg in 1970s to the current level of 3500 K cals/kg (Singh
n.d.).

The decline in the quality of coal has been attributed to

inefficient mining practices adopted by CIL (Chand 2008). Before
nationalization, the practice of selective mining was a norm, and a
necessity for the public sector companies to remain in a competitive
market dominated by private players. Each mine had a coal
handling plant wherein coal was processed with crushing, multi-
screening, and hand picking of stone so as to confirm to the
declared grade. However, after nationalization, large open cast
mines were opened to increase coal production in response to the
growing demand. Higher sized equipment were deployed in
production, which made it more difficult, time consuming, and
unremunerative to follow selective mining. With more and more
open cast mines giving higher production, installation of coal
handling plant became costlier and this gave rise to in-pit crushing
for sizing of coal and neglect of separation processes to remove
sand and stone in most of the mines. Owing to this, the quality of
coal dispatched from the pithead continued to deteriorate. The
deterioration was even more pronounced due to absence of

29
competition from the private sector.

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Figure-2: Production versus consumption of coal: 2006-2011

Source: Consumption data is from Report of the Working Group on

Coal & Lignite for formulation of Twelfth Five Year Year
Plan (2012-2017), Government of IndiaConsumption figures
of 2011-12 figures are based on the Annual Plan of 2011-12
Production figures are from Provisional Coal Statistics (various
years), Coal Controller’s Organization, Ministry of Coal,
Government of India

Open cast technology, even today, is the prevalent technology

adopted for mining. In 2011, for instance, 90 per cent of production
has been through opencast mines (CCO 2012). The increased
emphasis on opencast mining has been the result of the target to
achieve faster production rates. Though the productivity in these
mines has increased over the years from 0.58 tons per man shift in
1974-75 to 3.05 tons in 2004-05 (Chikkatur et al 2009) and further

31
to 10.06 in 2011(CCO 2012), it is still very low when compared to

32
international standards. Output per man shift in the United Colliery
in Australia, for instance, is estimated at 65 tonnes1.

Over-emphasis on using open cast mining techniques &

exploitation of shallow coal resources has resulted in increased
production for the country; however, it has also led to a total
neglect of underground mining in India. Underground mines in
India are still a mix of manual and semi- mechanized mines. There
have hardly been any investments in new underground projects, in
capacity building or in mechanizing the existing underground
mines since the nationalization in 1973. About 95% of coal from
underground mines is produced using the board and pillar (B&P)
method, which is characterized by low production, low
productivity, and low recovery factor (Chand 2008). The
production of coal from underground mines has declined over the
years. In 2002, for instance, the share of underground mining in the
total coal production in India stood at 19%. It declined to 10% in
2011 (CCO 2012). The stagnation in the evolution of underground
mining technology has made it difficult to access coal located at

depths beyond 150 meters. With the increasing depletion of coal

located at shallow depths and absence of any long term plans to

33
develop underground mining, the demand-supply gap is expected to
increase further.

The increasing demand-supply gap and deterioration in the

quality of coal has resulted in growing import dependence. Import
dependence has increased from 13 million tonnes in 2002 to 30
million tonnes in 2011 for coking coal, and from 10 million tonnes
in 2002 to 69 million tonnes in 2011 (CCO 2012). The growing
import dependence exposes economy to higher international prices
and geo-political risks related to change in policies of exporting
nations and application of taxes and other export reducing
measures.

The constant inability of CIL in meeting the growing demand

of power requirements has ramifications for energy security of the
country. As a result, in 2012, the president of India had issued a
directive to CIL which mandates the company to sign Fuel Supply
Agreements (FSAs) with power producers assuring them of at least
80 per cent of committed coal delivery. Any failure with regard to
the stipulated supply will result in payments of heavy penalty by
CIL. However, in the absence of any major reforms and with the
existing inefficiencies, it is uncertain if the presidential directive
will have any impact on ramping up coal production in the country.

34
Given the growing magnitude of coal shortages, there have been
recently increased talks of encouraging active participation of
private

35
players to broad base the country’s efforts at increasing coal supply.
It is felt that commercialization of the sector and entry of new
players will result in improvements in efficiency and productivity,
increase in investments, delivery of better quality of services and
improved access, and lowering of prices for the consumers.
However, despite the realization, there has not been much progress
in improving private sector participation in the sector. Coal Mines
(Nationalization) Amendment Bill 2000, which aimed to introduce
private participation in commercial mining without the existing
restriction of captive mining, is still awaiting parliamentary
approval. Although in the recent times there have been discussions
on reintroducing the bill, it is highly uncertain as to how far the bill
will go given the political dynamics and the constant opposition
from trade unions.

