Prime Minister Narendra Modi on June 18, 2020, launched the auction process for 41 coal blocks for commercial mining, a move that opened India's coal sector for private players."Allowing private sector in commercial coal mining is unlocking resources of a nation with the world''s fourth-largest reserves," the PM, pointed out. After the Supreme Court cancelled over 200 coal blocks in 2014, only 29 were auctioned due to end user restrictions. The new change in rules will now however, pave the way for companies that win coal blocks via the two tier auction process of technical and financial bidding, to henceforth, use coal mines for any of their subsidiaries or holding companies.

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The Modi government's announcement on May 16, 2020, allowing commercial mining of coal by the private sector, on revenue sharing mechanism instead, of the regime of fixed rupee/tonne, effectively ended government monopoly in the coal sector. In a bid to open up the coal mining sector to attract global bidders for auctions and boost FDI in mining and remove end user restrictions, the union cabinet in January this year, promulgated the Mineral Laws (Amendment) Ordinance, 2020.

Coal reforms under PM Modi's leadership have been a continuous process. In March 2015, the Narendra Modi led government enacted the Coal Mines (Special Provisions) Act, containing provisions enabling the government to allocate coal mines through auctions. Over 70 coal mines were auctioned/allocated. On 20th February 2018, the Cabinet Committee on Economic Affairs (CCEA) permitted private firms to enter the commercial coal mining industry in India, with mines to be auctioned to the firm offering the highest per tonne price. In August 2019, the Modi government approved 100% FDI via the automatic route for coal mining, to boost revenues of states and create employment, besides developing the far-flung areas.

Major global coal mining firms, which were so far forbidden from mining coal in India, can now invest in Indian coal sector. Indian firms too can invest in a commodity business where domestic supply falls short of the demand, opening up an opportunity to substitute 135 MT of coal imports.At present, despite being the world's fourth-largest producer (it produced 729 million tonnes in 2019-20) , India is also the second-largest importer of the dry-fuel (estimated imports of around 135 million tonnes).

According to estimates by the coal ministry, the commercial mining of the aforesaid 41 blocks is expected to generate approximately Rs 33,000 crore of capital investment in the country over the next five to seven years and contribute over Rs 20,000 crore revenues annually to the concerned state governments. It will also lead to employment generation for more than 2.8 lakh people - direct employment to approximately 70, 000 people and indirect employment to approximately 2.1 lakh people.

Upon attainment of peak rated capacity of production of 225 million tonnes, these mines will potentially contribute about 15% of the country’s projected total coal production in 2025-26.According to Crisil, the Modi government's move to open up commercial coal mining could nearly halve the annual expenditure incurred on importing non-coking coal to about Rs 45,000 crore because of substitution through domestic production. In fiscal 2020, India imported an estimated 180-190 million tonnes (MT) of non-coking coal costing over Rs 90,000 crore.

Coal mining and coal-fired thermal power generation sectors are two of the core industries and together contribute about 10% to India’s Index of Industrial Production (IIP), affirming their importance to the economy. Further, India’s logistics industry, sponge iron industry, aluminium industry among several others, as on date, depend on India’s domestic coal industry. Economic activities in three eastern states (Chhattisgarh, Jharkhand & Odisha) are significantly dependent on coal. Hence, the importance of the coal sector in India, not just in terms of energy security for the country, but also for the socio-economic role it plays, cannot be denied.

Coal mining in India started in the 1770s in Raniganj coalfield. The early coal mines were owned by the British mercantile firms, Indian private sector players and also state-owned entities like Railways. Mining operations continued on a smaller scale until 1950 when the National Coal Development Corporation (NCDC) was formed with the task of exploring new coalfields and expediting development of new coal mines.

The oil shock in the early 1970s, led the clueless Indira Gandhi administration into commiting a huge blunder---nationalising the coal industry in 1973 and thereby, allowing domestic coal to be mined only by public sector companies. Coal India Limited (CIL) was set up in 1975. After nationalisation of coal industry in India, there was no demand-supply gap until 1991. In 1993, to focus on the increasing energy demand, the government decided to allocate coal mines to various players for captive consumption only.In the meantime, the power sector reforms took place in 2003, resulting in significant growth in the power sector. Growing power sector started demanding higher supply of coal which could not be fulfilled by the state run CIL, leading to higher demand-supply gap which started converting into disproportionate imports, between 2004-2014.

