India produces nearly 90 percent of its energy requirements, 65 percent of which are met by coal. Although commercial energy production has expanded substantially since independence, an inadequate supply of energy remains a constraint on industrial growth. Overall growth in the demand for energy was rapid in the earlyÍÍÍÍ 1990s, but commercial energy consumption was among the lowest in the world. Much energy use in the subsistence sector, such as the use of firewood and cattle dung, is unrecorded. Analysts believe that the share of noncommercial energy fell from around 65 percent in the early 1950s to 23 percent in 1991, and they expect this proportion to fall further during the 1990s. Most commercial energy production and distribution are in the public sector, but in the mid-1990s, the government was moving slowly to encourage the entry of private capital.

Coal

The coal industry is a key segment of the economy. Reserves are estimated at 192 billion tons, 78 billion tons of which are proven reserves. Additional coal exists in small seams, at great depths, and in undiscovered locations. The bulk of the coal found has been in Bihar, Madhya Pradesh, Orissa, and West Bengal. Known reserves should last well into the twenty-first century. In the 1980s, development of strip mines was stressed over underground mines because of the speed with which they could be exploited. Most of the industry was nationalized in the early 1970s. Coal India Limited was established in 1975 as the government's holding company for several operating subsidiaries. Production stagnated in the second half of the 1970s at around 105 million tons after an initial surge in production following nationalization. In the late 1970s and throughout the 1980s, the industry was plagued by the flooding of mines, serious power outages, delays in commissioning new mines, labor unrest, lack of explosives, poor transportation, and environmental problems. Government-set coal prices did not cover operating expenses of the more technically difficult mines. The central government was the main source of investment funds.

Throughout the late 1970s and 1980s, the coal industry--along with the electric power and transportation sectors--was a critical bottleneck in the economy and particularly handicapped industrial growth. The Seventh Five-Year Plan (1985-89) set a target of 226 million tons for coal production in FY 1989, but actual production reached only 214 million tons. Production rose to 241 million tons in FY 1991 and to 251 million tons in FY 1992. The annual demand for coal in the mid-1990s was around 320 million tons, a level that appeared to be out of reach without a significant leap in efficiency and large-scale investment. Subsurface mine fires in Bihar, some of which have been burning since 1916, have consumed some 37 million tons of coal and make another 2 billion tons inaccessible.

Data as of September 1995