The current route of captive mining has also been

unsuccessful in increasing coal production. As of 2009, only 14 of
the 200 allocated blocks had started production and the number had
remained the same for the past few years (ORF 2009).
Statistics of the more recent years also indicate a similar lag. Out of
86 coal blocks with targeted coal production of 73 million tonnes
which were scheduled to be produced in the XI plan, only 28
blocks started production as of March 2011. Production from

36
captive mines

37
in 2010 was estimated at only 35 million tonnes as against the
target of 73 million tonnes2.

The government has reiterated the importance of captive

mining in meeting energy demand of India in various forums. In
fact, Ministry of Coal in its document states that, “captive coal
mining is of utmost importance… The level of attention given and
encouragement extended to captive coal mining will decide whether
domestic coal will remain the primary source of energy supply”
(MoC 2005). Certain policy measures like allowing Joint Ventures
have been introduced to facilitate captive coal mining development.
However, still its contribution to production has remained limited.

There are various factors that are responsible for the failure of
captive mining and also for impeding the development of
competitive structure in the Indian coal sector. These factors are
discussed below:

4.1. Delays in receiving approvals and clearances

In the present legislative and regulatory framework, the
allottee of a captive coal block has to obtain multitude of clearance
and approvals before actual production can begin. Table-2 gives the
authorities and agencies at the Central and State level from whom

38
the approvals have to be sought. The process of seeking clearances

39
is a long drawn process involving central and state ministries, and
sometimes also lack clarity. This causes significant delays in
production from the allotted captive blocks.

Of all the clearances, the MoEF clearance is the most time

consuming, since many departments and issues are involved, and
also because a vast majority of coal blocks have a strong overlap
with forest areas. Although the government has prescribed time
frame for various clearance, these limits are rarely adhered to. For
instance, the prescribed schedule for giving forest clearances is 15
months, but in reality it takes around 3 to 4 years. The situation
with regard to obtaining environmental clearances is no different
(ORF 2009). The process of land acquisition is another area which
is leading to inordinate delays in the commencement of operations.
A number of coal projects are facing delays due to opposition of
local communities against mining.
Table-2: Approval and the agencies involved
Approvals/Clearances Authority/Agency Involved

Mining Lease
Approval or Purchase of CMPDIL (or Mineral Exploration
Geological Report
Corporation Limited, Singareni
Collieries Company Limited)

40
 Directorate General of Civil Aviation
and Ministry of Defense (for
unexplored blocks if Arial
reconnaissance is conceived)

Mine Plan CMPDIL

Coal Controller

Mine Safety Directorate General of Mine Safety

41
Approvals/Clearances Authority/Agency Involved
Mining Technology & Coal Controller
Conservation Measures,
and Coal Categorization

Mining Lease State Government (Mining

Department), Ministry of Coal (GoI)-
Reviewed at various levels within the
Departments at the State & Central
Government level
Environment
Environment Impact State Pollution Control Board
Assessment/Environment
Management Plan

State Environmental Impact

Assessment Authority
State Water Resource and Water
Supply Department
District Administration (for various
aspects of site clearance

Coal Controller

42
Department of Environment (MoEF)

43
 Forest
Forest Clearance & Committee to Advise GoI (MoEF)

Valuing Compensatory
Afforestation
Office of Chief Conservation of
Forests (Regional Office of MoEF)

State Forest Department & District

Authority
Department of Forest (MoEF)

State Revenue Department

Land Acquisition Ministry of Coal (under provision of

CBAADA)
State Department of Revenue
Infrastructure Appropriate Departments of the State
Govt. & Ministries of Central Govt.
(Electricity,

Water, Railways, Road

etc.)
Source:http://www.idfc.com/pdf/publications/captive_coal_mining

44
_final.pdf

45
4.2. Lack of level playing field

CBAADA 1957 empowers central government to acquire

virgin coal bearing land for a centrally controlled public sector
enterprise. Such preferential treatment with regard to land
acquisition is not extended to the private sector. The Act also
empowers the central government to acquire the land for which
prospecting license has already been issued. Thus, the private sector
right holders are vulnerable in the sense that their prospecting
license could be nullified should the central government expresses
interest in prospecting the area.

