India’s Cabinet Committee on Economic Affairs (CCEA) has given approval for the auction of coal blocks to private operators, as part of the government’s move to improve the economy.

The approval was granted under the Coal Mines (Special Provisions) Act 2015 and Minerals (Development and Regulation) Act 1957.

According to CCEA, the ‘methodology gives highest priority to transparency, ease of doing business and ensuring that natural resources are used for national development’.

In a tweet, the Press Information Bureau stated: “The opening up of commercial coal mining for private sector is the most ambitious coal sector reform since the nationalisation of this sector in 1973.”

This strategy is seen as part of a plan to boost efficiency through competition and end the era of monopoly of state-run Coal India. Besides attracting higher investments from both local and overseas players, the industry will stand to benefit due to the use of advanced technologies.

“The higher investment will create direct and indirect employment in coal-bearing areas.”

Union Coal and Railways Minister Piyush Goyal was quoted by Business Today as saying: “It will increase competitiveness and allow the best possible technology into the sector.

“The higher investment will create direct and indirect employment in coal-bearing areas, especially in the mining sector and will have an impact on economic development of these regions.”

Currently, 70% of India’s power requirement is met by thermal plants. India is estimated to have coal reserves of up to 300 billion tonnes. The states of West Bengal, Odisha, Jharkhand, Chhattisgarh, and Madhya Pradesh have significant coal deposits.

CCEA believes that auctioning of the coal blocks to private sector for commercial use will not only lead to energy security and accountable allocation but also bring cost-effective power for end-consumers.