If, a person has a vision, chases it with missionary zeal and a robust action plan driven by an apt strategy mix, he is bound to achieve success. Luckily, at this critical juncture when India needs accelerated growth to fulfill the aspirations of millions of unemployed youth and the poor, we have a prime minister in N Modi who embodies all these qualities. The manner in which he has addressed the challenges facing the coal sector proves the point.
The position is best encapsulated in a cryptic observation [Anil Swarup, secretary, ministry of coal recapitulated] Modi had made to him 9 months ago when he took charge of the department. Hon’ble prime minister had said “Fix coal, fix the economy”. What Mr Swarup was not able to comprehend then, the spectacular achievements of this sector during the last one year under his stewardship speak clearly and loudly.
Modi who during his marathon election campaign had spoken a lot about the endemic corruption in the coal sector in particular, the systemic and brazen manner in which this national resource was looted by those in the government and their favourites, had a clear vision in his mind about what coal can do to the economy. More importantly, he had a blue print on how to ‘metamorphose’ it in to a healthy and robust sector acting as the harbinger for catapulting Indian economy on a high growth trajectory.
Well aware that 60% of power generation in India is based on coal and how vulnerable is India’s GDP [gross domestic product] to power availability, this government has put in place measures – both in the short-term and long-term – for removing all constraints coming in the way of increasing production, timely evacuation from the mines and transportation to power plants. For successful implementation of these steps, it has acted in full sync with other players especially railways and state governments.
The results speak for themselves. During 2014-15, there was an unprecedented surge in output of Coal India Limited [CIL] – a government of India undertaking which alone accounts for nearly 80% of coal production and whose inefficiency and deep rooted corrupt practices were long perceived as a drag on development. CIL produced 494 million tons, a record 32 million tons higher than in the previous year. This compares with a cumulative increase of 31 million tons in 4 years from 2009-10 to 2013-14.
An increase of over 30 million tons in a single year is a stellar achievement in the 4 decade history of CIL. The momentum is being sustained during the current year with an increase of 12.3 % during April-June, 2015 over corresponding quarter of 2014 and 14% increase recorded in July, 2015 over July, 2014. The target for the current financial year is 550 million tons, an increase of 56 million tons over 2014-15.
In the past, electricity outages triggered by precariously low levels of coal stock with power plants was an all time affair. Majority of the plants having 7 days stock or even less used to be the order of the day; last year this had come down to 2 days, one in some cases and or even zero. Today, power plants generally have 20 – 45 days stock of coal. This is a vivid testimony to excellent management and handling of the entire coal supply chain by Modi – dispensation.
The government has done meticulous planning for the future. Keeping in mind GDP growth target of 8-9% per annum, it has kept a mammoth target of 1.5 billion tons [or 1500 million tons] for 2019-20. Of this, 1 billion tons will come from CIL. During the 5 year period 2014-15 to 2019-20, this translates to an increase of over 500 million tons or 100 million tons annually. That may appear to be a monumental challenge.
CIL will have to open 70 to 100 more mines for which necessary land, environment and other state level clearances will have to be taken. The behemoth will have to go for large scale mechanization and adoption of modern technologies. The mindset of the entire organization from top to bottom – hitherto used to near stagnation or marginal increase in production – needs to undergo a paradigm shift. Above all, the management will have to be given full autonomy in taking decisions even as the coal ministry merely acts as facilitator.
To cope with these challenges, the initial efforts being made by Modi – dispensation inspire confidence. In the past 10 months, CIL has acquired 2000 hectares for 72 mines and obtained 41 environment clearances. With land and environment clearances in place, it has been opening a mine every month. The manager of each of the hundreds of mines has been asked to come up with an evacuation plan; such plan has been done for the entire 1 billion tons target for 2019-20.
The aforementioned clearances have come on fast track primarily because of excellent coordination with states. Modi himself does video conferencing [VC] with chief secretaries of states once in 2 months. This arrangement keeps state administrations on tenterhooks resulting in prompt removal of all procedural bottlenecks and timely approvals. It is a unique arrangement never seen before in the history of independent India.
Timely evacuation of coal is a fundamental requirement for increasing and sustaining high production [in the past hundreds of million tons were lost due to railways inability to evacuate]. To ensure this, the undertaking has been holding meetings with railway authorities once every quarter [against once a year in the past]. This has helped in the latter taking up over 120 new projects for evacuation of coal.
Besides galvanizing the entire machinery of CIL towards the 1 billion tons mark, the government has also made foolproof arrangements to drive private sector to achieve the 500 million tons target set for it. Having already successfully auctioned over 30 mines [out of the 204 cancelled by Supreme Court in September, 2014], it is well on its way to auctioning the rest. Those mines have reserves close to 900 million tons and are therefore more than adequate to enable private players reach the target.
Having paid hefty sums to the government for getting hold of the mines, they will be under pressure to develop them fast and extract coal [unlike the original allot tees who had got these free and hence, many of them were lying idle]. At the same time, the lure of captive supplies and protection from fluctuations in international price will also drive them towards faster development and in turn, increase in production.
The benefit of the new system of e-auction in a transparent manner whereby any company meeting the criteria [as per notified guidelines] can participate on a level playing field will be available much beyond exploitation of reserves in cancelled mines. This will ensure that all future mine allot tees will be credible players willing to develop them fast and ensure full utilization of their potential. It will catapult India’s coal sector in the top league and meet requirements for powering double digit growth on a sustained basis.
If Modi can transform the coal sector, there is every reason to believe that he will be able to deliver in every other crucial sector viz., roads, highways, power, railways, agriculture etc. However, the only big risk he faces is the commanding position of opposition parties in Upper House and their obstructionist capabilities in Lower House too which comes in the way of passing progressive legislation [e.g. sabotage of Land bill (2015)].
How he handles this big risk and carries forward his development agenda, we can only wait and watch!