Land Acquisition Act (1894), which provides for full

acquisition of privately owned/tenancy land for public purpose, is
also unclear with regard the definition of public purpose. The Act
puts restriction on private companies and allows them to acquire
land only for dwelling houses for workmen employed by the
company or for the provision of amenities directly connected
therewith. However, no such restrictions apply to public sector
enterprises (PSEs) in this regard.

4.3. Structural impediments

CIL enjoys various incumbency benefits accruing to it for
over 35 years of exclusive protection. Given that coal mining
46
projects by

47
very nature have high sunk costs, these incumbency benefits put
new entrants at a disadvantage in terms of cost of production, price,
and profit. The incumbency benefits enjoyed by CIL include
possession of the available geological data, monopoly over the
infrastructure (CIL has constructed railway lines through budgetary
support etc.), domain knowledge in terms of vast experience,
established market and clientele, business goodwill, established
relations with communities and trade unions, and close proximity
with MoC. There are also pre-disposed attitudes and mind set
within the existing legal and regulatory framework where in all the
agencies like DGMS, MoL, CPCB, etc have a positive bias towards
CIL.

4.4. Poor quality of captive blocks offered to

private players
The blocks offered to private players for captive mining are of
poor quality and are generally not amenable to economic
development. CIL is the custodian of all the coal blocks and the
allotment of blocks to different parties are made on the
recommendations of CIL. CIL reserves majority of good coal
blocks for its purpose, as also inferred from the data given in Table-
3. Of the total proved reserves of coal, 73% have been allocated to

48
CIL, and only 10% to the private players for captive mining.
Moreover, 57% of reserves in captive mines are in the category of
indicated reserves

49
where the detailed exploration needs to be done by the respective
companies. The blocks are often located in remote and undeveloped
areas, which have challenging geographies. Sometimes the blocks
are not divided scientifically, which in turn preclude their economic
development. Also, the condition of offering only virgin blocks
devoid of any
infrastructural facilities to private players serves more to block the
competition than allow it.

Table-3: Distribution of gross geological coal resources (In

billion tonnes)
%
Proved Indicated Inferred Total share
Blocks

CIL 67.71 19.42 4.56 91.96 37

Captive 9.55 15.86 2.7 28.11 11

Non-CIL 3.46 5.17 5.98 14.61 6

Others 2.77 0.35 0 3.12 1

(TISCO etc)

Un-blocked 0.78 7.01 21.61 92.49 37

Godavari 8.26 6.08 2.58 16.92 7

Valley

NE Region 0.43 0.1 0.37 0.9

50
 Total 92.96 117.08 37.8 247.84 100
Source: The Expert Committee on Roadmap for Coal Sector
Reforms, Ministry of Coal, Government of India

4.5. Presence of opaque & flawed policies

The process of allocation of captive coal blocks has been
through a screening committee headed by a Secretary of coal and
comprising of representatives from various ministries, state owned
corporations, and state governments. This induced subjectivity in
the process of allocation and has been a source of controversies in
the sector. Although competitive bidding of coal blocks is a part of
the Mines and Minerals (Development and Regulation) Bill 2011,
the delays in switching from opaque to a more transparent policy
for allocation has caused huge amounts of losses. As per the report
released by Comptroller and Auditor General (CAG) of India in
2012, huge losses have accrued due to the inefficient allocation of
blocks during 2004-09. The loss to the exchequer owing to the
flawed policy has been estimated at Rs 1.86 lakh crore. There have
been various question raised for the delays in switching to a more
efficient policy, despite the possibility of introducing it in 2006
through a simple administrative order rather than waiting for
legislative amendments.

51
 There are also other policies that inhibit optimal production of
coal in captive blocks. For instance, captive miners are not
permitted to sell any excess coal mined from the captive blocks in
the market. The surplus if any needs to be sold back to CIL at a
notified price, which is considerable lower than the market price.
This gives current captive mine owners little incentive to increase
production beyond their needs. Also, the government’s policy of
jointly allocating captive mines has been a source of various
problems. Firstly, due to differences in the schedules of end use
projects, time bound development of these mines becomes very
challenging. Secondly, varied economic interests of the miners
make it difficult to optimally develop the mines thereby affecting
efficient utilization of resources. Also, technical requirements of
end-use projects might also be different, thus adding to the
challenges (Aggarwal, S 2009).

