Need to link coal mines and power plants through rail lines

Narendra Modi government has promised to deliver electricity 24x7 basis. This is a electrifying and positive assurance, but can only happen when fuel supply arrangements are made and actually kept, so that power plants can deliver the power!

After almost five years in preparation, according to the press, Coal India's subsidiary, Central Coalfields Ltd in Sambalpur, has been able to start its mining operation at Amrapali, which has an estimated initial capacity of 12 million tonnes per year. Considering the shortage we have in the country, this would be a welcome contribution to the power generators.


Coal fired plants in India account for 60% of the power generated in the country and the move to import parity pricing, by the government, would toll heavily on consumers by way of increased tariffs. Domestic coal is about 40% cheaper than imports even after taking into account for heating value and/or quality. The government has assumed that import parity price for coal would boost competition. Unfortunately, it will not, and may just create unhealthy situation in the country.


In the meantime, Coal India has been toying with the idea of making fertilisers in a proposed joint venture with GAIL, Food Corporation of India and Rashtriya Chemicals and Fertilizers Ltd (RCF). All because, they have a huge cash reserve of over Rs60,000 crore. Coal India's plans to get minority shareholders support has not been supported by Institutional Investor Advisory Services India Ltd (IiAS), who has charged this to be an "unrelated diversification". And, rightly so. (Read:IiAS advices voting against Coal India's proposal to amend MoA)


At the moment, out of 100 coal based power generating plants, 47 of them are said to be on a hand-to-mouth existence, in terms of coal supplies and their stocks are running in critical levels. It is reported that thermal power plants with a total power capacity of 28,834 MW are stressed on account of lack of fuel linkages and, in fact, actual supplies.


In his Railway Budget, Minister DV Sadananda Gowda announced three new railway lines, and these are:


Tori-Shivpur-Kathautia .. 91 kms

Jharsaguda-Barpalli-Sardega ..52 kms

Bhupeopur-Raigarh-Mand ..180 kms


These will improve coal linkages and will bring nearly 100 million tonnes of incremental traffic to railways and will also facilitate faster transportation of coal to power plants.


In a separate statement, Chairman of Sambalpur based Mahanadi Coalfields has stated that the completion of Jharsaguda-Barpalli-Sardega link in Odisha would enable their Vasundhara coalfields to increase production by 7 million tonnes a year, where, they are now restricting production to only 10 mta due to evacuation and infrastructure restraints. The mine has green clearance for 17 mta.


If the above three rail links are handled on a war footing, it is estimated that these 323 kms of rail lines can unlock upto 300 mta of coal!


Narendra Modi government has promised to deliver electricity 24x7 basis. This is a electrifying and positive assurance, but can only happen when fuel supply arrangements are made and actually kept, so that power plants can deliver the power!


Mineral-rich states like Jharkhand, Odisha and Chhatisgarh need to get faster railway development work done and overcome the hurdles faced in various "clearances" that have become bottlenecks. These have to be removed within a time frame that the government must now set.


In the meantime, in addition to the work that is planned for railway linkages, expeditious movements for evacuation of coal from pit heads etc, our suggestion would be:


Why not Coal India partner with NTPC or others to set up a power generating unit called: Amrapali Power Ltd within the 5/7 km radius of the mines, thus enabling the mine to send the coal by conveyor belt? In fact, Coal India should set up one power plant at the coal mining sites in each of these states and link them to the national power grid!


This will help meeting the challenge of electricity power supply on 24x7 assured by the Prime Minister. It is doable.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)


Budget 2014: Get your taxes and investments right

Getting instant reactions and opinions from the popular media is fine, but when you need the cold truth about the Budget where do you turn? Ameet Patel and Debashis Basu explained the fine prints of Budget to savers at an event organised by Moneylife Foundation

India's new Finance Minister Arun Jaitley delivered his maiden budget on the 10th July. Budget 2014 had huge expectations tethered to it and the stock markets too reflected these expectations. To take stock of what the budget did well and where it failed, Moneylife Foundation organised a seminar with Ameet Patel and Debashis Basu in Mumbai.

Ameet Patel, a Chartered Accountant and partner at Sudit K Parekh & Co, spoke about changes in  taxation and innovations (or the lack of it) in the budget. Debashis Basu, Moneylife Foundation's Founder Trustee, took on how the budget would affect investments and the investment climate. Their talks were followed by a lively interaction between both the experts and with the audience.

Historically, budgets have become more and more muted in their effect on the economic and investment climate. Mr Patel began therefore, by listing out some expectations that India had from this budget, especially on the tax front. Mr Patel gave a thumbs down to the fact that contrary to expectations, there was no change in the tax rates, there was a change in the DDT calculation(which may result in lesser dividend payouts) and that the Surcharge and Education Cess had not been removed.


