Question map
Consider the following statements : 1. Coal sector was nationalized by the Government of India under Indira Gandhi. 2. Now, coal blocks are allocated on lottery basis. 3. Till recently, India imported coal to meet the shortages of domestic supply, but now India is self-sufficient in coal production. Which of the statements given above is/are correct?
Explanation
The correct answer is option A (Statement 1 only).
The coal sector was nationalized through the Coal Mines (Nationalization) Act 1973, which debarred private companies from mining coal and gave Coal India Ltd (CIL), a PSU, the monopoly for coal mining.[1] This nationalization occurred after Indira Gandhi was re-elected in 1971 on a campaign that endorsed nationalization, and she went on to nationalize coal along with other industries.[2] Therefore, Statement 1 is correct.
Statement 2 is incorrect. Coal blocks for captive mining were allocated based on recommendation with no mechanism of bidding.[1] A screening committee was set up by the Ministry of Coal to provide recommendations on allocations for captive coal mines, and all allocations to private companies were made through[3] this committee. There is no lottery-based allocation system mentioned in the sources.
Statement 3 is also incorrect. India's total coal imports have increased tenfold since FY2004.[4] While there are goals for self-sufficiency, India is not yet self-sufficient and continues to import coal to meet domestic shortages.
Sources- [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 14: Infrastructure and Investment Models > Background: > p. 427
- [2] Rajiv Ahir. A Brief History of Modern India (2019 ed.). SPECTRUM. > Chapter 39: After Nehru... > Socio-Economic Policies > p. 687
PROVENANCE & STUDY PATTERN
Full viewThis is a classic 'Sectoral Evolution' question. It blends static history (Indira Gandhi era) with current economic realities (Auctions & Imports). The strategy is to track the 'Life Cycle' of major industries: Nationalization → Crisis/Scam → Reform (Auctions) → Current Status (Import dependence).
This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.
- Statement 1: Were coal mines in India nationalized by the Government of India?
- Statement 2: Was the nationalization of India's coal sector carried out during Indira Gandhi's tenure as Prime Minister?
- Statement 3: Are coal blocks in India currently allocated on a lottery basis?
- Statement 4: Has India been importing coal to meet domestic supply shortages in recent years?
- Statement 5: Is India currently self-sufficient in coal production so that it no longer needs coal imports to meet domestic demand?
- Names the Coal Mines (Nationalization) Act 1973 as the legal instrument for nationalization
- States private companies were debarred and Coal India Ltd (a PSU) obtained monopoly for coal mining
- Explicitly states that the coal industry was nationalized in 1973
- Places nationalization among major economic policy actions of the period
- Declares that coal mines were nationalised (cites early 1970s timing)
- Links nationalization to subsequent increases in coal production
- Explicitly states Indira Gandhi 'went on to nationalise the coal, steel, copper, refining, cotton textiles, and insurance industries.'
- Links the nationalisation campaign to her re-election in 1971, implying the policy was enacted during her tenure.
- Describes Indira Gandhi's use of nationalisation as a policy tool (example: ordinance to nationalise fourteen major private banks in July 1969).
- Demonstrates a broader pattern of sectoral nationalisation under her leadership, supporting that coal nationalisation fits this policy framework.
- Explicitly states allocation methods for Schedule I mines, naming public auction and government allotment rather than a lottery.
- Describes the auction route where any government, private, or joint-venture company can bid, implying competitive bidding not random selection.
- Describes historical allocation for captive mines via a screening committee, indicating allocations were made by committee recommendation rather than by lottery.
- States that all allocations to private companies were made through the committee, showing a selection process.
States that coal blocks for captive mining were allocated based on recommendation and there was no mechanism of bidding.
A student could use this to infer that historically allocation was non-auction/non-lottery and then check policy changes or timelines to see whether a lottery system replaced recommendation-based allocation.
Describes a policy shift introducing private sector participation via a revenue-sharing mechanism and allowing any party to bid for blocks (including auctioning partially explored blocks).
One could extend this to expect auction/bidding mechanisms in recent policy and therefore search for whether lottery allocation exists alongside or instead of such bidding rules.
Mentions SHAKTI (2017) which deals with auction and allocation of long-term coal linkages in a transparent manner for power sector consumers.
Use this as an example of auction-based allocation practice and compare it to any documented lottery procedures to judge if lottery is current practice.