Domestic demand-supply gap by 2012 widened to between 18%--20%, of overall coal demand.Further, the Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act), Forest Rights Act, delineation of Go and No-Go areas, etc., also contributed in creating challenges for further expansion of coal mines. This led to the letter of assurance issued to power companies not converting into fuel supply agreements (FSA).And then came the Comptroller and Auditor General of India (CAG) report followed by the Supreme Court verdict in 2014, that overturned the allocation of almost all the coal mines allocated after 1993. In a bid to therefore, open up the coal mining sector to attract global bidders for auctions and boost FDI in mining and remove end user restrictions, the union cabinet in January this year promulgated the Mineral Laws (Amendment) Ordinance 2020. The ordinance made amendments to the Coal Mines (Special Provisions)Act, 2015, undoing the herculean blunder by Indira Gandhi and successive Congress led dispensations.

Historically, Indian coal prices have been consistently very low compared to the global or import prices (3/5th of coal is imported from Indonesia) as the major purpose of the state-owned companies is not profit maximisation.Also due to higher tariffs and logistic costs involved, the landed cost of the coal for the end users goes up significantly but is still lower than imported coal prices.The revision in coal prices is done after considering its impact on the overall economy particularly the power sector.

The estimated average cost for coal production, as in Run of Mine or (ROM) coal, excluding crushing, sizing, transportation charges and all levies, duties, etc) is about Rs 1, 000 per tonne.Majority of the coal production is favourably placed with respect to cost of production except for say, 10% of overall coal production.However, the coal sector in India is constrained by tax structure and transportation cost. On landed basis, taxes, duties and levies account for up to 25% and freight accounts for up to 34% of overall coal cost, making the likes of CIL non competitive, necessitating the urgency of bold reforms undertaken by the Modi government, both within the coal sector and in the renewables' space, too.

India has emerged as a global leader in renewable energy, where investments top those into fossil fuel. After adopting its National Electricity Plan (NEP) in 2018, India remains on track to overachieve its “2ËšC compatible” rated Paris Agreement climate action targets.At the Secretary General’s summit in New York, India announced its intention to reach a target of 450 GW of renewables by 2030. The emission reduction potential of this target is within the range of current policy projections. For three consecutive years, renewable energy investment topped that of fossil fuel-related power investments and in 2018, solar investments exceeded those in coal. Given the price-competitiveness of solar PV, these should be India’s preferred choice of distribution companies.

The Paris agreement 1.5 Celsius limit means that there needs to be a phase-out of coal in the power sector by 2040, at the latest globally.The National Electricity Plan (NEP) in 2018 included more than 90 GW of planned coal-fired capacity which will increase emissions unnecessarily, and risk becoming stranded assets. Abandoning these plans is more than feasible when we consider recent developments such as a 50% decrease in the cost of solar power in just the last two years and several utilities shelving plans to build coal plants.

India’s Paris Agreement target is within the range of what is considered to be a “2°C compatible” fair share of global effort. This means that India’s unconditional Paris Agreement climate commitment in 2030, even while it allows the country’s total emissions to increase, is consistent with holding warming to 2°C. India could become a global climate leader with a “1.5ËšC compatible” rating if it abandons plans to build new coal-fired power plants.

Right now, the nation has over 200 GW of coal-fired capacity in operation; if all the planned capacity is built, this could increase to over 300 GW over the next few years. This is an important consideration, as India’s CO2 emissions rose by 4.8% in 2018, largely driven by emissions from coal power plants. Estimates show India could achieve the more ambitious part of its Nationally Determined Contribution (NDC) goals—a 40% non-fossil-based power capacity by 2030, more than a decade earlier than targeted.This has been made possible due to the unmitigated and singular focus of Prime Minister Narendra Modi, in embracing clean energy. While interventions in the electricity sector have largely been driven by strong policy commitments, action in the transport sector will be governed in the long run by the targeted penetration of electric vehicles. Despite this, recent policy announcements by the Modi government indicate that it is prioritising, manufacturing and infrastructure development in a manner that facilitate a transition to a lower carbon transport system.

Given the burgeoning energy demand, Modi government's huge strides in developing renewable energy sources have been highly commendable. The installed capacity of renewable energy generation in the country has grown 72% from 80 gigawatt (GW) to 138.9 GW during the past six years.Foreign direct investments of $6.1 billion flew into the Indian clean energy sector -- including solar, wind, biomass, large hydro and nuclear -- in the five year period 2014-19.Globally, India stands third in terms of renewable power, fourth in terms of wind power, and fifth in terms of solar power installed capacity. For the period 2014-2019, clean energy investments in India were about $75 billion. Of the renewable energy sources, excluding large hydro above 25 MW, installed capacity of solar energy capacity registered the highest growth. It grew from 2.6 GW in March 2014 to 34.4 GW in February 2020.

An additional 62.4 GW clean energy capacity is currently under various stages of implementation and 34.07 GW is under various stages of bidding.Most of the clean energy projects, except nuclear power and some large hydro, are set-up in the country by the private sector, which bodes well for overall energy security. The country's solar installed capacity reached 37.63 GW as of 31 March 2020.India has the lowest capital cost per MW globally of installing solar power plants.

