Is the spot market mechanism the panacaea for the slack in energy sector?

While benefits in supply and pricing are likely to accrue to the consumer with the activation of energy exchanges, certain grey areas need to be addressed

In the span of less than a month, India has brought trade in gas and electricity under the spot market mechanism. It wants to do the same for coal. The coal ministry has this month announced auctions for coal mines and wants to set up a coal exchange soon. 

Allowing pricing freedom as an exchange is a big deal in the Indian energy policy. Gas is under an administered pricing system, electricity prices in no state reflect demand-and-supply forces and lack of transparency in coal pricing was one of the reasons foreign investors have been reluctant to invest in Coal