Notes that historically all blocks were given to Coal India Ltd (CIL) and coal pricing/supply were government-controlled, indicating centralized, non-lottery allocation in the past.
A student could contrast this centralized allocation era with later reforms (auctions/revenue sharing) to evaluate whether a lottery system fits the evolution.
Includes a 2019 exam-style question that explicitly lists 'Now, coal blocks are allocated on lottery basis' as a proposition to be judged, implying the claim was contested or noteworthy.
Treat this as a prompt to investigate the correct answer at that time (i.e., whether official allocation was by lottery or not) and to check subsequent policy changes.
- Explicitly reports a government goal to move from 'shortage to surplus' and states that coal imports have been reduced, implying prior import dependence to meet shortages.
- Links policy action (increasing domestic production) with the need to lower imports, which signals imports were used to bridge domestic shortfalls.
- Gives a clear numerical demand–supply gap (demand ~908.40 MT vs supply ~621.26 MT), showing a substantial shortfall in domestic coal availability.
- A large and persistent gap between demand and supply is a direct driver for importing coal to meet domestic requirements.
- Identifies inadequate supply of coking coal due to limited deposits and rising production costs, pointing to sector-specific shortages.
- Industry-specific scarcity of coking coal supports the need for imports for steel and related industries even if thermal coal is more abundant.
- Explicitly frames self-sufficiency as a future target (by 2024-25), implying it is not yet achieved.
- Sourced from a news report quoting a government statement about when self-sufficiency will be reached.
- States India is only 'almost self-sufficient' and only by the end of the decade, not currently.
- Indicates government time-frames announced were optimistic and the achievement is projected, not present.
- Documents a historical increase in import dependence (imports rose tenfold since FY2004), showing imports have been necessary.
- Provides direct evidence that India has relied on coal imports to meet demand.
Gives a direct demand vs actual supply comparison (demand 908.40 MT vs supply 621.26 MT), showing a historical gap between domestic output and demand.
A student could compare these numbers with more recent production and consumption figures (from government or industry data) to judge whether the gap has closed.
States policy and operational facts: India imports coal for present use and many power plants cannot get sufficient domestic coal.
Use this policy rule alongside current import statistics to assess whether imports remain necessary despite domestic production.
Reports production figures (729.1 MT in 2019–20) and notes coal is a major energy source (about 53% of energy), implying high and growing demand context.
Compare the 2019–20 production figure to contemporaneous demand estimates to infer whether production met demand then and whether trends imply self-sufficiency now.
Notes inadequate supply of coking coal (specific grade) and geographic concentration, indicating domestic shortages for certain industrial uses that can force imports.
A student could check whether imports are driven by overall shortage or by lack of specific grades (coking coal) to refine the self-sufficiency judgement.
Describes a government production target (100 crore tonnes by 2019–20) and states 'coal imports have been reduced', suggesting policy aiming at self-sufficiency but not asserting its completion.
Compare the target to actual achieved production and import volumes after 2019–20 to see if the target led to elimination of imports.
- [THE VERDICT]: Manageable Hybrid. Statement 1 is standard Modern History/Economy (Spectrum/Vivek Singh). Statements 2 & 3 are General Awareness logic checks. If you follow energy news, 'Lottery' and 'Self-sufficient' are glaring errors.
- [THE CONCEPTUAL TRIGGER]: Industrial Policy & Resource Mobilization (GS-3). Specifically, the transition from State Monopoly (1973 Act) to Market Mechanisms (Auctions/Commercial Mining).
- [THE HORIZONTAL EXPANSION]: Memorize the 'Resource Governance' timeline: 1) 1969: Bank Nationalization. 2) 1973: Coal Nationalization. 3) 2015: MMDR Amendment (Auctions introduced). 4) 2020: Commercial Coal Mining allowed (Ending CIL monopoly). 5) Distinction: Coking Coal (Import dependent) vs Thermal Coal (Domestic abundance but high ash).
- [THE STRATEGIC METACOGNITION]: Do not study sectors in isolation. When reading about 'Coal' in Geography, ask: 'What is the legal regime?' (Mines Act). When reading Economy, ask: 'Do we still import this?' (Trade Deficit data). Connect the geography of resources to the economy of imports.
Coal mining in India was brought under state control in the early 1970s through nationalization laws.
