Modi govt’s coal reforms go beyond the current crisis. It transforms India’s energy security

In the last week of April 2022, the National Power Portal’s coal update flagged an imminent shortage of coal supplies at the Dadri-II and Aravalli thermal stations that supplied electricity to Delhi-NCR. This shortage, a result of a complex intersection of circumstances—ranging from a heatwave in North India to delays in coal transportation—was so severe that the Delhi government predicted that Metro Rail services would have to be suspended and rolling blackouts would follow unless coal stocks into these feeder stations were replenished quickly. Acting immediately to deal with the impending crisis, the Coal Ministry worked in tandem with the Ministry of Railways, who proceeded to cancel over 753 scheduled passenger trips to make way for freight trains carrying coal, and overnight pressed over 500 rakes on coal transport duty to meet the soaring demand for coal.

Overlooked in this coverage of the coal shortage was a major policy announcement made on 13 April 2022 about sweeping reforms in the coal sector, particularly related to usage, acquisition and disposal of land acquired under the Coal Bearing Areas (Acquisition and Development) Act, 1957. These big-ticket policy changes announced by the Narendra Modi government in April effectively addressed the long-standing needs of the sector and have the potential to unlock significant growth as well as enhance energy security.

History of land acquisition in India for coal mining

Land acquisition—particularly for industrialisation and infrastructure projects or ‘public purposes’—has a long and complicated history in India and is governed by a complex set of policies and rules. Until 2013, land acquisition by government agencies from private landowners in India was governed by the Land Acquisition Act of 1894—an old, colonial-era law—replaced by a new Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR). However, areas that are acquired for the purposes of coal mining continued to fall under the older, CBA (A&D) Act, 1957 which was an unwieldy older Nehruvian-era legislation.

The nature of mining-related land acquisition is different from that for other industrial or public purposes. For instance, infrastructure projects like roads can be rerouted or changed to minimise the impact on private landowners, but if a coal deposit has been identified in a particular area, only that coal-bearing land can be acquired, and projects can not be redesigned or shifted to adjoining areas that are non-coal bearing.

The 1957 Act was created in an era when dependence on coal was near total, and alternate sources of energy like solar, wind, etc, had yet to become widely prevalent, and placed severe restrictions on land acquired through this legislation. According to the Act’s guidelines, the government first had to issue a notification declaring its intent to begin prospecting for coal in the notified area. The prospecting notification had a validity of two years, following which the government could declare its intention to acquire the land under Section 7(1) of the Act, and had to complete the land acquisition within a three-year period.

The problem lay not with the process of acquisition as much as with the severe restrictions placed by the 1957 Act on usage. Land acquired under the CBA (A&D) Act, 1957, could only be used for the purposes of coal mining and activities ‘strictly incidental to mining purposes.’ The law provided for no exemptions to this rule. Thus, even a coal washery or quarters for coal miners could not be constructed on it.

Furthermore, once the land was notified under this Act, there was no provision for its de-notification. Thus, coal mining agencies that had acquired extensive fields while prospecting, could neither transfer the land back to the original owners nor use it for any other purpose if it turned out to be non-viable. They could not sell or mutate the notified land either. This resulted in significant resentment against coal mining in areas, particularly tribal regions where Coal India Limited had acquired land while prospecting but could not legally denotify them to hand them back to the original owners.