Mumbai: The Reserve Bank on Thursday cautioned that increasing dependence on imported coal and rising global prices of the dry fuel can impact growth and inflation.
     
"The Ministry of Coal pointed out that coal shortage has resulted in significant increase in coal imports ... higher import dependence and elevated international prices of coal have the potential to impact the key macro indicators like inflation, growth, fiscal deficit and current account deficit," RBI said in its annual report for 2011-12 fiscal.
     
Coal imports increased from 43.1 million tonnes (MT) in 2006-07 to 98.9 MT in 2011-12, the report said.
     
According to the revised estimates of the Coal Ministry, in the terminal year of 12th Five-Year Plan (2016-17), coal demand is projected to rise to 980 MT against the indigenous availability of 795 MT, leaving a projected gap of 185 MT which needs to be bridged by importing coal, it said.
     
Higher dependence on import of dry fuel, it said, calls for parity between both domestic and international prices of call.
     
"A revision in the coal pricing formula was contemplated in January 2012 to bring domestic prices in line with international prices. However, the increase was rolled back subsequently as the overall coal price increase on account of new pricing was substantial," the report said.
 
The Planning Commission had recently said Coal India (CIL), which accounts for over 80 percent of the domestic coal production, should adopt a pooling formula on prices by combining rates of imported and domestic coal in order to offset the impact of high import costs.
    
Earlier, the company said the board in-principle approved pooling of prices.
     
Inflation, as measured by the Wholesale Price Index (WPI), was 6.87 percent in July, while the country's GDP fell to a nine-year low at 6.5 percent last fiscal.

(Agencies)

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