High-yield topic: it is a landmark economic-policy event frequently tested in polity/economy sections. Understanding it helps answer questions on public-sector expansion, resource governance, and historical economic reforms.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 14: Infrastructure and Investment Models > Background: > p. 427
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 6: Indian Economy [1947 – 2014] > 6.3 Economic Situation after Nehru (1965 to 1991) > p. 211
- Geography of India ,Majid Husain, (McGrawHill 9th ed.) > Chapter 8: Energy Resources > COAL DEPOSITS OF THE TERTIARY PERIOD > p. 7
Coal India Limited emerged as the public-sector monopoly for coal extraction after nationalization.
Important for questions on PSUs, their formation and role in sectoral monopolies; connects to governance, industrial policy, and debates on efficiency vs state control.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 14: Infrastructure and Investment Models > Background: > p. 427
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 14: Infrastructure and Investment Models > Impact of the reforms/changes on Economy: > p. 428
Post‑nationalization amendments permitted captive mining and later reforms introduced auctions and allocation changes.
Useful for linking historical nationalization to later policy shifts (liberalization, transparency, auctions); helps tackle questions on resource allocation, regulatory change and sectoral reforms.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 14: Infrastructure and Investment Models > Background: > p. 427
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 14: Infrastructure and Investment Models > Impact of the reforms/changes on Economy: > p. 428
Indira Gandhi pursued wide-ranging nationalisation of key industries, including coal, as part of her economic policy after 1969.
High-yield for Modern India and Economy: explains state-led industrial policy, links to labour protection and political strategy, and helps answer questions on sectoral reforms and public sector expansion.
- Rajiv Ahir. A Brief History of Modern India (2019 ed.). SPECTRUM. > Chapter 39: After Nehru... > Socio-Economic Policies > p. 687
- Rajiv Ahir. A Brief History of Modern India (2019 ed.). SPECTRUM. > Chapter 39: After Nehru... > Nationalisation of Banks and Other Sectors of Economy > p. 686
The 1969 nationalisation of fourteen major private banks exemplifies the use of ordinances and executive action in Indira Gandhi's nationalisation agenda.
Important for polity and economic history: clarifies timelines and methods of nationalisation, connects to questions on executive power, financial sector reforms, and continuity across sectors.
- Rajiv Ahir. A Brief History of Modern India (2019 ed.). SPECTRUM. > Chapter 39: After Nehru... > Nationalisation of Banks and Other Sectors of Economy > p. 686
Indira Gandhi campaigned on nationalisation and then implemented nationalisation measures after re-election in 1971.
Useful for UPSC essay and polity answers: shows how economic measures serve electoral strategy, links political history with economic policy-making and helps in analysing motives behind reforms.
- Rajiv Ahir. A Brief History of Modern India (2019 ed.). SPECTRUM. > Chapter 39: After Nehru... > Socio-Economic Policies > p. 687
Whether coal blocks are given by recommendation, auction, or another mechanism is the central issue behind claims of lottery allocation.
High-yield for UPSC because questions test knowledge of resource allocation mechanisms and reforms; this concept links mineral governance to policy changes enabling market-based allocation and helps in evaluating statements about allocation methods.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 14: Infrastructure and Investment Models > Background: > p. 427
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 21: Sustainable Development and Climate Change > Part IV: New Horizons of Growth > p. 621
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 15: Infrastructure > Coal > p. 445
The 'End of Monopoly'. Since Statement 1 covers the start of the monopoly (Nationalization), the shadow fact is the 2020 reform allowing 'Commercial Mining' by private players, effectively ending the Coal India Ltd monopoly. Also, look out for 'District Mineral Foundation (DMF)' funds, which is a recurring sibling topic.
Apply 'Administrative Common Sense'. A 'Lottery' is used when items are identical and demand exceeds supply (e.g., DDA Housing). Coal blocks vary wildly in value (reserves, accessibility). Allocating a billion-dollar asset via lottery is irrational and invites corruption; 'Auction' is the standard for heterogeneous natural resources. Also, 'Self-sufficient' is an extreme absolute—rarely true for India's energy sector.
Link to GS-3 Energy Security & Balance of Payments. Coal imports are a massive chunk of India's Current Account Deficit (CAD). Understanding why we import (high ash content in domestic coal) links Geography (Gondwana coal nature) to Economy (CAD).