Without coal sector corrections, 5 trillion economy is just a poetry


India’s economic growth has entered the arena of uncertainty with its unrealistic dream to become 5 trillion Economy by 2024. The GDP growth for the first quarter of the financial year 2019–20 dropped to 5%, The current GDP numbers are the worst in the last six years. Unemployment at a 45-year high has hurt demand for everything from soaps to cookies, almost every sector is struggling. The most affected are the Core sector.

illegal mining in Jharkhand

The steel companies are facing the heat from the slowdown in one of their biggest clients, the automotive industry. Demand for real estate has also been falling in a slowing economy and a liquidity crunch. Core sector is facing unavailability and untimely delivery of Raw material such as coal and iron ore. According to a report released by Mjunction (JV of TATA Steel & Sail), India’s coal imports rose 9% to 234 MT in FY19. Despite massive indigenous coal reserves, Steel and power companies are importing huge amounts of coal to run their plants. Power producers are facing double taxation problem on imported coal.

Do you have any idea what are the factors behind this mess?

Why companies are relying on imported coal to run plants? One of the answers is lying in Veteran lawyer Harish salve’s statement. Recently harish Salve blamed supreme court judgements for the economic slowdown in India. In an interview, salve said,

“Foreign companies invested billions of dollars in India, and with one stroke of the pen, without examining the merits of every case supreme court cancelled the 214 coal blocks. A few million people are without jobs in India. Indian Coal mines are lying closed, and we are importing coal. That is putting pressure on the economy,” He said that the cancellation of coal block allocation has cost the economy 1 per cent-plus of GDP.

Salve’s statement is alarming but, surely, these cancellations harmed the growth of India. Experts believe India can not achieve 5 trillion economy mark without the growth of its mineral-rich states.

The classic case of Jharkhand

Formed in the year 2000, The state of Jharkhand is popularly known as India’s bowl of minerals. The state has massive coal reserves which are 27.3% of India’s total coal reserves. Similarly, Jharkhand has iron ore reserves which are 26% of India’s total iron ore reserves. These figures may look promising but they do not represent the real picture. Despite this much of mineral reserves, Jharkhand remains among the poorest states with people struggling for basic amenities and employment.

Most of the Companies who invested in Jharkhand have suffered and are suffering from red-tapism and coal mafia. They lost millions of dollars due to the inactive system.

In 2016 the then coal minister Piyush goyal informed parliament that None of the 21 coal mines in Jharkhand which were auctioned or allocated in 2015 to companies including Essar Power, Hindalco, JSW Steel, SAIL and NTPC has started production awaiting clearances. In the past 3 years, nothing much has changed so far.

Around 45 km away from Jharkhand’s Santhal Pargana region capital dumka, two small villages Amarkonda and Murgabani are located. You cannot find these two villages on Google map but these villages are quite famous for the wrong reasons. These two villages hold one coal block of 410 million ton capacity known as the Amarkonda Murgadangal coal block, which was allocated to then India’s leading steel company Jindal steel and power limited in the year 2008. Block was allocated to the company for the supply of coal to its proposed 1000 MW power plant in dumka district.

villagers in Amarkonda village of dumka district

The company tried several times but failed to start mining activities because of Naxalite activities, Coal Mafia nexus and villagers discontent. The block was deallocated in 2013 after 5 years of allocation but the situation remained unchanged since then. Youth are jobless in the surrounding area.

There is no school working there, no supply of water and other basic amenities makes this area looks like an ancient jungle village. We interacted with villagers and asked why they restricted mining activities, they replied, “We thought Mining Company would capture our land and all will be displaced”.

Answers of villagers were not straight, few rational minds told us that coal mafia has brainwashed their minds. They only know one agenda, That is they have to oppose companies investing in Jharkhand. This situation suits to coal mafia as without entry of organized sector companies they can easily carry illegal mining of coal. The company suffered huge losses because of coal mafia. JSPL’s proposed power plant investment worth rupees 8000 crore goes in vain. Amarkonda and Murgabani Villages of Shikaripara assembly constituency comes under Naxalite Red Zone. Dumka, Pakud and Godda district was severely affected by Naxal activities between 2002 to 2012. On 26/04/2008 SHO of Shikaripara along with one other constable was killed by Naxals. Similarly, on 08/12/2009 two BSF jawans were martyred in a Naxal attack in dumka district.

This case study is self-explanatory and it reflects larger than system image of coal mafia. Villagers normally dig and get coal whenever they want except the rainy season. The Govt machinery has failed to prevent illegal mining by coal mafia and the locals.

Many more struggling with the same

The upper case study also reflects the story of 11 other coal blocks which were systematically paralysed by the system. These coal blocks of Jharkhand were allotted to private & government companies for captive mining activities. These companies planned to invest millions of dollars to convert those blocks into mines. This would have created employment on a large scale in the state but due to lack of cooperation by the government, these companies were unable to start their operations.

For example, 241 Mt capacity Rohne Coal block was allocated to Rohne coal company & JV partners, which include JSW Steel, Bhushan Power & Steel & Balaji industries in the year 2009. The mining plan was approved by the ministry on 04/03/2009. While it took around 5 years for the company to get its final forest clearance on 24/01/2014. After getting the forest clearance the company got Environment clearance on 22/05/2014.
The companies spent this long time in getting the approvals & permissions but before the company could have built any infrastructure, their allocation was once again cancelled & the mines are again available for allocation.

The economy of Jharkhand got derailed because of this and the unemployment ratio rises instead of decrease.

man carrying illegally mined coal over the bicycle

Curse of Coal Robbery

In Jharkhand, the stolen coal is proving to be a big problem for the state exchequer. In monetary terms, the loss comes to over Rs 1000 crore per year in Jharkhand state alone. As per one estimate, more than 50,000 bicycles are being used daily to transport coal obtained from illegal mining and theft. These coal cycle wallahs peddle more than 1.5 million tonnes of coal by bike each year. One cycle normally ferries around 300 kg of coal. Bicycles wallah’s usually transporting coal around 30–40 km’s in one day. They usually earn around 100 rupees per ferry and they sell coal in the local village market for around 1 or 1.5 rupees per kg.

The unorganised sector is said to control 25% of all the coal mined in India. It is no secret that coal ‘mafia’ dons connive with corrupt coal company officials to ‘divert’ coal trucks: around 20 million tonnes of coal is estimated to be diverted each year.

According to one estimate, around 90 per cent of all coal traded illegally in India has been stolen from mines and coal washeries. The rest is dug by hand at mines no longer commercially viable — abandoned but still owned by CIL, the world’s largest coal miner. Coal is an important natural resource. Nearly 60 per cent of India’s electricity is generated by coal-fired power stations. But CIL is unable to meet all of India’s coal demand.

‘Momentum Jharkhand’ is losing Momentum!

In 2017, the Jharkhand government had invited big companies to invest in the state. After momentum Jharkhand investors summit, the government claimed that they have signed 210 MOU’s and secured investment proposals of 3 lakh crore. These figures were lucrative but the reality is not matching even bit of it. In August 2019, Federation of Jharkhand Chamber of Commerce & Industries (FJCCI) claimed that due to acute power shortage, failure of the single window system, lack of basic facilities in industrial areas, around 1000 industrial units has put down their shutters. Federation of Jharkhand Chamber of Commerce & Industries even highlighted their discontent through banners and posters in State capital Ranchi. It indicates momentum Jharkhand is losing momentum.

[The author is the DGM- Corporate communications, Jindal Steel & Power Limited (JSPL)]