The new government seems to be taking some baby steps towards some crucial reforms. There is some good news regarding the coal sector. The sector may be opened to private players with conditions attached. The government is considering a proposal to auction mining leases to private bidders. This would include the leases to those areas that Coal India is unable to mine. The Coal ministry is also developing a long term plan to reform Coal India by 2030. This would be in line with the new governments view to reform PSUs instead of privatizing them.

While these steps will certainly help, we believe that if the government were to go in for reforms in any sector, it should be decisive. Coal India is a cash rich PSU that enjoys a monopoly. The government should consider ending its monopoly. Participation of private companies with a proven track record into the coal mining sector should be allowed. This will lead to an increase in the supply of this important commodity in the local market. Indian power companies will then not need to import a commodity that it has in abundance.