Coal India divestment faces fresh hurdle as December strike looms

Nov 05 2013, 10:16 IST
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SummaryThe risk to the government's targeted disinvestment programme in 2013-14 is increasing.

to help CIL raise output by digging deeper at its existing mines. The unions interpret these moves as a prelude to privatisation of the company.

Apart from disinvestment and restructuring, the trade unions are annoyed with the breach of labour and mining laws. “Contract labourers are made to work for more than 8 hours a day in violations of the Mines Act. Safety norms also have not been adhered to,” Kumar said, adding some of the trade union leaders, including him, who have protested were arrested recently.

A strike at CIL will hit output by almost 2 million tonne, given that the company produced four-fifth of the country’s coal output, estimated at 557 million tonne during 2012-13. While a good monsoon this year has boosted hydro power and lowered demand for thermal power and hence coal to some extent, a lower output at CIL will raise coal imports further.

India’s coal imports have more than trebled from 41.5 MT in 2006-07 to 135 MT in 2012-13 due to rising demand and CIL’s inability to scale up operations. The coal import bill has risen steadily to $16 billion last fiscal, adding to the stress on the current account deficit, that widened to 4.8% of GDP in 2012-13 from 4.2% in 2011-12.

In July, the coal ministry convened a meeting with trade unions to end the stalemate over the 10% stake sale in CIL to raise about R20,000 crore by March 2014, as it was crucial to meet the disinvestment target and rein in the fiscal deficit within the Budget estimate of 4.8% of GDP. Although the coal ministry lowered the disinvestment target to 5% from 10%, trade unions representing 3.57 lakh workers are still opposed to it.

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