Further, exploration is carried out by public sector enterprises

without the involvement of private players. On allotment of captive
blocks, geological information needs to be purchased by private
sector from the government. The geological data is often of poor
quality and is available at a very high cost.

52
4.6. Price distortions & absence of independent regulator
The pricing of coal was fixed by the central government until
its deregulation in 2000. With deregulation, the right to fix the price
of coal has been conferred on CIL and SCCL. However, the pricing
of coal is still far from being efficient and market driven, and is
guided by the Ministry of Coal. There have been rampant talks of
introducing price reforms in the sector. However, these reforms are
secondary unless there is a market with multiple producers, each
with limited power to influence prices. The presence of a large
monopoly producer has not allowed the sector to reap the benefits
of price deregulation.

The impact of monopolistic market structure is exacerbated

by the absence of an independent regulatory oversight. The
presence of an independent regulator is important to boost
investments in the sector, create a level playing field, introduce
competitive price regulations, and to govern allocation of blocks,
approve mines, etc. While the necessity of establishing an
independent regulator has been widely debated over the last few
years, it is only very recently in 2012 that the Coal Regulatory
Authority Bill has been introduced. The Bill has recently been
approved by Cabinet Committee on
Economic Affairs (CCEA), and will soon be tabled in Parliament.

53
The bill does not give pricing power to the regulator; however, it
empowers them to frame rules and methodologies for determining
the price.

TERI in 2006 did a perception survey to seek the opinion of

private players and consumers regarding issues that need to be
resolved for enabling a competitive environment in the coal sector.
The survey was a part of project on ‘Competition in India’s Energy
Sector’ and was supported by Foreign Investment Advisory Services
(A joint Service of the International Finance Corporation and The
World Bank); DFID (Department for International Development)
and the Competition Commission of India (CCI) (TERI 2007). The
survey findings are presented in Table-4 and Table-5.

Table-4 gives the opinion of respondents on impact of the

competition-enabling provisions. The monopolistic structure of coal
industry was seen as the biggest deterrent to competition and
greater private sector participation. The existence of public
monopoly with critical control over prices and other aspects raised
concerns on nonlevel playing field for private operators. Absence of
independent coal regulator was seen as a major impediment by
47.8% of respondents. 43.5% of survey respondents also regarded
the presence of stiff legislations concerning land acquisition,

54
rehabilitation and environment management as a major competition
impediment.

55
 Table-4: Factors impeding competition in the coal sector

Respondents
Absence of independent sector Most important
regulator
(47.8%)
Dominance of a Public Sector Most important
Monopoly leading to non-level (52.2%)
playing field

Presence of stiff legislations Most important

concerning land acquisition,
(43.5%)
rehabilitation and environment
management

Acute shortage of coking & Important (32%)

noncoking supplies and
deterioration of quality of coal

Source: TERI 2007

With regard to captive mining, 70.8% of the respondents

believed that the lack of transparency in allocation of coal blocks is
the most important factor contributing to limited private
involvement in the sector. Further, about half the respondents
opined that ‘high cost and low quality of geological information’

56
and ‘release of blocks with low prospects’ are major deterrents to
private captive mining.

57
Factors such as ‘restrictions on use of surpluses in excess of captive
needs’ and ‘lack of developed supporting infrastructure’ were rated
as moderate contributors to lack of private involvement in captive
mining.

Table-5 gives the survey findings with regard to the extent to

which statutory provisions of sector legislations impeded
competition in the sector. Biased policies in favor of public sector,
flawed policy for coal allocation, restrictions on commercial
mining, and control over production were regarded as the major
provisions requiring reforms.

