<div><em><strong>Sutanu Guru </strong>on why a decline in coal imports is both good and bad news</em></div><div> </div><div>In July, 2015, coal imports declined by 11 per cent to 19.3 million tons. This is the first time in more than one year that coal imports have declined. This seems in tune with the claims made by Union Coal Secretary Anil Swarup in July that the next three months will see a dramatic fall in coal imports. The steep decline in July also seems to in tune with a forecast made recently by Union Power & Coal minister Piyush Goyal that the current financial year will see an overall decline in coal imports to 210 million tons.</div><div> </div><div>Why should Anil Swarup and Piyush Goyal be happy with the steep decline in coal imports? According to them, one key objective of the Modi government when it came to power was to execute a strategy to dramatically increase domestic coal production in the country. Indeed, going by government statistics, coal output from state owned Coal India Ltd and other private producers increased by more than 40 million tons in the previous financial year. This increased domestic availability apparently led to a lower dependence on imports. The power and coal ministry has ambitious targets of almost doubling coal output in the country by 2019. </div><div> </div><div>For many years, the steep rise in coal imports by India had only become an embarrassment, but also a symbol of the economic policy failures of the UPA government. A brief recap of recent history is telling. In January, 2012, there were media reports that the then Joint Secretary Pulok Chatterjee of the PMO was given a specific task of heading a team to look into the problem of stagnating coal production and crippling power shortages. A few months after that, India had to face humiliation and derision as the entire grid in North India collapsed. From about 30 odd million tons a year of coal imports when he took over as Prime Minister in 2004, Dr Manmohan Singh left office in 2014 with annual coal imports in excess of 200 million tons. The relentless rise in imports continued even after Narendra Modi took over as PM and crossed 250 million tons in 2014-15. </div><div> </div><div>Not many mind the fact that India imports almost 80 per cent of its oil and gas needs. The country simply doesn’t have enough “discovered and recoverable” oil and gas. But India happens to have the third largest reserves of coal in the world. To import such massive amounts of coal when you are sitting on mountains of reserves is indeed scandalous. Add the coal block allocation scam that hit the UPA government and the dismal picture is complete. To that extent, the government deserves to pat itself on the back for at least reversing the trend of coal imports rising year after year.</div><div> </div><div>Yet, it is not all good news. The steep decline in imports in July reflects another ongoing crisis in the Indian power sector. Saddled with unpaid debts and dues in excess of Rs 4.5 lakh crores, power distribution companies in India simply do not have the cash to pay for power purchases. This, in turn, is forcing power generation companies to scale down output. The decline in July is evidence of that.</div><div> </div><div>Clearly, Minister Piyush Goyal has perhaps achieved just about 25 per cent of his ambitious targets related to coal and power. He has a little more than three years to achieve the balance 75 25 per cent. </div><div> </div>
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