Coal De-Allocation: India Risks Power Cuts, $66 Bn Investments

coal based power constitues 60 percent of India's installed capacity, followed by hydroelectric generation at 16 percent.

Former coal secretary P.C Parakh said the impact on the economy would depend on the speed of the government reaction to the verdict.

"Impact depends on how quickly the government responds to the Supreme Court verdict and how the procedure for reallocation of coal block is followed," Parakh said.

The Confederation of Indian Industry (CII) said the court verdict is likely to adversely impact domestic coal supplies and will erode investor confidence.

"The court'’ decision has created uncertainty and is likely to impact key sectors including power, steel and mining. In particular, given that the power sector is the largest consumer of coal in India this development is likely to exacerbate the shortage of fuel for the power sector," CII said in a statement here.

Acute fuel shortages are already impacting the power sector and currently close to 80 million tonnes of coal are being imported to meet demand.

Another sector that will be impacted by this ruling is the financial sector as banks account for over 60 percent of the overall investments in these blocks, CII said.

"CII would like to reiterate that while it respects the judgement of the apex court decisions, taken retrospectively could impede future investment flow into the country," it added.

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