Context: In September 2023, the National Coal Index (NCI) increased by 3.83 points to reach 143.91. This is the first time the index has risen since April 2023. The increase was due to a temporary surge in global coal prices.
Details:
- The Ministry of Coal introduced the National Coal Index (NCI) on June 4th, 2020. It is a price index that shows how the price of coal changes each month compared to a fixed base year.
- The NCI is a tool that calculates the Premium or Revenue Share for coal based on market prices.
- It includes all types of coal transactions in India, including regulated and non-regulated sectors, and covers coal of different grades.
- This includes transactions at notified prices, coal auctions, and coal imports.
- The NCI’s increase suggests that there is a higher need for coal due to the approaching festive season and winter.
- This will prompt coal producers to increase domestic production in order to meet the rising energy demands.
National Coal Index(NCI):
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- The NCI is a system that includes all transactions of raw coal in India, including different types of coal traded in regulated and non-regulated sectors.
- This includes transactions at the specified price, coal auctions, and imported coal.
- The implementation of the NCI offers numerous advantages, one of which is its pivotal role as a fundamental indicator used for taxation purposes.
- The NCI is a comprehensive compilation of prices obtained from different sources of sales channels, including Notified Prices, Auction Prices, and Import Prices. This index is regularly updated on a monthly basis.
- Composition: The NCI consists of five smaller indices, with three for non-coking coal and two for coking coal.
- The three indices for non-coking coal are combined to create the overall non-coking coal index, while the two indices for coking coal make up the coking coal index. Each index represents different grades of coal.
- The NCI, or the National Coal Index, is a tool that is utilized to calculate the proportion of revenue that is allocated per metric ton of coal produced from blocks that are auctioned.
- This calculation is based on a predetermined formula.
- The index encompasses all the transactions involving raw coal in the Indian market, including different grades of coking and non-coking coal, both in regulated sectors such as power and fertiliser, as well as non-regulated sectors.
- However, it is important to note that the index does not include washed coal and coal products.
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