Why economic significance of the coal sector extends beyond energy production

“As the cornerstone of India’s energy basket, coal remains indispensable, contributing to over half of our primary energy needs. In the last decade, thermal power fueled mainly by coal has consistently contributed more than 70% of our total power generation”, the Ministry of Coal said.

Despite considerable advancements in promoting renewable energy sources, the increase in electricity demand necessitates continued use of thermal power. Projections indicate that by 2030, the share of thermal power as an energy source will be around 55% and 27% by 2047.

"It is anticipated through comprehensive studies that coal demand in 2030 will likely reach 1462 MT and 1755 MT by 2047," a press release on PIB said.

Why is the coal sector important?

Contribution to railway freight: Coal is the single largest contributor to railway freight, contributing nearly 49% of total freight income amounting to ₹82,275 crore in the fiscal year 2022-23 alone. This revenue contributes more than 33% of total railway earnings.

Government revenue: The coal sector brings more than ₹70,000 crore every year to the Union and state governments through royalties, Goods and Service Tax (GST) and other levies. In FY23, the royalty collections reached ₹23,184.86 crore for central and state governments.

Employment: The coal sector is a major employment provider, particularly in the coal-producing districts of eastern India. Coal India Ltd and its subsidiaries employ more than 239,210 people, besides contractual workers and outsourcing engagements.

Dividend Payments: Coal India Ltd has been consistently providing substantial dividends to the Central Government over the last five years, paying an average of ₹6,487 Crore annually. In FY 2022-23, the company made a significant dividend payment of ₹9,475.85 crore.

Corporate Social Responsibility: The public sector undertakings (PSUs) in the coal sector prioritise corporate social responsibility with an average annual expenditure of ₹608 crore over the last five years.

As India continues its growth and development, the coal sector remains a cornerstone of progress, driving economic prosperity, employment, and social well-being.