Coal Budget in the Budget 2023-24 was cut by 50%.

The expenditure budgeted for the year 2023-24 is 192 crores which is 50% less than the budget of the previous years. At the face of it, it would seem that India is phasing out of coal, but are we really?

Private, Commercial coal mining is being promoted and Government PSU participation and holding in the coal mines is drastically reduced

Government aims to reduce use of imported and promote Indian coal blended with biomass pellets in the thermal power plants
Investment in road and rail to ensure first and last mile connectivity of coal
If we see the budgets of 2021-22 and 2022-23, the term ‘coal’ was mentioned 3 times each. In the 2021 budget, coal was one of the strategic sectors wherein the Government had clearly stated that “there will be bare minimum presence of the public sector enterprises. The remaining CPSEs in the strategic sector will be privatised or merged or subsidiarized with other CPSEs or closed.” Further, in the budget 2021-22 there was a reduction in the customs duty for coal to 1%. In the budget 2022-23, the government had proposed four pilot projects to promote coal gasification and chemical use in the industries. This year, coal was mentioned just once. While the (Hon’ble) Finance Minister announced the Saptrishi or 7 priorities to fulfill the vision of the government of Amrit Kaal, one of the priorities of the government was reaching the last mile.

While giving the details of ensuring the last and the first mile connectivity under logistics, coal was one of the sectors mentioned by the finance minister. The Minister in her speech stated: “51. One hundred critical transport infrastructure projects, for last and first mile connectivity for ports, coal, steel, fertilizer, and food grains sectors have been identified. They will be taken up on priority with investment of `75,000 crore, including `15,000 crore from private sources”. This clearly indicates that Indian coal will continue to be exploited with focus on moving the coal faster. This move of the Government can also be seen in the backdrop of coal shortage for power and industrial users that we have witnessed in the past years. Last year where several coal fired thermal power plants were shut and several running on critically low coal stocks, lack of connectivity between coal power plants and coal mines was said to be one of the key reasons.
In the COP26, India promised that it will phase down coal and fossil fuel energy, it actually meant that India will move away from fossil fuel generated energy use, but it does not mean we will reduce mining of coal. The Economic Survey 2022-23 estimates that the coal industry will grow 6-7% every year and reach about 1.5 billion tonnes by 2030. In addition, the Government has, from this budget, made it evident that it will be moving the public sector out of the coal industry completely and the industry’s mining operations will be handed over to the private sector cutting the budget allocated to the sector by almost 50% of the budget allocated from the previous year. Government had also allowed 100% foreign investments in commercial mining in the financial year 2020-21. In September 2022, 141 coal mines were set up for auction and one of the recent developments where the Government directed old power plants set to be retired to keep running till 2030. With the Government’s move to promote use of coal as chemicals in industries with projects such as coal gasification, coal to PVC, coal to hydrogen etc., it is clear that coal is not going anywhere. In one form or the other, coal will continue to be exploited and used.

This budget and Government’s actions over the past years have clearly indicated its intentions to promote commercial coal mining. With the incentives being given to the private players easing the auctioning process of coal mines, the dilution in the Environment and Forest related laws, the Government’s move is clearly to promote more and more coal mining. This will only lead to the loss of forest lands, biodiversity and most importantly, it will push more and more people into the fossil fuel led industrialization. The climate emergency that we are facing today requires us to take more substantial action and phase out coal from all energy and material use.

Centre for Financial Accountability is now on Telegram. Click here to join our Telegram channel and stay tuned to the latest updates and insights on the economy and finance.