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

Land acquisition for coal mines has had a complicated history in India. But Modi govt's reforms pave the way for a paradigm shift in energy security.

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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.


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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.


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Alternative energy sources

The energy landscape and availability of alternative options have changed significantly since the original act was formulated. Wind and solar energy did not even exist as concepts in 1957. Today, part of the stated mandate of the government and energy-related public sector undertakings like Coal India is to diversify their portfolio and reduce fossil fuel dependence by creating wind and solar power parks. Coal India has an ambitious plan to develop mined out/exhausted coal areas and use them to build solar energy parks, as part of the larger goal of reducing carbon emissions and commitment to work towards mitigating climate change in line with international agreements but can not do that under the act which forbids such usage.

The Act tied the hands of coal-mining entities to the extent that they could not even surrender these lands to the local forest departments for reforestation, even if they wanted to. The government runs an initiative focused on ‘compensatory afforestation,’ under the administration of the Compensatory Afforestation Fund Management and Planning Authority (CAMPA), where regeneration activities are carried out in available lands to compensate for the diversion of forest lands. Coal India’s subsidiaries had identified over 3,200 hectares of non-forest mined out land that was flagged off for renewal and compensatory afforestation, but the old act had no provisions that allowed for transfer and mutation to Forest Departments, preventing even environmentally friendly initiatives.

Finally, while the RFCTLARR Order 2015, brought the quantum of compensation paid to individual landowners under the CBA (A&D) Act, 1957 in congruence with the new land acquisition norms, legislative lacunae meant that owners whose lands were acquired for coal mining were forced to pay income tax on compensation—something that no other landowners were required to do. This created a great deal of resentment and resistance.


Also Read: India’s coal conundrum: how to loosen its grip while not abandoning millions who depend on it


Other issues that are to be addressed

The world has changed enormously since this original act was passed. Changing energy security imperatives, and the development of new technologies and alternate sources of energy have rendered most of the old Act irrelevant, bureaucratic and obsolete. A lot of the coal mining process is no longer open-cast, but underground, using modern technology that results in no disturbance or impact on the surface, environment and existing land usage. Yet authorities such as the Directorate General of Mines Safety (DGMS) continue to insist that surface rights to the land be acquired if underground mining permits have to be issued. This is analogous to expecting Delhi’s underground Metro Rail, for instance, acquire all the surface land its underground routes passed through before permitting the rail to run. When such hindrances are not placed on other underground operations, this insistence on coal-related activities is patently absurd.

While our dependence on fossil fuels will continue for now, opening coal-bearing lands for alternative uses such as afforestation, development of cleaner energy parks like solar/wind stations, coal-related ancillary activities, etc, will result in significant growth and boost local economies in backward, coal-rich districts. The far-sighted move announced by the Union Cabinet may not immediately solve today’s coal crisis but is a significant, creative way forward that will initiate a long-term paradigm shift in energy security and rejuvenate local economies.

Adhiraj Parthasarathy is a Director in the Development Monitoring and Evaluation Office, NITI Aayog, where he works on the evaluation of government schemes. He koos @adhirajp. Devansh Kedia is a freelance writer whose interests lie in water resources, land rights and public health. Views are personal.

(Edited by Srinjoy Dey)

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