Why was captive coal mining introduced?

4. Why was captive coal mining introduced?

Captive coal mining was introduced to encourage private sector participation in the coal
sector, so that it will lead to an increase in the production of coal. The PM himself acknowledged
this in his speech to the Parliament, mentioning that with the increased demand in coal,
CIL alone was unable to cope.2 The UPA government also made the promise of 'Power to all
by 2012,' and captive coal mining was seen as an appropriate manner of increasing the production
of coal.3
However, due to the UPA government's policy of allocating coal blocks for free, there has
been no incentive for the private sector to increase coal production. Instead, private coal producers
prefer to sit on the coal blocks until the price of coal is favourable to them, rather than
commence mining immediately to recover the cost of paying for them. This government is neither
interested in increasing coal production, nor improving the power situation, which only
seems to be getting worse.
Interestingly, as in the case of 2G allottees, coal block owners diluted their equity to generate
huge revenues from investors. The share prices of these companies also skyrocketed in
the market, enabling the promoters to amass funds without mining even one ton of coal from
the mines allotted to them at no cost.