How Coal Mining Boosts Economic Growth and Development of Coal Producing States in India

Coal is one of the most abundant and important natural resources in India. It accounts for about 55% of the country’s primary energy consumption and 75% of its electricity generation1. Coal mining is also a major source of revenue and employment for many states, especially those with large coal reserves.

In this article, we will explore how coal mining contributes to the economic growth and development of coal producing states in India, and what are the challenges and opportunities for the future.

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Coal Production and Revenue in India

India has the fourth-largest coal reserves in the world, estimated at 326.49 billion tonnes as of March 20212. The major coal producing states in the country are Odisha, Chhattisgarh, Jharkhand, Madhya Pradesh, Telangana, Maharashtra and West Bengal3. These states together account for about 90% of the total coal production in India2.

The table below shows the state-wise coal production and revenue from royalty, DMF (District Mineral Foundation) and NMET (National Mineral Exploration Trust) for the last five years4.

StateCoal Production (in million tonnes)Revenue from Royalty, DMF and NMET (in crore rupees)
Madhya Pradesh75.4174.31
West Bengal31.6739.48
Uttar Pradesh15.2818.52

As we can see from the table, the coal producing states have received a substantial amount of revenue from the coal mining sector, which has grown at a compounded annual growth rate (CAGR) of 13.80% during 2014-20234. This revenue can be used by the state governments for various developmental activities, such as infrastructure, education, health, social welfare, etc.

Coal Mining and Development of Coal Producing States

Coal mining not only generates revenue for the state governments, but also creates employment opportunities, enhances infrastructure, and improves the quality of life of the people living in the coal producing regions. Some of the benefits of coal mining for the development of coal producing states are:

  • Employment generation: Coal mining provides direct and indirect employment to a large number of people, especially in the rural areas where most of the mines are located. According to a study by TERI5, the coal mining sector employed about 7.5 lakh people directly and 35 lakh people indirectly in 2016-17. Coal mining also supports the growth of ancillary industries, such as transportation, power, cement, steel, etc., which further create employment opportunities.
  • Infrastructure development: Coal mining requires the development of infrastructure, such as roads, railways, power plants, water supply, etc., which benefit the local communities and the economy. For instance, the Ministry of Railways and the Ministry of Road Transport and Highways have invested significantly in the coal producing regions to improve the coal evacuation and logistics4. Under the PM GATI SHAKTI national master plan, the Ministry of Coal has formulated a National Coal Logistics plan, under which 37 new railway projects have been planned for meeting the future evacuation needs of the coal sector4.
  • Social sector development: Coal mining also contributes to the social sector development of the coal producing states, through various initiatives taken by the Ministry of Coal and the coal companies. For example, the District Mineral Foundation (DMF) was established in 2015 to work for the interest and benefit of the persons and areas affected by mining-related operations. The DMF funds are used for various projects related to health, education, livelihood, women and child development, skill development, etc. in the mining-affected areas6. Similarly, the coal companies undertake various corporate social responsibility (CSR) activities, such as building schools, hospitals, community halls, etc., in the coal producing regions4. The Ministry of Coal has also established a Sustainable Development Cell (SDC) in 2019 to advise, mentor and plan actions to minimise the adverse impact of mining on the environment and society6.

Challenges and Opportunities for the Future

While coal mining has been a key driver of economic growth and development of the coal producing states, it also poses some challenges and risks for the environment and society. Some of the major challenges and opportunities for the future of coal mining in India are:

  • Environmental impact: Coal mining causes various environmental impacts, such as land degradation, deforestation, biodiversity loss, air pollution, water pollution, greenhouse gas emissions, etc. These impacts affect the health and well-being of the people and the ecosystems. Therefore, there is a need to adopt cleaner and greener technologies, such as coal washing, coal gasification, carbon capture and storage, etc., to reduce the environmental footprint of coal mining. There is also a need to ensure compliance with the environmental norms and regulations, and to implement effective environmental management plans and mitigation measures.
  • Social impact: Coal mining also causes various social impacts, such as displacement and resettlement, health and safety issues, social and cultural disruption, inequality and conflicts, etc. These impacts affect the rights and interests of the local communities and the vulnerable groups, such as tribals, women, children, etc. Therefore, there is a need to ensure inclusive and participatory decision-making, fair and transparent compensation, rehabilitation and resettlement, grievance redressal, benefit sharing, etc., to protect and promote the social welfare of the affected people.
  • Energy transition: Coal mining faces the challenge of energy transition, as the world moves towards a low-carbon and renewable energy future. The demand for coal may decline in the coming years, as the countries adopt more ambitious climate targets and policies. Therefore, there is a need to diversify and transform the coal sector, by exploring new avenues, such as coal bed methane, coal to liquid, coal to chemicals, etc., to create new value and opportunities. There is also a need to reskill and retrain the coal workforce, and to provide alternative livelihoods and social security, to ensure a just and fair transition.


Coal mining is a vital and strategic sector for India, as it provides energy security and economic growth for the country. Coal mining also plays a significant role in the development of the coal producing states, by generating revenue, employment, infrastructure and social welfare. However, coal mining also entails some challenges and risks for the environment and society, which need to be addressed and mitigated. The future of coal mining depends on how well it can balance between the economic, environmental and social aspects of coal mining. Coal mining can be a big booster for the economic growth and development of the coal producing states, if it is done in a responsible and sustainable manner. 🙌

Here are some references for further reading:

: Annual Report 2020-21, Ministry of Coal, Government of India : Coal Directory of India 2019-20, Ministry of Coal, Government of India : Sustainable Development in Indian Coal Mining Sector, Ministry of Coal, Government of India : Nuclear fusion: ‘A question of when, not if’, BBC News : Employment and Social Issues in the Coal Industry, TERI : Coal Reserves, Ministry of Coal, Government of India : Provisional Coal Statistics 2020-21, Ministry of Coal, Government of India : Energy Statistics 2021, Ministry of Statistics and Programme Implementation, Government of India

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