The last time Coal India Limited’s (CIL) miners threatened to go on strike, when the UPA was in power, the government backed off and never sold the CIL stake it had planned to. This time around, the stakes were even higher, for the government as well as the CIL miners. It wasn’t just the R24,000 crore the NDA needed to get from divesting a 10% stake in CIL, there was also the future of opening up of mining sector that was at stake—for the miners, this was seen as the end of the world with their jobs at stake. Add to this the huge shortage of coal—currently 250 million tonnes, or half of CIL’s production, if power plants were to run at 85% PLF—and it is obvious the coal sector needs a massive ramp up. This means infusion of a whole lot of new technology in CIL which has one of the lowest productivities in the world, and it also means bringing in top-notch global miners into India—no industry, no matter how efficient it is, does well unless there is competition. That is why, for instance, Australia’s mine reserves have risen more than 3 times in the last 30 years as compared to just 20% in the case of India.
Had the threatened 5-day strike of CIL gone out of control, all of this would have been jeopardised. Coal minister Piyush Goyal did well to sit down with the miners to discuss why they had a stake in the modernisation being planned. To meet just the FY15 targets requires the government to significantly step up the availability of railway rakes; doubling production by FY20 requires a whole lot more—creating more railway lines, opening up new mines, etc. Coal India’s PE ratios are just a third the global average, so even if it survives in its current condition, it cannot thrive, nor can its miners. This is what Goyal seems to have impressed upon the miners. To deliver on his promise, he will have to really stretch the system, and need to do a lot more hand-holding of CIL as well, but it is important that a dialogue is going. And that he rubbished the media-driven fear that coal was being de-nationalised—if CIL becomes more efficient, it will thrive as more private players come in, as has been the case with several other PSUs such as BHEL and NTPC.