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COAL BLOCK AUCTIONS TO SWELL STATE TREASURIES

Govt. of India raised 2 trillion rupees with two rounds of coal block auctions. The first round was with Schedule II mines or mines which were operational at the time of allocation cancellation by the Supreme Court.  The second round was with Schedule III mines or mines which were about to become operational. These funds, raised by auctioning of coal blocks, will go to the East Indian States of West Bengal, Jharkhand, Odisha and also to Chhatisgarh and Madhya Pradesh. These States already are already receiving much larger amounts this year through Finance Commission mandates (as compared with previous years) and will therefore be flush with funds.  If these funds are used properly, these States will see radical change in the infrastructure scenario.  The only caveat is that there may not be enough users of the infrastructure facilities unless there is corresponding growth in industries in these States as customers.

Coal production had been stable at around 550-560 million tonnes during the last three years but this year, with the coal mines re-allocation, the output is expected to go up to 620-630 million tonnes but coal imports will still be required. 

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