You are here

Why Coal Matters in India?

Prashant Hosur is Research Assistant at the Institute for Defence Studies and Analyses, New Delhi. Click here for detailed profile
  • Share
  • Tweet
  • Email
  • Whatsapp
  • Linkedin
  • Print
  • June 01, 2010

    Coal presently constitutes a little over 50 per cent of India’s energy mix. Given the rising environmental pressures, there has been a call for reducing the consumption of hydrocarbons, especially coal, by various countries. The big question is: Can India take drastic measures to reduce its coal consumption? Why is coal so important in India?

    Rising economic growth warrants increased energy consumption. Moreover, there is a bi-directional causal effect between energy consumption and economic growth. That is to say, rise in economic growth causes rise in energy consumption, which in turn causes economic growth. Coal has been the chief energy source for India because it is found in abundance and is cheaper to exploit than some of the other energy resourses.

    The need felt by policy makers to strike a balance between economic growth and climate change makes the energy security debate rather interesting. On one hand, coal has a high rate of carbon emissions and thus contributes to global warming. On the other hand, power generation using renewable energy and other cleaner energy sources such as nuclear have not been able to contribute significantly as yet. That being said, it is generally agreed that the percentage of hydro carbons and fossil fuels in the energy mix has to be reduced to attenuate the effects of global warming in the near future.

    A deeper study of the coal sector reveals that an innocuous initiative to reduce coal consumption to improve the environment can very well create a politically volatile situation for the government. Issues pertaining to coal mafias, coal unions and its politics ought to be addressed if any meaningful reforms or cuts in coal consumption are to be made. The politics of the coal sector must be addressed in order to understand why significantly reducing coal consumption may not be easy.

    Among the major coal trade unions, there are those that are affiliated to the Congress party, the BJP and the CPI (M). Hence decisions to either reform the coal sector or reduce coal consumption would be more of a political decision (and a risk) than a policy issue.1 For instance, an article posted on the Communist Party of India, Marxist [CPI (M)] website discussed why The All India Coal Workers’ Federation (CITU) had gone on a strike in December 2008. The reason given by the federation was as follows:

    “The Federation has taken this decision because of the inordinate delay in commencing the bipartite negotiation for revision of wages for the workers which has fallen long overdue; to force a decisive halt to the dubious game plan of the authorities concerned and the ministry to impose 10 years tenure for wage agreement in coal industry despite government’s acceptance of the unanimous demand of the entire trade union movement for five year tenure that was conveyed through concerned DPE guidelines; because of the nonchalant move of the government and the Coal India management in gifting away coal-blocks to private hands, despite total opposition by the entire trade union movement and in utter violation of Coal Mines (Nationalisation) Act and because of the drastic reduction in the regular workforce in the coal industry through mass scale contractorisation and outsourcing.”2

    As stated in the text the major issues that the coal federation has are regarding wages, privatization of the coal mining industry and downsizing the workforce. Given that this piece appeared on the Communist Party of India’s (Marxist) webpage, it can be inferred that the Federation has found a political ally to back it up. This shows the extent to which coal labour unions in India are entrenched in politics. Under such political circumstances, it would be difficult to reduce India’s coal consumption, not just because of issues regarding path dependence, but because any significant reduction in coal consumption (even in the presence of a viable option) will have social and political repercussions. For instance, Dr. D. Chandrasekharam, head of Earth Science department at the Indian Institute of Technology, Mumbai, stated in a conference that “India with its 10,600 MW geothermal power potential is yet to appear on the geothermal power map of the world. Availability of large recoverable coal reserves and a powerful coal lobby is preventing healthier growth of non-conventional energy sector, including geothermal power.”3

    There is however a grimmer aspect of the coal sector as well. The government so far has not been able to stop private coal mafias from pursuing illegal mining, extortion activities and interference in the administration of coal companies (which are mostly in the public sector). Not only have illegal activities yielded money and muscle power, there have also been some reports suggesting that the coal mafias may have formed alliances with other groups like the Naxals/Maoists in various regions.4 Given the fact that Naxalism is perhaps the biggest internal security threat to India, the coal industry seems to have found itself amidst a volatile situation. Hence, controlling the coal sector or reforming it is a formidable task which may take time, diligent efforts and patience.

    In sum, issues pertaining to the coal unions and the coal mafias have to be addressed if lasting reforms in the coal sector are to be undertaken. Reduction in coal consumption would naturally necessitate reducing the workforce, which can have political repercussions. While other issues such as path dependence and availability of alternative fuels necessitate the continued use of coal, the problems posed by the coal unions and the coal mafias suggest that India may potentially find itself restrained in acting on reducing its coal consumption in the near future.