Revised SHAKTI Policy for Coal Allocation

Context

The Cabinet Committee on Economic Affairs (CCEA) has accorded its popularity of the Revised SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) Policy for Coal Allocation to Power Sector.

SHAKTI Policy

• It was delivered in 2017 and there has been a paradigm shift of the coal allocation mechanism from a nomination-based regime to a more obvious manner of allocation of coal linkages through public revenue/ tariff-based bidding. 
• The contemporary revision with innovative capabilities will similarly decorate the scope and effect of the SHAKTI policy and help the power region through:
  • Greater flexibility
  • Wider eligibility and
  • Better accessibility to coal.
• It will ensure coal linkage to all electricity manufacturers leading to generation of more power, cheaper tariffs and an overall advantageous effect on the economy.

Coal Sector of India

• Production: India surpassed  one billion tonnes of coal manufacturing in FY 2024-25, with a 4.99% increase in output as compared to the previous year.
  • India is the second largest coal generating country globally.
• Import: Imports decreased by 8.4%, leading to significant foreign exchange financial savings and a decline in import dependency.
• Importance in Energy Mix: With the fifth-biggest coal reserves and as the second-biggest consumer, coal remains vital, contributing 55% to the national strength mix and fuelling over 74% of the overall power sector. 
• Coal Fields: The important coal fields in India are located in the eastern states of Jharkhand, Odisha, and West Bengal, as well as in relevant states like Chhattisgarh and Madhya Pradesh.

Key contributions

• Railways & sales: Coal stands as the single biggest contributor to railway freight, with a mean share of nearly 49% of total freight income.
• Government income: The coal region contributes over Rs. 70,000 Crore annually to the significant and state governments via royalties, GST, and other levies. 
• Employment: The sector gives jobs to over 239,000 employees in Coal India Ltd and hundreds more in contractual and transport roles.

Challenges Faced through the Coal Sector of India

• Environmental Impact: The coal sector faces significant environmental challenges, together with air pollutants, greenhouse gas emissions, and the impact of coal mining on local ecosystems and communities.
• Dependence on Coal Imports: Despite being the world’s 5th biggest coal reserve holder, India still imports great portions of coal (especially coking coal for steel and high-GCV thermal coal).
• Slow Environmental Clearances & Land Acquisition: Delays in woodland/environmental clearances and land acquisition avoid well timed development of coal blocks.
• Underutilization of Mining Capacity: Coal India and other miners regularly operate under capability because of demand uncertainties, regulatory hurdles, and infrastructure delays.
• India’s Green Commitments: Coal is the most carbon-in depth fossil fuel. India’s dedication to global climate dreams (e.g., Paris Agreement, Net Zero by 2070) puts pressure to lessen coal dependency.
• Low Private Sector Participation: Despite reforms, coal mining remains dominated by PSUs (Coal India Ltd. And SCCL), limiting opposition and innovation.

Government Initiatives for Coal Sector in India 

• Commercial Coal Mining: Launched in 2020, permitting private companies to mine coal for commercial sale without any end-use restrictions.
• Single Window Clearance Portal: Launched in 2021 to provide a centralized platform for obtaining all approvals and clearances (e.g., land, forest, environmental) for coal mining projects.
• Auction of Coal Blocks for Non-Regulated Sectors: Coal blocks are regularly auctioned to be used in sectors like steel, cement, and aluminum, promoting assorted usage.
• Coal Gasification and Liquefaction Promotion: The government goals to gasify 100 million tonnes of coal by 2030.
• Technology & Automation Push: Use of drone surveillance, GPS monitoring, on-line coal sale portals, and automated loading structures in mines.
• Coal Logistics Reforms: Development of coal corridors, dedicated freight corridors, and first-mile connectivity projects to improve coal evacuation.
• Coal Allocation to Small Consumers: Through e-auctions, even small and medium organizations can now access coal at market-determined prices.

Conclusion

• While coal will retain to play an essential position in India’s energy landscape in the near to mid-term, a balanced and strategic transition in the direction of cleanser power resources is important. 
• The Ministry of Coal is strengthening domestic manufacturing to enhance energy protection and advance Viksit Bharat, ensuring a self-reliant, sustainable power framework for long-term growth.

Source: The PIB

UPSC Mains Practice Question

Q. “In spite of adverse environmental impact, coal mining is still inevitable for development”. Discuss. (2017)

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