National Coal Index 

09 Nov 2023 National Coal Index 

This article covers “Daily Current Affairs” and the topic details “National Coal Index”. This topic has relevance in the “Economy” section of the UPSC CSE exam.

For Prelims:

What is the National Coal Index? 

For Mains:

GS3:  Economy

Why in the news?

In September, the National Coal Index witnessed a 3.83-point increase, driven by a temporary surge in coal prices in the global markets. 

About the National Coal Index 

• The National Coal Index (NCI), introduced by the Ministry of Coal on June 4, 2020, serves as a price index reflecting changes in coal prices relative to a fixed base year FY 2017-18.
• The NCI determines Premium (per tonne) or Revenue Share (percentage basis) using a market-based mechanism and covers all raw coal transactions in the Indian market.
• This includes various grades of coking and non-coking coal in both regulated (power and fertilizer) and non-regulated sectors, covering transactions at notified prices, coal auctions, and coal imports.
• The upward movement of the NCI signals a growing demand for coal, attributed to the upcoming festive season and winter in the country. 
• This trend encourages coal producers to capitalize on the rising demand by scaling up domestic coal production to meet the increasing energy requirements.

An Overview of India’s Coal Sector

Coal Reserves:

• India boasts the world’s fourth-largest coal reserves, estimated at approximately 319.02 billion tonnes. 

Coal Production:

• As of FY 2022, India ranks as the second-largest producer and consumer of coal globally, with a mining output of 777.31 million metric tons. 
• The majority of the extracted coal is dedicated to electricity production.

Coal Consumption:

• India’s energy sector heavily relies on coal as a primary fuel for thermal power plants. 
• Coal currently contributes to about 70% of the total energy generation, dominating India’s energy generation mix.

Types of Coal found in India:

Anthracite:

• Best quality coal with 80 to 95 per cent carbon content.
• Ignites slowly with a blue flame and possesses the highest calorific value.
• Found in small quantities in Jammu and Kashmir.

Bituminous:

• Contains 60 to 80 per cent carbon content and a low moisture level.
• Widely used with high calorific value.
• Found in Jharkhand, West Bengal, Odisha, Chhattisgarh, and Madhya Pradesh.

Lignite:

• Often brown, carries 40 to 55 per cent carbon content.
• The intermediate stage is during the alteration of woody matter into coal.
• High moisture content, resulting in smoke when burnt.
• It is found in Rajasthan, Lakhimpur (Assam), and Tamil Nadu.

Peat:

• Less than 40 per cent carbon content.
• The first stage of transformation from wood to coal.
• Low calorific value burns like wood.

Geological classification

• India’s coal-bearing strata fall into two main categories: Gondwana and Tertiary coal fields. 
• Gondwana coal comprises about 98 per cent of the total reserves and 99 per cent of the coal production in India.

Coal Market:

• The India Coal Market is projected to grow from 0.90 billion tons in 2023 to 1.30 billion tons by 2028, reflecting a Compound Annual Growth Rate (CAGR) of 7.57% during the forecast period (2023-2028).

Challenges:

• The recent power crisis in India has thrust coal into the spotlight. Challenges include a sudden surge in electricity demand, inadequate demand forecasting, transportation issues, global coal price hikes, delays in coal mine operationalisation, and delayed payments.

Future Outlook:

• As India takes decisive steps towards achieving its 2030 Conference of Parties (COP) 26 goals and embraces a greener path, the role of coal in the future energy mix is under reassessment. 
• Initiatives are underway to address and mitigate its harmful environmental impact.

Sources: https://pib.gov.in/PressReleasePage.aspx?PRID=1975343 

Download Yojna daily current affairs eng med 9th November 2023

Q1. With reference to National Coal Index (NCI), consider the following statements: 

1. Using a market-based mechanism, the NCI determines Premium (per tonne) or Revenue Share (percentage basis).
2. The National Coal Index (NCI), introduced by the Ministry of Coal, serves as a price index reflecting changes in coal prices relative to the previous year.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2  

(d) None 

Answer: (a) 

Q2. Consider the following: 

1. Anthracite coal ignites slowly with a blue flame and possesses the highest calorific value.
2. Anthracite coal is found in large quantities in Gangetic Plains. 
3. The tertiary coal comprises about 98 per cent of the total reserves and 99 per cent of the coal production in India.

How many of the abovementioned statements are correct?

(a) Only one 

(b) Only two 

(c) All three 

(d) None

Answer: (d)

Q3. Discuss the key components and challenges in India’s coal sector, including the types of coal found, their distribution, their implications.

Gaurav N