Coal Mines (Nationalisation) Act, 1973, Schedule I

The Coal Mines (Nationalisation) Act, 1973 is a landmark piece of legislation in India’s energy and industrial history. It was enacted to bring the ownership and management of coal mines under government control, aiming for the rational and scientific development of coal resources to meet the nation’s growing needs. A critical component of this Act is Schedule I, which lists the specific coal mines that were nationalised. This post explains the context, objectives, and real-world impact of the Act and its Schedule I, using tangible data and simple language.

Table of Contents

Background and Purpose

In the early 1970s, India’s coal sector was plagued by fragmented ownership, unscientific mining practices, and poor safety standards. Private ownership led to inefficiencies, low productivity, and hazardous working conditions. Recognising coal’s strategic importance for energy and industrial growth, the government decided to nationalise coal mines.

The Coal Mines (Nationalisation) Act, 1973 was passed by Parliament to:

Acquire and transfer the rights, titles, and interests of private owners in coal mines to the central government.
Reorganise and reconstruct coal mines for rational, coordinated, and scientific development.
Guarantee that coal resources are used in line with the country’s growing requirements.
Vest ownership and control of coal resources in the State to distribute benefits for the common good 2 5 9.

Key Provisions of the Act

The Act is structured into several chapters, covering:

Acquisition of Rights: The government took over the ownership of coal mines listed in Schedule I, ending private ownership in the sector 1 5.
Payment to Owners: Compensation was provided to previous owners based on the value specified in the Schedule 8.
Management: The central government or its companies managed the mines, ensuring assets and records were handed over.
Employee Provisions: Employees were protected, with provisions for transfer, provident funds, and superannuation 5.
Exceptions: Later amendments allowed captive mining by private companies for specific industries like iron and steel, power generation, and cement production 2 9.

What is Schedule I?

Schedule I is an important part of the Act. It contains the official list of coal mines that were nationalised. At the time of enactment, about 711 coal mines across India were included in Schedule I 2. Each entry in the schedule specifies:

The name of the coal mine or group of mines.
The previous owner(s).
The location.
The compensation amount to be paid for each mine 8.

Schedule I provided legal clarity and transparency about which assets were being transferred to the government.

Tangible Data and Real Impact

Number and Distribution of Mines

711 mines were nationalised in 1973, spread across major coal-bearing states like West Bengal, Jharkhand, Odisha, Madhya Pradesh, and Maharashtra 2.
These mines accounted for the bulk of India’s coal production at the time.

Economic and Social Impact

Coal India Limited (CIL) was formed as the main public sector company to manage these mines. Today, CIL is the world’s largest coal producer.
Nationalisation led to significant improvements in safety, working conditions, and production efficiency.
The Act enabled planned investment in technology, mechanisation, and expansion of coal mining operations.

Amendments and Evolving Policy

In 1976, the Act was amended to permit captive mining by private companies in iron and steel production and, later, for power generation and cement production 2 9.
In 1993, further amendments allowed private sector participation for captive coal mining for power generation and coal washing.
Despite these changes, the core principle remained: public sector dominance in coal mining, with private participation tightly regulated and limited to specific end-uses.

Schedule I and Subsequent Developments

Coal Mines (Special Provisions) Bill, 2014

The legacy of Schedule I continued into the 21st century. In 2014, the Supreme Court of India cancelled the allocation of 204 coal blocks (many of which were originally in Schedule I) due to irregularities in the allocation process 7 10. The Coal Mines (Special Provisions) Bill, 2014 created a new Schedule I, listing these cancelled blocks for reallocation through transparent auctions 10.

Schedule I (2014 Bill): Included all 204 cancelled mines, along with associated land and infrastructure.
The reallocation process aimed to ensure transparency, competition, and efficiency in coal block allocation.

Why Was Nationalisation Necessary?

Fragmented Ownership: Before 1973, coal mines were owned by hundreds of private entities, leading to inconsistent practices and poor resource management.
Safety and Labour Issues: Private mines often neglected safety, resulting in frequent accidents and poor working conditions.
Resource Utilisation: Nationalisation allowed for coordinated planning, investment, and scientific mining, boosting productivity and national output.
Strategic Control: Coal is vital for power generation, steel, cement, and other core sectors. State control ensured energy security and a stable supply.

Captive Mines: A Special Category

The Act and its amendments introduced the concept of captive mines:

Captive are mines allotted to companies for their own use (e.g., a steel plant using coal for its furnaces).
Coal from captive mines cannot be sold in the open market; it must be used by the owner company for the specified end-use 2.

This approach balanced the need for private investment in key sectors while maintaining overall state control.

Current Status and Relevance

Coal India Limited and its subsidiaries continue to dominate coal production in India.
The government has gradually opened up the sector for private and foreign investment, but public sector control remains strong.
Schedule I’s legacy is seen in ongoing efforts to ensure transparent allocation and scientific management of coal resources.

Conclusion

The Coal Mines (Nationalisation) Act, 1973, and specifically its Schedule I, transformed India’s coal sector. By nationalising over 700 mines, the government took a bold step to ensure that coal-a strategic national resource-was managed in the public interest. The Act led to improved safety, efficiency, and planning in the sector, laying the foundation for India’s industrial growth. Even as policies evolve and private participation increases, the principles established by the Act and its Schedule I continue to shape India’s approach to coal resource management 2 5 9.

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Coal Mines (Nationalisation) Act, 1973, Schedule I