Among the good moves by the FM, the increase in the tax slabs for senior citizens was a good change, he said. He added, "the rise in the income threshold for non senior citizens who pay no tax, would put more money in the pockets of taxpayers." People who earn upto Rs.2,50,000 a year, would owe no tax to the government, changed from the previous limit of Rs.2,00,000.


He said, "'Achhe Din' are indeed here for foreign investors," and rued that similar benefits had not been made available to domestic investors. On the changes in taxation for debt funds, he said, “They might as well shut down the debt funds.”

Mr Patel said one of the biggest plus points in the budget was a statement of intent on rolling out the Goods and Services Tax (GST). Even though there was no firm commitment on a proposed date for introduction of GST, the Finance Minister assured states that their concerns would be taken care of and a consensus would be built with the states for a smooth roll-out of the GST. Another good sign, according to Mr. Patel, was the clear message from the government, that they do not believe in using retrospective taxation, and would not use legislation with retrospective effect except in the rarest of rare cases.


In sum, the biggest positives for taxpayers, according to Mr. Patel, were the following:

  • 1) Increase in the threshold limit for those who pay 0% tax
  • 2) Increase in the exemption limit under section 80C
  • 3) Increase in deduction for interest on housing loans for 'self-occupied' properties.


Mr Basu took the stage to speak on how the Budget affects future investments for investors and savers. He began with the macro view of the economy and pointing out that the budget did not deliver smaller government. The borrowing needs of the government, the interest outgo and have the needed spending cuts, or improved climate for doing business and so the fiscal deficit remained a serious impediment to bringing down inflation and interest rates. The bugdet has changed the tax treatment of non-equity funds, but this would not affected Moneylife readers because Moneylife has never advocated non-equity funds like Monthly Income Plan, Capital Protection Funds and hybrid multi-assets funds.


For investors, Br. Basu re-iterated the Moneylife philosophy, "less is more and simpler is better when it comes to investments." He listed out the types of investments to stay away from for all investors, which are, Capital Protection Funds, Monthly Income Plans and Gold ETFs.


For those who were investing themselves, even investments in Debt Funds and FMPs was not the best idea. He said, "with the change in tax treatment for FMPs, you will need to hold them for atleast 3 years to get the tax benefit. This would mean that you were taking a long term interest rate call when investing in these products," Moneylife has written before, about how difficult it is to predict interest rate movements for even experts.

Mr Basu said the given the budget, the economy was likely to take longer to recover. Over this period, the rupee was unlikely to strengthen soon and inflation would continue to be at current levels for a while. In such a scenario trust ONLY high quality stocks, he said. “I would tend to favour only large cap funds and select midcap funds, and stocks in the IT, pharma and consumer goods” he said. He ended his talk by saying that you could still “keep the faith but keep a watch out” regarding the new administration and Finance Minster.




2 years ago

I was looking for a transcript of the session especially the Q&A. We don't need an eminent CA to talk of the extra amount in the hands of a senior citizen because of the 50K increase in the exemption limit.

Disappointing coverage!!


Moneylife Foundation

In Reply to Badri 2 years ago


You need to know where to look. Coverage of an event, in any media, is only a summary.
If you want to see the detailed coverage, please watch the video.
You may have noticed that this is part of the effort the Moneylife makes at investor education through Moneylife Foundation -- a Not-for-profit entity.

The videos of each event are available at
You need to go to the website and look under 'Events".

You may like to take advantage of this FREE benefit that is available to all savers.

You may also like to register for regular updates.

You may further want to support this public initiative by volunteering or donating.

A two-way effort will make India a better place for savers and further our advocacy and financial literacy effort!

Team Moneylife Foundation

June inflation dips to 5.43% even as prices of onion, potato remain high

As per WPI inflation, during June, prices of vegetables as a category declined by 5.89% while that of potato and onion soared by 42.51% and 10.70%, respectively, in the wholesale market

After rising to a five-month high last month, inflation in June dipped to 5.43% mainly due to decline in the prices of food items and vegetables with the exception of potato and onion. The Wholesale Price Index (WPI) inflation was at 5.16% in June 2013.


As per WPI inflation, prices of vegetables as a category declined by 5.89% during the month, while that of potato and onion soared by 42.51% and 10.70%, respectively in the wholesale market.


Inflation had soared to a five-month high of 6.01% in May 2014.


Among other important items, the prices of sugar and edible oils fell by 2.09% and 0.75%, respectively during June.


The food items that became expensive during the month include fruits (up 21.40%), followed by milk (10.82%), egg, meat and fish (10.27%) and rice (10.24%).


The inflation of food items as a category, however, continued to remain high at 8.14% during the month and will continue to be a cause for concern for the Government which is gearing up to meet the impact of poor monsoon on the price situation.  


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