Question 18 from UPSC CSE 2019 - Economics

Question

Consider the following statements:
1. The coal sector was nationalized by the Government of India under Indira Gandhi.
2. Now, coal blocks are allocated on a lottery basis.
3. Till recently, India imported coal to meet the shortages of domestic supply, but now India is self-sufficient in coal production.
Which of the statements given above is/are correct?

Accepted Answer

Correct Option: A. 1 only

Strategy: - For the first statement, focus on the historical context of coal nationalization under Indira Gandhi.
- For the second statement, identify that coal block allocation occurs via auctions, not a lottery.
- For the third statement, recognize the factual mismatch: India is not self-sufficient in coal and still imports a significant amount.
- Conclude that only Statement 1 is correct.

Key Info: **Nationalization History and Purpose**
- Occurred in two phases: coking coal mines in 1971-72 and non-coking coal mines in 1973, under Prime Minister Indira Gandhi.
- Aimed to address unscientific mining, inadequate private capital investment, and poor labor practices.
- Led to the creation of government-controlled entities like Coal India Limited.

**Coal Block Allocation Process**
- Previously involved government discretion.
- Following a 2014 Supreme Court ruling, the Coal Mines (Special Provisions) Act, 2015 mandated allocation through transparent auctions or allotment.
- The current system uses an ascending forward auction, not a lottery.

**Current Coal Import Status**
- India remains a major coal importer due to quality and supply-demand gaps.
- Annual imports meet about 25% of the country's coal demand, especially for coking coal.
- India has not yet achieved self-sufficiency in coal production.

Answer

Option B: 2 and 3 only

Answer

Option C: 3 only

Answer

Option D: 1, 2, and 3