Industry prospects-COAL

India is the third largest producer of coal in the world. The total coal production in the country during FY12 stood at around 545 MT. India is also the third largest consumer of coal in the world as coal meets 57% of the country's energy needs. Around 77% of the total coal in India is consumed by the power sector. The mineral is also used in other industries such as steel, cement, fertilizers, bricks manufacturing, textiles and chemicals. Demand of coal from captive plants is projected to grow at a high rate, thereby increasing its share in total demand by FY15. Domestic coal production is unlikely to meet expected demand growth over the next five years. PSU companies, who account for four-fifths of the country's coal production, are finding it difficult to accelerate production growth. Environment clearance and rehabilitation and resettlement (R&R) issues are creating serious roadblocks for private companies as well. Hence, the demand-supply gap has to be met by raising imports. In response to this, a top government advisory body has proposed that the government should allow private firms to mine coal to plug supply shortages. At present, India does not permit commercial mining of coal by private firms. However, it allows power producers to access 'captive blocks' for their fuel needs. The country has 293.5 bn tonnes of coal reserves, of which 40% of these have been proven. But social and environmental concerns, in addition to policy inaction have kept the prospects of the sector on a tight leash.