Table-5: Need for reforming statutory provisions

Mines and Minerals (Regulation and Development) Act 1957,

Mineral Concession Rules

Preference to PSEs for grant of PL and ML Major

High cost of geological information Moderate

Major
Coal Mines Nationalization Act/Restriction of
commercial mining

58
 Restriction on competitive bidding Major

Coal Bearing Areas (Acquisition and Major

Development) Act 1957 and Land Acquisition Act

1894 (Preference to PSEs for land acquisition)

Moderate

Notification under Contract Labour (Regulation

and Abolition Act) 1970 (Restriction on the use of
contract labour)

Colliery Control Order 2000 (Power of the Major

government to control production)

While some of the impediments such as restriction on the use

of contract labor and absence of competitive bidding have been
corrected since the time the survey was conducted in 2006, a lot
still needs to be done in addressing other loopholes and
uncertainties. Most important would be to introduce a common
legislative framework that provides a level playing field between
public and private sector.

59
 The government is currently laying a lot of stress on involving
private players to undertake mining on behalf of CIL. The focus is
on the MDO (mining, development, and operations) model,
wherein private sector undertakes mining operations, while the
ownership and sale of coal rest with CIL. It is clear that CIL does
not have a capacity to meet the current and projected energy
demand for India and that the greater involvement of private sector
is inevitable. Given this, it becomes important to focus on
introducing a series of policy reforms which correct for various
impediments that are observed in introducing competition in the
sector. Given the changing dynamics, the role of the government
needs to be appraised from being the operator to a facilitator
creating enabling policies for the private investments to flow in.

60
 5. Overcome issues and challenges of coal industry:

5.1 .LOWER-IMPACT MINING TECHNIQUES

Traditional mining techniques can have a severe impact on the
environment, and some popular methods — like open pit and
underground mining — present some of the most significant
environmental risks.
With many of these techniques, companies can significantly reduce
surface disturbance at mining sites, low er soil erosion and move
less material that w ould need backfilled.

5.2 . REUSING MINING WASTE

Mining naturally produces significant amounts of w aste — such as

tailings, rocks and w astewater. In many cases, businesses leave w
aste behind w hen mining operations cease — or, in the case of

61
tailings, stored in large structures like tailings dams, w hich are
prone to failure and, as a result, cause severe environmental
damage.
Luckily, for almost every category of mining w aste, there are at
least one or tw o w ays to reuse that w aste on- or off-site.
Companies can use w aste rocks in simple on-site construction, like
backfilling voids and reconstructing mined terrain in a w ay that
prevents soil.

5.3 . ECO-FRIENDLY EQUIPMENT

Mining companies w anting to reduce their environmental impact

can sw itch to more eco-friendly equipment.Battery-driven mining
equipment is often pow erful enough to replace dieseldriven
options. Businesses w anting to become more sustainable could
also upgrade to more advanced, durable equipment that lasts longer,
reducing the turnover of machinery and decreasing the resources
needed. Improved durability can also reduce theenvironmental
costs of damaged equipment — like rubber or plastic shed as a
piece of equipment breaks down.

5.4. REHABILITATING MINING SITES

Many modern mining techniques cause significant disruption to the
environment — like stripping the topsoil layer necessary for plant

62
growth and raising soil and water acidity, making the area
inhospitable to new vegetation and leaving it prone to soil erosion.

63
Worse, this erosion can often continue for years after a mining
company has packed up and moved out.As a result, many former
mine sites are left unproductive, unusable by landowners and, in
some cases, almost entirely inhospitable to plant and animal life.
However, this damage isn’t guaranteed to be permanent.
Companies can use many land rehabilitation techniques to make
mined land productive again or speed up the land’s natural recovery
process.
For example, it’s possible to use biosolids to replenish
depleted topsoil. Soil with biosolids, if seeded and watered, can
produce vegetation capable of preventing further soil erosion within
as few as 12 weeks.

5.5. SHUTTING DOWN ILLEGAL MINING

Illegal mining remains a significant issue for the industry —
for example, experts estimate that around 14,000 people are
currently involved in illegal mining in South Africa. There, illegal
mining often takes place on properties not suited for large-scale
mining and without regard to regulations that reduce the
environmental impact.Preventing illegal or unregulated mining
operations can help ensure that all mining is bound by the same
environmental standards and ensure accountability.

