At what cost are we building #PowerfulIndia?

The energy policy of India is largely defined by the country’s expanding energy demand and our failure to produce it. India is the third largest primary energy consumer in the world after China and USA, 56.26% of this comes from coal.

The Energy crisis

On one hand we have a growing demand for energy and on the other, we are struggling to meet that demand. Access to electricity is one of the most defining elements of the inequality that exists in our country.

The government of India announced on 29 April this year that it had completed the electrification of all inhabited villages in India. This, like most other such announcements, had its own Ashwatthama line.  According to the definition of the Union power ministry, a village is said to be electrified if only 10% of the households in it have power connections and if there is electricity in the public institutions in the village. So by ensuring as little as 10% access, the government can declare a village electrified.

Despite Minister for Coal, Piyush Goyal’s promise to end dependence on coal imports, India’s thermal coal (mostly used for power generation) imports rose by 8 percent and coking coal imports by about 13 percent in 2017-18. State-owned Coal India (CIL) has struggled to supply adequate coal to power plants, to meet the growing demand and in fact, even meet the scaled down target of 2017-18.

Almost every government since 1991 has considered opening up the country’s coal sector to competition. The Narendra Modi government first passed the Coal Mines (Special Provisions) Ordinance as soon as they came to power in 2014 and finally succeeded in legislating the Coal Mines Special Provision Act, 2015 which allowed entry of private companies in coal mining. The rationale provided for this was that this will increase production of coal, make it more competitive and so on. This ordinance and then the law removes the restriction on end use from the eligibility to undertake coal mining except in the case of certain specified coal blocks. What this means is that now private coal companies can mine coal and sell it in the open market for any use without any restriction.

Energy demand against bad jobs, loss of livelihood and destruction of environment

56.26% of India’s energy demand comes from coal. 80% of coal produced in the country comes from CIL. Only 1 out of every 10 tonne extracted by CIL is from its underground mines. Underground mines contribute 20 per cent of production in Australia, nearly 40 per cent in the US and 86 per cent in China. Of the existing underground mines, CIL plans to shut down 37 by the end of this fiscal year. Thus, the policy emphasis is on open pit mining.

Why do companies choose Open Pit mining?

Advantages Problems
Less capital intensive than underground mines Requires acquisition of large tracts of land destroying agricultural and forest lands
Easier to detect Loss of livelihood of people dependent on this land
Easier to extract Loss of homes of people in this area and resettlement costs
Easier to transport Destruction of the existing environment and soil fertility
Larger machines can be used for mining than in underground mining Pollution of air, water due to coal dust and its health impact
Requires less training of workers Social conflict develops between different sections of these areas
Requires less investment in safety Leads to Land Subsidence
  Leads to underground fires leading to accidents, damage to lives and property and depletion of reserves.


According to some market analysts, the average cost of open-cast coal for Coal India is about $13 a tonne while that for underground mines, is about $75 per tonne. Thus while the monetary cost of production of coal using the Open Pit method is low, its social cost far exceeds its advantages. It starts by displacing people from villages, destroying forest and agricultural lands, polluting air and water, taking away homes and livelihoods of the displaced people and the concomitant health costs of the people living in that area and working on these mines.

Over and above these problems, CIL employs along with its 2.98 lakh permanent workers and about 1.13 lakh contract workers according to their Annual Report of 2017-18 and the latest collective bargaining agreement. This is a very conservative estimate of the number of irregular workers employed in these mines. According to union sources, a lowest category permanent worker earns about Rs. 26,000 per month plus benefits while a contract worker, doing the same job, would make about Rs. 6,000 without any benefits. This huge gap in wages and benefits between the workers creates a situation where unionisation of the precarious workers becomes an uphill task. The open pit mines actually make it easier to hire contract workers, as this requires less training. Thus the number of contract and other irregular workers has increased significantly over the years and most of whom remain outside the reach of trade unions. Apart from hiring miners sourced from contractors, CIL also has a range of other outsourced workers engaged in operations and logistics.

Lax Regulation – Devastated Environment

In fact based on the Supreme Court order in the Common Cause vs Union of India case filed by the NGO Common Cause seeking to regulate mining lessees for rampant unlawful mining in Odisha, Odisha government slapped Rs. 8,297 crores on Mahanadi Coalfields Ltd, a subsidiary of Coal India as fine for unlawful production of coal violating environmental clearances in March this year. The two-judge bench of Justice Madan B Lokur and Justice Deepak Gupta directed that the compensation will be payable “from 2000-2001 onwards at 100 per cent of the price of the mineral”, and should be deposited on or before 31 December 2017. The SC has been also hearing cases of illegal mining by Jindal Steel and Power Ltd., Rungta Mines Ltd., Sarda Mines Pvt. Ltd. and Essel Ltd separately. The compensation on the companies has been levied as per provisions of the Mines and Minerals (Development and Regulation) Act, 1957 as amended in 2015. Section 21(5) of the Act, empowers the state government to recover the price of the illegally-mined ore from each defaulting lessee. In addition, the government can also recover any rent, royalty or tax, for the period during which such illegal mining activity was being carried out outside the mining lease area.

Where do we go from here?

Unlawful mining is a perfect entry point for raising the following questions:

  • Who does this coal belong to? The coal companies or the Communities they displace?
  • What about the environmental damage? What will we leave for our children?
  • Energy that we generate with this coal – who is it for?

Mining can be made more environmentally sustainable with least human cost by developing and integrating practices that reduce the environmental impact of mining operations and creating alternate livelihood opportunities for those who are displaced by these activities. To ensure environmental sustainability, measures such as reducing water and energy consumption, minimizing land disturbance and waste production, preventing soil, water, and air pollution at mine sites, and conducting successful mine closure and reclamation activities are incorporated while to reduce human cost, the entire process needs to be more democratic and inclusive. This also requires effective regulatory mechanisms that are stringently implemented by specific regulatory bodies with sufficient powers.

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