By Mayank Jain:
The power we all use to run our homes, businesses and the economy of India at large is heavily dependent on the availability of coal. Coal alone provides for 2/3rd of India’s electricity generation and all other sources combined are able to make up only the remaining one third.
The reason to worry here is the high prices that have become a steady cause of concern coupled with deficient supply which is unable to meet the demands for this ‘black diamond.’ We have the world’s largest reserves but we imported some 110 million tonnes of coal last year just to meet our needs. Between the years 2008-2013, coal imports grew by 37% while domestic coal production only grew by 2.1% and some millions of Kilowatt-hours of power was lost due to shortage of coal.
The high prices of coal are putting extra burden on the exchequer. It also trickles down to the end consumer of electricity who has to bear almost 100% price hike due to coal prices which have tripled over last thirteen years.
There are multiple reasons for high pricing of coal which includes the treatment of Coal India Limited as a cash cow; extracting huge amounts from the undertaking without contributing much. On the other hand, most of the states have to shell out money from their pockets for subsidies. Another reason for the high prices is the high transportation cost of coal from one place to another as compared to low cost transmission of produced electricity.
The pricing of coal shouldn’t be too high because it disrupts the entire economy but keeping it too low will leave no incentive to conserve power. The solution lies in pricing it rightly and privatisation that is done in a free and fair manner which can increase efficiencies and yet, keep the national interest intact.
The following analysis by AskHow details the issue much better: