Excerpt from Draft Approach Paper: Tenth Five Year Plan (2002 - 2007) 

Dated 1.5.2001, Planning Commission- Government of India 

Chapter 3: Sectoral Policy Issues


3.56 Coal is a primary energy source which is plentifully available in the country and isalso the cheapest fuel for power generation. Coal production will fall below the target for the Ninth Plan but this has not presented a problem because thermal power generation capacity has not expanded as targeted. For the Tenth Plan period, however, if electric power is to expand to support 8% growth, a substantial expansion in domestic coal production will be needed. The gestation period for a coal mine is considerably longer than that of power plants and this means that coal production planning should have in mind not only the requirementof the Tenth Plan but also the Eleventh Plan.

3.57 A major policy constraint affecting the coal sector is the fact that it is the only energy sector that is not open to private investment except for captive mining. At a time when the petroleum sector has been opened to private investment, there is no reason why coal mining should not be thrown up also. A proposal for amending the Coal Mines (Nationalisation) Act 1973 has been introduced in Parliament. Early passage of this amendment is a necessary step for attracting private investment in this important area. Opening the sector for private investment will not only improve total supplies, it will also ensure an improvement in quality because of the pressure of competition.

3.58 It should be noted however that amendment of the Coal Mines (Nationalisation) Act may not be sufficient to attract private investment in this important area. It will also be necessary to make other amendments to overcome the hurdle placed in the way of private mining in notified tribal areas by the Samatha Judgement. The procedures for environmental clearance also need to be greatly simplified so that potential private investors face clear and transparent rules."