64
6. Environmental problems, the policies, and

the governance issues:

6.1. Environmental problems associated with coal mining

Coal mining impacts the environment and ecology to an
unacceptable degree, unless carefully planned and controlled. Some
of the environmental impacts are felt immediately, while others are
perceived over the long term. The magnitude of the environmental
impacts, however, vary with the method of mining, scale and
concentration of mining activities, geological and
geomorphological setting of the area, nature of deposits, land use
pattern before the commencement of mining operations, natural
resources etc. The major environmental problems at the mining
stage are given below:

65
 • Destruction of forest & biodiversity
Over 60 per cent of coal resources in India are located in forest
areas (MoC 2005). Most coal blocks allocated in the last few years
have been in or adjoining forest areas. Given the anticipated
increase in demand for coal, the problem of loss of forest cover will
accentuate as the need to access forest resources will increase
manifold. MoC (2005) estimated that the demand for forest land for
mining will increase from about 22,000 ha in 2005 to about 75,000
ha by 2025. Loss of forest cover not only impacts the biodiversity
and natural ecosystems, but also compounds the problem of climate
change, as there are fewer sinks available for CO2 and consequently
reduced carbon sequestration. Also, forest areas in many coal
producing states are sources of non-timber forest products such as
mahua, tendu, chironji, bamboo, mushrooms, etc. With the loss of
forests for coal mining, communities dependent on these forest
resources lose their traditional sources of livelihood .

• Air pollution
At the stage of mining, activities like drilling, blasting, excavation,
construction of haul roads, movement of heavy earth moving
machinery (HEMM) etc. results in fugitive emissions of particulate
matter and dust. These emissions cause significant human and
social impacts by causing air pollution and ecological disturbances.

66
According to MoEF 2009, most coal mining districts including

67
Dhanbad, Korba, Angul, Talcher, Jharsuguda, and Singrauli, are
critically polluted. The release of greenhouse gas (GHG) emissions
contributes to the problem of climate change. An estimated 650 Gg
of methane was released from coal mining in 1994 (MoEF 2004) .
The problem of air pollution and GHG emissions is compounded
by the presence of mine fires, which can be commonly seen in
Jharia, Raniganj and other coal mining regions.

• Land degradation
Degradation of land is perhaps the most serious impact of coal
mining operations. Open cast mining causes a much greater
degradation to land than underground mining. With prominent
emphasis on large scale mechanized opencast mining in India, large
tracts of land are left degraded as a result of activities like
excavation, stacking of waste dumps, discharge from workshops,
construction of tailing ponds, etc. Underground mining operations
also lead to problem of subsidence of land and result in changes in
topography and drainage pattern.

In Jharia, for instance, total of 75.77 square km area of land has

been affected due to fire (17.32 sq.km.), subsidence (39.47 sq.km),
excavation (12.68 sq.km) and dumps (6.30 sq.km) (Singh,

68
R. et al 2007). Illegal operations and the practice of “rat-hole”
mining have also compounded the problem of
land subsidence and devastation, particularly in Raniganj,
Jharkhand and Meghalaya. Sahu (2011) has made certain
estimations with regard to land degradation resulting from waste
generation. As per him, coal mines of CILremoved about
500 million cubic meter(Mcum) of overburden to produce
260 million tonnes of coal in 2003-04 i.e. an avg. stripping ratio of
1.92 cubic meter of over burdern against per tonne of coal
production. Coal production and the resulting waste generation
and land degradation for the year 2005-06 are given in Table-6.
Given India’s future plans to produce up to 300 meters depth with
the given technology, and assuming the stripping ratio of future
coal production to be1:15, Sahu pointed that for every 1 million
tonnes of coal production, 15 million tonnes of waste will be
generated. This is huge quantity and given the growing
unavailability of land in India, there will be problems in storing this
waste.

Lack of proper land reclamation and mine closure further

compounds the problem of land degradation. India does not have a
detailed inventory of abandoned mines; however, as per CSE
estimates, there are at least 240 abandoned coal mines where no

69
reclamation has taken place2

70
 Table-6: Coal production, waste generation & land affected: 2005-06

Unit Value
Production million 407
tonnes

Overburden/waste million 1493

tonnes
hectares
Estimated
10175
land affected

Land in 25
ha/million tonnes
of coal

Source: Sahu (2011)

• Stress on water resources

Coal mining activities adversely affect the environment especially
water. It degrades the quality of water by not only lowering the pH
of the surrounding water resources but also by increasing the level

71
of suspended particulate solid, total dissolved solids and some
heavy metals. Further, the overburden generated also contaminates
the surrounding water bodies and increases the heavy metal
concentration especially of Fe, Cu, Mn and Ni which reduces the
utility of water for domestic purposes. The Damodar River which
flows through 6 coalfields (North and South Karanpur, East &
West Bokaro, Ramgarh, Jharia, and Raniganj) has been classified
as heavily polluted by CPCB (Priyadarshi 2010). Acid Mine
Drainage (AMD) is also the most persistent pollution problems
especially in the mines of North Eastern Coalfield (Singh, n.d.).

