The coal sector today (20 February) witnessed one of its biggest reforms since nationalisation in 1973, which will now allow private companies to mine coal for commercial use, ending the 55 years of Coal India Limited’s (CIL) monopoly on coal production in the country. CIL currently accounts for more than 80 per cent of domestic coal output.

Coal Minister Piyush Goyal announced the reform after a Cabinet meeting, following which large, medium as well as small mines will be allocated to private companies for mining. He said that the state-owned CIL will also benefit from the increased competition.

India depends on thermal power for 70 per cent of its power production and this measure is sure to reflect in the final price the consumers have to pay for power. A statement released by the Cabinet committee on the reform said that the reform will ensure assured coal supply, accountable allocation of coal and affordable coal leading to lower prices for consumers.

“It will increase competitiveness and allow the use of best possible technology into the sector. The higher investment will create direct and indirect employment in coal bearing areas especially in mining sector and will have an impact on economic development of these regions," the minister said.

Goyal added that the entire revenue from the coal mine auction would go to the coal bearing states and that the auctions would be conducted in a highly transparent manner. The revenue would especially benefit the Eastern states like West Bengal, Odisha, Jharkhand, Chhattisgarh, and Madhya Pradesh with huge tribal and backward populations.