Coal Sector in India: Significance and Challenges
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.
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.