The Indian government had an initial target of 20 GW solar capacity for 2022, which was achieved four years ahead of schedule. In 2015, the target was raised to 100 GW of solar capacity (including 40 GW from rooftop solar) by 2022, targeting an investment of US$100 billion.India has established nearly 42 solar parks to make land available to the promoters of solar plants.In the

decade ending 31 March 2020, India expanded its installed solar power capacity by 233 times from 161 MW to 37, 627 MW.And a large part of that phenomenal growth came in the last 6 years, under the visionary leadership of Prime Minister Narendra Modi.

Roof-top solar power accounts for 2.1 GW, of which 70% is industrial or commercial.In addition to its large-scale grid-connected solar photovoltaic (PV) initiative, India is developing off-grid solar power for local energy needs. Solar products have increasingly helped to meet rural needs; by the end of 2015 just under one million solar lanterns were sold in the country, reducing the need for kerosene. That year, 118, 700 solar home lighting systems were installed and 46, 655 solar street lighting installations were provided under a national program;well over 1.4 million solar cookers were distributed in India.

Also, the International Solar Alliance (ISA), proposed by India in 2015 as a founder member, headquartered in India, has clearly, put forward the concept of "One Sun One World one Grid" to harness abundant solar power on global scale.To cut a long story short, 56% of India’s commercial energy is met by Coal whereas, well over 60% of entire power generated in India is coal based.Modi government has set a target of installing 175 GW of renewable energy capacity by 2022, which includes 100 GW from solar, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydro-power.The government is promoting development of solar energy in the country by providing various fiscal & promotional incentives like 10-year tax exemptions.If we look at last decade, the growth rate of coal was roughly 6.5%, which is further expected to slow down to about 4% till 2030.

In other words, effectively speaking, India has a stated objective of achieving 40% of installed capacity from non fossil fuels, by 2030.Coal power generation accounts for 38-40% of the additional power generation worldwide and about 27% of the global energy mix. Therefore, clearly, despite the focus in non fossil fuels, coal as a source of power is unlikely to become redundant any time soon and relying only on CIL which accounts for 83% of India's coal production, 76% of thermal power capacity and over 50% of india's total energy supply, make little sense.

Cognisant of the situation, in an unprecedented move, the Modi government recently approved the promulgation of Mineral Laws (Amendment) Ordinance 2020 that will amend the Mines and Minerals (Development and Regulation)

Act 1957 and Coal Mines (Special Provisions) Act of 2015. The reformist ordinance marks a dramatic shift from the outdated attitude of past Congress led UPA dispensations, as it opens up the coal sector to private players so that they can mine coal for commercial purposes and not merely for captive use.The ordinance allows any India-registered company to bid and develop coal blocks, clearly over-riding Section 11A of the Mines and Minerals (Development and Regulation) Act, which had earlier provided that the central government can auction coal and lignite mining licences only to companies engaged in iron and steel, power and coal washing sectors.

India produced about 607 million metric tonnes of coal in 2018-19 and imported another 235 million tonnes (mt).It is estimated that of the 235 mt, 135 mt valued at Rs 171,000 crore could have been easily met from domestic reserves, had the coal sector been opened up to the private sector.The Modi government needs to be therefore applauded for taking the tough but practical step of democratising the coal sector and ending the monopoly of CIL which is over 70%, government owned.Allowing 100% FDI in coal mining will also help India to harness its coal reserves which were earlier available only for captive use of steel and power, more efficiently.Privatisation should help attract global players like BHP, Glencore, Rio Tinto and Anglo American.India is also taking steps to free up more coal deposits and broaden its auction pool.

CIL supplies a majority of its produce to the power sector, with NTPC, India's largest power generator, being its key customer. With NTPC’s announcement last year about forming a subsidiary to undertake coal mining business, to compete with merchant miners, the government has shown its resolve in encouraging competition between various state utilities.

CIL currently has seven producing subsidiaries namely, Eastern Coalfields Limited (ECL), Bharat Coking Coal Limited (BCCL), Central Coalfields Limited (CCL), Western Coalfields Limited (WCL), South Eastern Coalfields Limited (SECL), Northern Coalfields Limited (NCL) and Mahanadi Coalfields Limited (MCL).MCL in turn has four subsidiaries, SECL has two and CCL has one.The mine planning and consultancy company of Coal India Limited is Central Mine Planning & Design Institute Limited (CMPDIL). In addition, CIL has a foreign

subsidiary in Mozambique, namely Coal India Africana Limitada (CIAL). The mines in Assam i.e. North Eastern Coalfields, are managed directly by CIL.

