India plans to value its coal reserves in rupees: What does it mean?

MoSPI has proposed a framework to assign a monetary value to India's coal reserves. Here's what natural capital accounting means and why it differs from pricing coal

The government is working on a framework to assign a monetary value to India's coal reserves, a step that is aimed at measuring the economic worth of the country's most important fossil fuel as part of environmental-economic accounting rather than determining what the reserves could fetch in the market.

 

The proposal is outlined in a discussion paper released by the Ministry of Statistics and Programme Implementation (Mospi) on Wednesday.

 

The paper explored the methodology for compiling monetary asset accounts for coal in line with the United Nations' System of Environmental-Economic Accounting (SEEA). The ministry clarified that the paper is exploratory and intended to invite expert feedback, and "does not represent the official statistical position of Mospi, the Government of India, or any other statutory authority."

 

What is natural capital accounting?

Natural capital accounting is a statistical framework that records natural resources, such as minerals, forests, water and land, as economic assets.

 

Instead of only measuring economic activity through indicators like Gross Domestic Product (GDP), it also seeks to capture the value of environmental assets and how they change over time.

 

According to the discussion paper, environmental-economic accounts "offer an integrated statistical framework to capture both the contribution of the environment to the economy and the impact of economic activities on environmental resources".

 

It said that the SEEA Central Framework enables countries to measure natural resource extraction, stock levels and changes in those stocks "in both physical and monetary terms".

 

Mospi said monetary asset accounts help assess "the economic value embodied in these resources", allowing policymakers to better understand their contribution to the economy while supporting decisions on "resource use, depletion, and long-term sustainability".

Why coal?

The ministry chose coal as the illustrative case because of its central role in India's energy system.

 

The paper said that coal "occupies a unique and strategically important position in India's energy and industrial landscape" and remains "the nation's most abundant domestic energy resource". It also points out that India produced a record 1,047.523 million tonnes of raw coal and 45.133 million tonnes of lignite in 2024-25.

 

Coal continues to account for most of India's electricity generation and is a key input for industries including steel, cement, fertilisers, chemicals and paper, the paper said.

Does this mean India is putting a market price on coal reserves?

No.

 

The proposal is not about estimating how much India's underground coal reserves could be sold for. Instead, it is seeking to estimate the economic value of the resource as a national asset.

 

"The primary objective of monetary valuation in the national accounts' context... is to compile market or market-equivalent values, not social values such as consumer surplus or welfare-based measures," the paper said.

 

It added that because "directly observable market prices for in-situ mineral deposits... are rarely traded", the preferred approach is to estimate their value through the expected stream of future resource rents.

 

In other words, the valuation focuses on the economic returns that coal reserves are expected to generate over their productive life rather than the value of the coal if it were sold as a physical commodity today.

What are resource rents?

The proposed methodology centres on the concept of "resource rent", which the paper described as "the economic surplus attributable to the natural resource itself after accounting for all costs of production and normal returns to produced inputs".

 

The ministry proposed estimating this surplus through the Net Present Value (NPV) approach, which discounts expected future resource rents over the life of the asset.

 

According to the paper, the NPV approach is "the recommended and most widely adopted methodology for monetary valuation" of mineral and energy resources because markets for underground deposits are generally absent.

Why does assigning a monetary value matter?

Coal is a non-renewable resource, meaning every tonne extracted reduces the remaining stock available for future use.

 

Mospi said accounting for natural resources in monetary terms enables comparisons across different types of environmental assets and provides a clearer picture of the economic benefits they generate.

 

It also allows governments to monitor depletion alongside additions to reserves and other changes over time within a single accounting framework.

 

The discussion paper further said that India already publishes physical asset accounts for coal through its environmental statistics. The proposed framework represen4d "the next step" by discussing international methodologies for valuing sub-soil assets in monetary terms and identifying an approach that could eventually be adopted within India's statistical system.

Which reserves will be valued?

The experimental exercise is limited to proved coal reserves.

 

The paper follows the SEEA framework and India's adoption of the United Nations Framework Classification (UNFC), which restricts the scope to commercially recoverable, or proved, coal reserves rather than all geological resources.

 

It also treats raw coal and lignite as a single combined asset to remain consistent with India's National Accounts Statistics, which do not publish separate monetary aggregates for lignite.

What next?

The ministry has not announced any timeline for adopting the framework.

 

Instead, the discussion paper compared the methodologies developed by the Organisation for Economic Co-operation and Development (OECD), the World Bank and the Philippines. It concluded that the OECD's 2025 approach is the most suitable starting point for India because it aligns more closely with the country's statistical system and available data.

 

Since the paper is intended to stimulate discussion, the methodology may evolve after consultations with experts before any formal incorporation into India's environmental-economic accounts.