India's coal production picked up in "a big way" during FY22 and FY23 resulting into improved availability and supply of the dry fuel, on account of various government initiatives towards the sector, Icra said.
The production of Coal India grew by 12.1 per cent in FY23, the ratings agency said, adding it was the fastest growth rate registered by the state-owned miner in the past few decades.
Besides enhancing output and supply, the government implemented multiple reforms to bring in greater transparency, improvement in ease of doing business, and investment attractiveness in the domestic coal and mining sectors, Jayanta Roy, Senior Vice President & Group Head – Corporate Ratings, Icra, said.
The government has taken various initiatives since January 2015. The policy interventions, especially with regard to the both captive and commercial coal mining have ushered in greater transparency and ease of doing business in the coal sector, he said in the Icra note.
"Domestic coal production picked up in a big way in FY2022 and FY2023, when, in order to keep pace with the steep jump in domestic coal demand, it grew by 8.7 per cent and 14.8 per cent, respectively.
"In order to keep pace with the steep jump in domestic coal demand during financial years 2021-22 and 2022-23, when demand increased by 13.4 per cent and 8.5 per cent respectively, domestic coal production grew by 8.7 per cent and 14.8 per cent, respectively," he said.
This was possible because of a sharp pick-up in captive and merchant coal mining, benefitting from the coal ministry initiatives, he said.
He further said that "the transition to the auction regime in January 2015, and opening up of commercial coal mining in June 2020...has aided production of coal from captive/ merchant miners."
Prime Minister Narendra Modi launched the auctions for commercial coal mining in India in 2020 to increase the availability of coal in the country.
As per the coal ministry data, so far, 86 coal mines have been auctioned under commercial coal mining, with a potential to generate Rs 34,188 crore in annual revenue to various states in the country. The coal production from captive and commercial coal mines have been steadily increasing over the years, registering a 216 per cent growth in the last six years.
The production from captive/merchant miners grew by a sharp 43.2 per cent in FY23, crossing the 100 MT-mark of annual production for the first time. It grew to 123 MT from 86 MT in FY22.
To increase India's self-reliance on coking coal, the coal minister in August 2021 launched the Mission Coking Coal which aims to more than double the country's coking coal production to 140 MT by FY2029-30.
On this, the expert said "our analysis is that this can help reduce the coking coal import dependence for the steel sector to 75 per cent from the prevailing level of 85-90 per cent".
According to official data, in last four years India's coal production has shown significant growth of 22.5 per cent to 893 MT compared to 729 MT in FY 2018-19.
The offtake or supply has also improved during the period to 878 MT in FY23 from 733 MT earlier.
Coal minister Pralhad Joshi recently said at an event that the country will not face any shortage of coal this year.
In the April-June quarter of FY24, the domestic coal production grew by 8.18 per cent, achieving the highest-ever figure of 222.6 MT and domestic coal offtake grew by 6.8 per cent to reach the peak of 240.1 MT.