Since privatising the coal sector and ending CIL's monopoly are now almost done and dusted, the next step should be spinning of CIL into smaller units and thereafter listing them on stock exchanges.Also, listing some of the larger subsidiaries and allowing them to run independently, free of parental control, should help unlock shareholder value and give the government greater leeway in raising funds to meet its annual disinvestment target of about $15 billion. Proposal to form a national coal index for pricing transparency and single window clearance for coal mining projects for speedy execution should aid the process of privatisation.Importantly, coal sector reforms are a huge boon for CIL, one of the largest producers of coal globally, as it will unshackle CIL from the burden of supplying coal to end consumers at deep discounts to international prices.Privatisation of coal sector by regularising production, removing end use restrictions and allowing foreign capital in commercial coal mining, are in sync with the larger ethos of "Minimum government, maximum governance".

Discussion on the power sector is incomplete without speaking of hydro power.India has an estimated hydro power potential of 1, 45, 320 MW, excluding small hydro projects (SHPs). At the end of February 2020, installed capacity was about 45, 700 MW. Several hydroelectric projects (HEPs) in India were languishing for decades under an incompetent Congress led UPA, due to contractual conflicts, environmental litigations, local disturbances, financial stress and unwilling purchasers. Only about 10, 000 MW of hydropower was added over the last 10 years. In yet another bold move, the Modi government accorded renewable energy (RE) status to large HEPs in March 2019, enabling new HEPs to receive concessions and green financing available to RE projects. Courtesy the Draft Electricity (Amendment) Bill 2020, hydropower purchase obligation (HPO) should become a reality soon. However, a better option is re-engineering of the power market to treat hydropower as a peaking and grid-balancing power, and also to distribute its higher tariff over the entire energy consumption on a prorate basis.

Hydro power potential is located mainly in northern and north-eastern regions. Arunachal Pradesh has the largest unexploited hydropower potential of 47 GW, followed by Uttarakhand with 12 GW. As water and water power are state subjects, the construction of HEPs is often delayed due to conflicts among riparian states — the Subansiri HEP is a prime example of this. Unexploited potential is mainly along three river systems — the Indus, Ganges and Brahmaputra (see Chart). Like electricity, hydropower should also be brought onto the concurrent list to enable uniform policy and facilitate faster development.

Undoubtedly, reforms in the minerals' sector have got strength from coal mining reforms since minerals like iron, bauxite and other minerals are located very close to the coal reserves.The beginning of auction for commercial coal mining is a win-win situation for all stakeholders industries. State governments will get more revenue and a huge population of the country will get employment. These coal sector reforms will make eastern and central India, the tribal belt, into pillars of development.16 aspirational districts in the country have a huge stock of coal, but people of these areas have not got adequate benefit of this and that people from these places have to migrate to far-flung cities for employment.De-nationalisation of coal and the massive push to boost energy production from renewables, will reverse the poor fortunes of these districts and states.The Modi government's decision to spend Rs 50,000 crore on creating infrastructure for coal extraction and transportation, will also create big employment opportunities.

Marrying energy security with environment friendliness is never easy due to the natural conflict involved. However, under Modi, India has managed this conflict seamlessly.For instance, as of March 31, 2020, the country’s total installed power capacity stood at little over 372 GW. Of this, the installed power capacity from renewable sources (including large hydro) accounted for over 134.7 GW, or 36.21% of the overall power capacity.This is a huge development, in reducing carbon foot print, without sacrificing growth.Don't forget that when Modi initially took charge in May 2014, renewable sources barely accounted for 5% of the installed capacity, thanks to the previous, utterly incompetent and lethargic Congress led, UPA regime. Again, within renewables, solar installations account for about 27.2% of the overall renewable capacity, today, in India.The LED bulb revolution, for instance, made popular by Indian families, which saves a good Rs 19,000 crore annually, is yet another great example of how Modinomics is participative and has embraced the concept of optimal energy utilisation. These bulbs used to cost Rs 300-450 per piece in 2013, but are now available at between just Rs 34-50, per unit.

Last but not the least, though India accounts for around 18% of world’s population, it uses only around 6% of the world’s primary energy. India’s per capita energy consumption (PEC) equals 0.6 tonnes of oil equivalent (toe) as compared to the global per capita average of 1.8 toe. Prime Minister Narendra Modi led government's landmark coal reforms, alongwith pioneering measures in boosting India's energy security by giving renewables the much needed push, should however, significantly raise India's PEC, which in turn, should accelerate the process of reaching the $5 trillion GDP number by 2024-25!

Ms Sanju Verma is an Economist, Chief Spokesperson of BJP Mumbai and Author of the Bestseller, "Truth & Dare--The Modi Dynamic".