Remove price distortions in coal, restructure CIL: Survey

Calling for removing price distortions, the pre-Budget Economic Survey today suggested allowing the private sector to mine coal and the restructuring of Coal India Ltd to boost production for cutting import bill which was Rs 95,175 crore in FY'14.
"There is a strong case for removing pricing distortions seen by consumers such as administered pricing for coal. These fixed prices are dulling the market response of reduced consumption in response to higher prices and reducing the flexibility of the market economy," said the Survey for 2013-14 tabled in Parliament by Finance Minister Arun Jaitley.
The survey further said that the gap between demand and supply has been consistently increasing. To bridge the gap between domestic demand and supply, India imported about 146 million tonnes for Rs 92,538 crore in 2012-13 and about 169 MT for Rs 95,175 crore during 2013-14 (provisional).

Based on the sectoral analysis carried out by various committees and institutions in the recent past, "the demand and supply projections of coal sector, and the current status of the coal mining...Initiatives need to be expedited on priority basis," the document said.
The initiatives include accelerating coal production in the short term by building critical feeder route for coal, clearing pending environment and forest clearances, permitting commercial coal mining by the private sector and restructuring state-owned Coal India. CIL accounts for over 80 per cent of the domestic coal production.
"A bill to amend the Coal Mines (Nationalisation) has been pending in the Rajya Sabha since 2000 and its passage needs to be expedited to permit private-sector entry into coal mining," it said.

The T L Shankar Committee on Road Map for Coal Sector Reforms had recommended restructuring of Coal India during the 12th Five Year Plan period (2012-17). "The process needs to be pushed through swiftly," the Survey said.

"The implementation of key infrastructure projects for evacuation and movement of coal will be of critical importance for enabling a step up in coal production," it said.
"In order to transport coal from the pithead, three critical rail lines have been identified...Work on these critical routes need to be expedited," it added.
The Survey further said that with stagnant domestic production, coal imports are likely to surge in the remaining three years of the 12th Plan.

The performance of the coal sector in the first two years of the current plan period has been subdued with domestic production at 556 MT in 2012-13 and 566 MT in 2013-14.
Overall domestic demand for coal during these two years was in the range of 715-720 MT, it said.
The main end-use sectors of coal are thermal power plants (60 per cent), iron and steel (7 per cent) and cement (5 per cent), apart from the irregular demand from the unorganised small-scale sector comprising primarily the brick and ceramics industry.