Demand for coal may not cripple the sector immediately, since Coal India has enough stock but the situation could get ugly really quickly, unless litigation over coal mines is not dealt with in a hurry.
Out that of the 64 coal blocks allotted and auctioned in 2015, only 13 have come into production because of pending litigation.
Power, Energy and Coal Minister Piyush Goyal's joy at a hugely successful coal mine auction has been short lived. That's because a majority of the coal mines auctioned and allotted in 2015 have yet to come online. The numbers speak for themselves.
The coal ministry auctioned 31 coal mines and allotted 42 coal mines to state-run companies in 2015. But after that, a total of 85 cases have been filed under the Coal Mines Special Provision Act.Now while 29 cases have been withdrawn, 25 of these cases have been heard by the Delhi High Court, but judgement has been reserved. And it's been 9-18 months since that happened. The cases where judgement has been reserved include 12 schedule-2 mines which were producing coal before the Supreme Court ordered the cancellation of licenses.
Nine cases have been disposed of by various High Courts. However, in 2 of these cases, the government has appealed the High Court order in Supreme Court and 20 cases are yet to be heard.
It's these pending cases that are giving the government a serious case of indigestion. The chief concern is that as many as 17 coal mines allotted to states like Karnataka, Punjab, Rajasthan and West Bengal are under litigation.
That means a significant drop in coal output. Now this will not become a problem in the near future because coal India has enough reserves to meet demand. So, unless these cases are disposed off quickly, the long-term impact could be crippling for an economy that hopes to achieve an 8 percent growth rate, because that growth will mean an increased demand for coal.
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