Is the government undermining its own Coal Mines Act for the profit of private companies?

In his campaign for the 2014 Lok Sabha elections, Narendra Modi promised to introduce reforms in the coal industry as a crucial part of his development agenda. In September that year, the Supreme Court passed a landmark verdict cancelling nearly all existing permissions for the captive mining of coal blocks. The verdict halted what had come to be known as the Coalgate scam—one of the biggest scandals that contributed to the fall of the United Progressive Alliance government. The court censured the government of India and its public-sector companies for forming joint ventures with private companies, which allowed the latter to pocket benefits of mining the allotted coal for free. It stated: “[It] is expected that the Government will not deal with the natural resources that belong to the country as if they belong to a few individuals who can fritter them away at their sweet will.” In total, 214 coal block allocations were nullified, including all joint ventures.

The 2014 Supreme Court verdict set the ground for fresh legislation and reform in the coal industry. The next year, the National Democratic Alliance enacted two key legislations to introduce these changes—the Coal Mines (Special Provision) Act and the Mines and Minerals Development Regulation Act. The coal ministry’s press statement boasted that the year would be written in “golden letters in the annals of history.” The Coal Mines Act stipulated that the blocks that had earlier had their allotments cancelled would now be distributed either through auctions to private and public firms, or through direct allotment to public-sector companies.

Three years since the Coal Mines Act was introduced, its implementation hangs under a serious cloud. Documents obtained through right-to-information applications reveal that the coal ministry does not possess copies of current agreements between public-sector undertaking and their private partners. This lack of government scrutiny has led to a prevailing practice that effectively replicates the joint-venture model that the Supreme Court struck down as illegal. As a result, the profiteering by private firms continues unabated in the coal sector due to ineffective implementation of the 2014 judgement and subsequent law.