Answer Writing Practice for UPSC IAS & UPPSC Mains Exam
Q. In what ways will the recently approved Mineral Law (Amendment) Ordinance 2020, open new areas of growth in the Coal Sector? Discuss (250 words)
- Why in News?
- The situation in the Coal Sector to date
- The impact of the ordinance on the Coal Sector
Why in News?
The Union Cabinet approved the promulgation of Mineral Laws (Amendment) Ordinance 2020 to amend the Coal Mines (Special Provisions) Act, 2015, as well as the Mines and Minerals (Development and Regulation) Act, 1957.
The Mineral Laws (Amendment) Ordinance 2020, will open the coal sector completely for commercial mining for all local and global firms after easing restrictions on end-use and prior experience in auctions. The ordinance aims to end captive coal block auctions in the future and it has to be adopted in the upcoming Budget session once cleared by the President. The government proposes to kick-start commercial coal mining auction in India.
The situation in the Coal Sector to date:
- In India, there were restrictions on bidding for coal mines.
- Only businesses involved in Power, Iron, and Steel, and Coal washery could bid for mines in India. The bidders also need to have prior experience of mining in India.
- This effectively limited the potential bidders to a select circle of players and thus limited the value that the government could extract from the bidding.
- The end-use restrictions prohibited the development of the domestic market for coal.
The impact of the ordinance on the Coal Sector:
- The democratization of the coal mining sector by opening it up to anyone willing to invest.
- It would attract more merchant mining companies, including multinationals to invest in India.
- It would enhance the ease of doing business in India.
- An offering of unexplored and partially explored coal blocks for mining through Prospecting License-cum-Mining Lease (PL- cum-ML).
- Promoting Foreign Direct Investment in the coal mining sector by removing the restriction and eligibility criteria for participation.
- Allowing the successful bidder/allottee to utilize mined coal in any of the plants of its subsidiary or holding company
- Attracting large investment in the coal mining sector as restrictions of end-use has been dropped.
- Large investment in mining will create jobs and set off demand in critical sectors such as mining equipment and heavy commercial vehicles.
- The country may benefit from the infusion of sophisticated mining technology, especially for underground mines, if multinationals decide to invest.
Opening up of coal mining in India would effectively end the monopoly of Coal India Limited (CIL), which is a Maharatna PSU. The company at present employs nearly 3 lakh people. It is the responsibility of the government to ensure that Coal India Limited is not compromised the way BSNL has been by opening up to private players. CIL has to be nurtured even as private players are welcomed.