7. Governance issues with regard to

environmental management
Despite the existence of policy and legislative framework,
environmental condition in and around the mining areas has
continued to deteriorate over the years. An analysis of the laws and
policies and the evaluation of their effectiveness through various
stakeholder consultations 4
suggest that the problem with coal
mining in India is not due to absence of regulations, but due to the
poor enforcements. Various governance deficits have been observed
in the way the policies are implemented on the ground. With regard
to mine closure and restoration, for instance, the companies have

72
been found to not adhering to practices as mandated by the
policies, and

73
there have been no stringent actions taken in this regard. CAG in
2011 conducted a performance audit of CIL and its subsidiaries
with a view to assess whether the

companies were fulfilling their responsibilities in an effective and

efficient manner. As per the findings of the report, no mine closure
plans were prepared for mines which were to be closed within 2 to
4 years. A backlog in backfilling and technical reclamation of
12,643 hectare land was found in seven subsidiaries of CIL as on
March 31, 2010. Also, the policy of preserving and re-using top
soil for reclamation was not in practice. Out of 18 open cast mines
covered in CAG audit, top soil was found to be preserved in only 5
mines. Also, it was reported that in mines where restoration and
reclamation were observed, the methods did not confirm to national
standards.
& the methodology adopted is unscientific
The regulatory bodies are clearly ineffective in regulating and
monitoring the different aspects of coal development. Two of the
major factors that were reported for their ineffectiveness are
shortages of skilled manpower and inadequate availability of
equipment. These factors were highlighted during discussions with
various regulatory bodies that include SPCBs, DGMS, State
transport department, State forest department etc. In addition,

74
political influence has been reported to be the major factor behind
no

75
or inadequate responsiveness of the regulatory bodies to the
observed fallacies. In many cases, loopholes in implementations are
deliberately ignored given the importance of coal for electricity
generation and the grave impact on the economy as a result of any
disruptions in the coal supply.

7.1. Methodology used for field survey

The survey was based on a quantitative research method
involving one to one interview. A semi structured questionnaire
was developed for data collection across four target groups: mining
workers, displaced communities, villagers close to mines, and
distant villagers (residing 7-10 kilometers away from coal mines
and not near to any other mines/industrial area). In total 400 people
were interviewed, which comprised of 100 mine workers (50 from
Jharkhand and 50 from West Bengal), 100 displaced families (50
from Jharkhand and 50 from West Bengal), 100 villagers residing
close to mines (50 from Jharkhand and 50 from West Bengal), and
100 villagers residing at a distance from coal mines (50 from
Jharkhand and 50 from West Bengal).
The sampling was done in two stages. In the first step, villages
were selected and in the second step the respondents were selected.

76
Step 1: Selection of villages
In the first step, a list of villages was prepared with the help
and inputs from Government officials
/local representatives and influential people of the area. Two
separate lists were prepared for Jharkhand and West Bengal. These
lists were used as the sampling frame. From each state, two villages
were selected by using systematic random sampling. Only in the
case of displaced communities, more number of villages was
selected. Further, equal number of respondents was selected from
each village.

Step 2: Selection of respondents

With regard to non-mining workers, each selected village was
divided into two segments with approximately equal number of
households. The center point of each segment was considered as the
starting point. From this point, following left hand rule, required
number of interviews were carried out. The interviews were
conducted with either the head of the family or any competent
member living in the selected households. For mining workers, an
attempt was made to ensure randomization and coverage of
different socio demographic strata

77
8. Recent policy and institutional reforms, the

impact and the missing gaps:

In the past few years, various reforms have been initiated in

the minerals sector, which have bearing on governance in coal
mining. These reforms have been the result of various national and
international pressures. National pressures include the need for
greater exploration information; transparent allocation of resource

78
revenue; and compensation for socio-environment externalities
created by mining. Internationally, there was a need for India to
make credible commitments to the world with regard to bringing
transparency in approvals, removing regulatory hurdles, and
creating incentives for increased investments in the sector.

