ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Nationalisation vs Privatisation

A Discourse Network Analysis of Coal Ownership in India

Coal production in India has not been commensurate with the growing energy demand. As a result, import dependence has increased, which has exposed the economy to higher prices and geopolitical risks. Coal India Limited, the monopoly public sector producer, is saddled with the problems of low productivity. Private sector participation in the sector is limited and restricted to captive mining. The aim of this article is to use a tool called “Discourse Network Analysis” and structurally analyse the configuration of debate on privatisation versus nationalisation from 1997 to 2013.

Coal is one of the main sources of energy in India and has contributed significantly to rapid industrialisation of the country. About 75% of the total coal produced in India is used for power generation (Senapati 2011). The importance of coal in the energy basket can be attributed to the availability of large coal resources in India. According to Indian Bureau of Mines (IBM 2012), gross geological coal resources are estimated at 286 billion tonnes, which are sufficient to meet India’s demand for at least the next 100 years. The importance of coal also stems from the current non-viability of large-scale use of alternate sources of energy. Coal currently accounts for 55% of India’s total energy consumption (CSO 2013), and according to many projections, it will remain the most viable fuel for driving economic growth for many years to come (see TERI and PSA 2006; Ministry of Coal 2005; Planning Commission 2005). Accordingly, affordable and sustainable supply of coal is inextricably linked to the goal of ensuring energy security in India.

The need for a larger and efficient production of coal was realised at the time of India’s independence in 1947. At that time, India’s power generation capacity was limited and mostly consisting of small hydro and high-grade-lumpy-coal-fired thermal power stations. Factors such as low cost of production, easy availability of technology and large indigenous reserves made coal a natural choice for nurturing industrial growth. Until 1970, most of the coal mines in India were exploited by the private sector. In the early 1970s, however, the government felt the need to nationalise these mines owing to the two related events: (i) the oil price shocks of the early 1970s forced the government to closely scrutinise its energy options, with coal being identified as the main source and its commercial development becoming a priority; (ii) while private miners did not invest much in the growth of the sector, the poor working conditions and low safety standards in mines were an added concern. It was felt that the nationalisation would not only ensure adequate investments in the sector, but also improve safety standards and the quality of life of the workforce.1 The coal industry was thus nationalised in two phases: coking coal mines in 1971 and non-coking coal mines in 1973. The Coal Mines (Nationalisation) Act of 19732 brought coal resources within the public sector. In 1975, the nationalised coal industry was restructured with the establishment of the public sector enterprise (PSE), Coal India Limited (CIL). The Ministry of Coal (MoC) was given the overall responsibility for developing policies and strategies for exploration and development of coal. Although the Coal Mines (Nationalisation) Act, 1973 restricted the role of private players in coal mining, subsequent amendments were made to the act to allow captive mining by private companies for selected end-use sectors such as power, iron and steel, cement, washing and coal gasification. The rationale for these amendments was to increase coal production by allowing greater private sector participation.

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