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| "Financial viability has to be the cornerstone. No project will be taken up until it achieves an internal rate of return of 16% at constant prices" Partha Bhattacharyya |
Coal India came about as a consequence of the oil-price shocks in the early 1970s. The government set up a high-powered committee to examine its energy options and decided that coal should be the mainstay of energy security in the country. The coal industry at the time was growing at about 2.2% a year, whereas the country was aspiring for national growth of about 5%; it was lagging because of a lack of investment because prices were not remunerative. But the government couldn’t simply increase prices. "In those days coal was a domestic fuel, just to be used in the kitchens of houses," Bhattacharyya says. "So it was not a socially or politically feasible alternative to increase coal prices." The government decided the answer was to nationalize the industry and boost it with public funds, and after some restructuring Coal India was created in 1975: a holding company with five wholly owned subsidiaries, later increased to eight.