Establishment of tribunals for adjudicating mining related

disputes, as proposed in the bill, is likely to reduce delays in giving
justice, provided these tribunals are equipped with appropriate
expertise required to assess mining related cases. Sustainable
Development Framework (SDF) for mining could also result in
introduction of best practices with regard to socio-environmental
management provided efforts are made to create awareness about
the framework among different stakeholders.

79
80
 As discussed in Section 2.6, establishment of a coal regulator
for improving regulatory oversight is a progressive and a much
awaited reform for introducing competition, improving
transparency, creating a level playing field etc. However, an
important factor that will determine its success in creating more
faith in governance and acceptance of mining is its independence
from the government as well as the industry. In context of
improving the way EIAs are conducted, the role of the National
Environment Appraisal and Monitoring Authority (NEAMA) is
seen as a positive way forward. It will result in a more independent
and scientific assessments and will mark a major improvement
over the current assessment system. However, efforts also need to
be channelized to strengthen capacity to do cumulative impacts
and risk assessments.

The Land Acquisition and Relief and Rehabilitation Bill

introduced in 2011 attempts to address the problems with Land
Acquisition Act 1894, which have been the center of debates and
controversies for many years. This include, among others, unclear
definitions and clauses and absence of requirements for
compensation, participation and R&R in the Act. The Bill has
introduced a number of positive changes which include mandatory
provisions with regard to taking consent of at least 80% of the

81
 36

82
 affected people, conducting Social Impact Assessments (SIA)
through independent body, and broadening the definition of
affected people to include sharecroppers, agricultural labourers,
tenants etc.
whose livelihoods are affected.

While these various policy initiatives are positive steps to

address governance deficits in the coal mining sector, much
depends on the effectiveness of their implementation. As seen in
previous sections, much of the governance challenges are not due
to the absence of policies, but due to the flawed implementation.
Therefore, these policies need to be combined with reforms which
improve their implementation & effectiveness on the ground.
Some of the reforms that need to be initiated include:

• Strengthening capacity of existing regulatory agencies and local

institutions;

• Ensuring timely and regular co-ordination among centre, state and

district level agencies;

• Enhancing transparency and knowledge on various issues;

83
• Promoting greater responsiveness and accountability across all
levels of government; and

• Laying clear rules and guidelines on the power, functions, and

responsibilities of different institutions.

84
 38

85
9. SWOT analysis:

86
10. Conclusion:

The coal industry was nationalized between 1971 and 1973.

The rationale given for nationalization was that the private
operators were unable to modernize and increase production to
meet national demand and meet norms related to working
conditions, payment of wages, health, safety etc. The problems
were reported despite the presence of the then existing legal and
regulatory authorities like Chief Inspector of Mines, Coal Board,
and Coal Mines Welfare Organization. However, after around 40
years of nationalization, the country is still confronted with the
problems of widening demand- supply gap, deteriorating quality,
and inefficiencies in production. The socio-environmental
conditions around mining continue to deteriorate and the reasons
stem from ineffective enforcements, inadequate capacity of
regulatory bodies, flaws in institutional structure, information
deficits, etc. The only exception is with regard to working
conditions in mines and welfare of workers, which have improved
considerably post nationalization.

87
 40

88
 Given the above, an important question that comes forward is
whether nationalization of the industry was the right thing to do at
that time or whether the focus should have been on strengthening
the then existing legal and regulatory framework. Whatever the

89
answer may be, it is now clear that the public sector does not have a
capacity to meet the growing energy demand.

There is an increased focus on involving private sector;

however, the mode of involving them is in the form of contracts
where ownership and control still rests with the public sector. In
the absence of robust policy measures to introduce competition and
improve transparency, there comes a doubt if the government is
willing to let go off their monopoly over the sector. The reasons
given against greater private sector involvement are that it will
adversely affect the poor and lead to corruption. However, in the
presence of robust policies and regulations, even the private sector
operating with sole motive of maximizing profits can contribute
towards greater welfare of employees, communities, and the nation
at large.

Thus, given the current situation, it becomes imperative to

restructure the sector by removing the current policy biases that
work against introducing competition in the sector and
strengthening regulatory and enforcement mechanisms so that coal
needs of the country are met without hampering environment and
social sustainability.

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91