With Coal India unable to mine enough black gold on its own, the government is working on a proposal to allow private contractors to do so on its behalf, C Rangarajan, chairman, Prime Minister's Economic Advisory Council, said.
The coal so mined will be supplied to Coal India at a pre-determined price.
However, Rangarajan cautioned, this will need legislative approval, which is going to be tough. “Coal India can use the private sector as an agent, to use them to open up new fields and enter into a contract with them so that they would supply the fuel to Coal India at some pre-agreed prices. This is one way of solving the problem till such time we are able to modify the fundamental law (to privatise Coal India), which is going to be very difficult,” Rangarajan said here on Saturday.
A marginal rise in Coal India’s own production in the last fiscal had strained the country’s forex reserves because import of coal doubled, he said.
“There was about $60 billion import of coal during 2011-12. Normally it is about $30-40 billion. It was because coal production was low and power sector resorted to imports.”
Rangarajan indicated that the time to cut interest rates hasn’t come yet as the Reserve Bank of India has to continue taking steps to tame inflation.
“The August inflation numbers have been revised upwards. Its not as if inflation has come down very sharply and therefore monetary policy has to be (expansionary). (It) has to take note of the fact that inflation still remains at the high level and that growth has also slowed down.
It has to perform a very difficult balancing act. It’s not as if the direction is very clear and there is only one direction to move,” Rangarajan said probably silencing critics, including finance minister Chidambaram who had indicated that RBI could have cut interest rates.