Amid the rising coal supply crunch, Planning Commission deputy chairperson Montek Singh Ahluwalia has made a strong pitch for privatization of the coal sector to boost growth, which as per finance ministry's mid-term review has dipped below 6%. At present, private companies are allowed to do captive mining in specified end-use sectors like power, steel and cement firms.
As per the plan document, total demand for coal grew by around 6.6% during the 11th Five Year Plan against domestic production growth of only 4.6%, and the gap was bridged by higher imports. Ahluwalia, who advocated private investment in the coal sector, stated that, “If petroleum, which is much scarcer than coal, is open to private sector, there is no reason why coal should not be opened up” and has maintained that Coal India doesn't have the capacity to meet the coal demand of 43,000 MW power plants.
However, industry experts of the proposal say that it would lead to huge increase in coal prices resulting in higher electricity cost for common person.
Indian coal sector is the exclusive domain of world largest coal producer CIL and its subsidiaries, which account for 80% of the country's production. However, CIL alone is not sufficient to meet the demand from consumers and thus India faces annual shortage of 140 million tonnes, coercing bulk consumers to bridge the gap via imports.
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