Coal output needs to be ramped up to rein in imports: PMEAC

In the recent period we have seen that the coal import into the country has increased almost by 40%, says PMEAC Chairman C Rangarajan

With coal import bill doubling to nearly $18 billion in 2012-13, the Prime Minister's Economic Advisory Council (PMEAC) today said domestic production of the dry fuel should be increased to lower reliance on imports.

"In the recent period we have seen that the coal import into the country has increased almost by 40%. It almost touched $18 billion, which is twice the value of the import a few years ago," PMEAC Chairman C Rangarajan said.

"Therefore, increasing the domestic production of coal and making the coal available for the power sector must be the first priority," he added.

India imported 110.42 million tonnes (MT) of coal between April 2012 and January 2013. Projecting imports to touch 185 MT by 2017, Planning Commission had earlier said there was an urgent need to take effective measures for stepping up coal production. India had produced 557.5 MT coal last fiscal.

Rangarajan also said higher coal imports have bearing on the current account deficit (CAD) as well.

India is running a high CAD of more than 5% of GDP. The plunge of rupee has worsened the deficit further.

Rangarajan's statement assumes importance since on June 21 government had allowed power producers to pass on the higher cost of imported coal to consumers, a move that would raise electricity tariff by a minimum 15-17 paise per unit.

"The availability of coal is extremely important as far as our situation is concerned. If the domestic production is not adequate, with the increase in demand; imports should be certainly looked at," Rangarajan told a private news channel.

"However, the imported coal may still be more costly than the domestic coal. What is critically important is increasing the availability of coal in the country. This has implications for the CAD as well," he added.