India’s coal heartland is powering down, with no safety net 

The energy shift is redrawing India’s economic map, but for coal belt workers in states like Jharkhand, the just transition is already collapsing under policy inaction

Even after three decades, the village of Manki in Jharkhand’s Chatra district still bears the marks of abandonment with its old houses and rusted electric poles. It was home to workers from a now-abandoned coal mine nearby. Today, the mine is buried under wild shrubs and red-flowering trees, with little evidence left of the 300-strong workforce it once employed. 

Manki presages the future. Long before “just transition” became a global talking point, the village had already borne the brunt of its absence. Coal, though required for some more years to become a developed nation, will eventually decline as other forms of energy become cost efficient and have stable supply chains as India aspires to become net-zero by 2070. The economic imbalance between the states setting up green industries and coal-producing regions will exacerbate. As India’s economic geography changes, these regions risk being left behind without a clear transition roadmap. 

The post-coal puzzle

Although coal currently powers 75% of India’s electricity, usage is expected to peak by 2040 and decline by 99% by 2060 to meet net zero goals, according to a CEEW study. This will impact a large portion of the population dependent on the coal economy. Jharkhand is the largest producer of coal in India, and employs close to 300,000 people directly in the coal sector — or 38% of India’s formal coal jobs. 

Another million are indirectly dependent on coal, according to a study by the Center for Strategic and International Studies. Theirs is the informal economy where locals dig and collect coal, transport it on bikes or cycles, and sell it in nearby towns. Also, markets come up near mining areas, providing livelihood opportunities for grocers, hawkers, etc. And then, there are those employed by other big industries in the state like steel, iron and cement manufacturing that require a lot of coal power.

According to AK Rastogi, the head of Jharkhand’s Just Transition Task Force set up in 2022, 18 out of the state’s 24 districts are directly dependent on coal. 

Unlike in other states like Gujarat, Rajasthan and Tamil Nadu, there aren’t enough new green projects in Jharkhand that can replace coal work, as of now. In fact, the state scores quite low when it comes to readiness and performance of power ecosystems in terms of renewable energy deployment, according to a report by Ember.

Among the 142 GW of renewable energy capacity coming up across India, Gujarat and Rajasthan together account for 58.3% of the capacity being built. Gujarat itself has attracted 3.07 lakh crore in investment for RE projects.

For this reason, over the past decade, India has seen a robust discussion on ensuring a just transition. Most have emphasised the need to prepare for this future when coal gets phased down. However, as India starts to close some coal mines, the country is already seeing what life without a just transition will look like.

The east-west divide

India’s economic geography for energy is changing as renewables grow. Out of the 220 GW of installed renewables capacity, solar has the lion’s share at 105 GW. Most of the solar parks are coming up in the western region of India in Gujarat and Rajasthan, while wind energy is also mostly concentrated in Gujarat and Tamil Nadu. Hydel power is mostly in the hills. 

Related industries like solar equipment manufacturers are also concentrated mostly in Gujarat, Rajasthan, Maharashtra, Telangana, and Andhra Pradesh and Tamil Nadu. This has left coal-dependent states like Jharkhand seeking a new economic engine for their post-coal future. 

“Technological transition will happen in western India, in terms of energy. In the east, the energy sector will gradually shut down. The problem is that the human resources are getting deprived in the east, where the just transition should have happened,” says Suprio Basu, who was formerly associated with the Just Transition Research Centre at IIT Kanpur.

The main challenge lies in coming up with a model of just transition that encompasses the coal regions, as the transition has to happen for whole townships that are dependent on the coal economy, according to Basu. Around 21 million people in India are dependent on the coal economy, found this iForest study.

“The informal coal economy will be hampered much more. In Jharkhand, you can see people ferrying coal on bikes and cycles. Beyond these, there are other players involved. All their livelihoods are dependent on coal. What will they do?” he says.

One single model of just transition is not going to work, according to Rastogi. There is a need to find localised solutions. “We have to look for alternatives that are district specific, and will depend on capacity. For example, East Singbhum district has potential for becoming an automotive and green hydrogen hub, while Chatra district — known for growing tomatoes — has potential to set up agro-processing centres,” he says.

Another issue is that there are a lot of inactive mines that haven’t been closed officially, so these areas cannot be reclaimed for other purposes, says Rastogi. He hopes that the new mine closure guidelines released by the Coal Ministry in January 2025 will speed up the process.

“Once mines are closed, then the process of reclamation, environmental rehabilitation and repurposing of these areas will lead to emergence of new opportunities for local people,” he says.

Another important factor is that people in active coal belts aren’t poor, so local communities don’t want change, according to Basu. “When there is such high cash flow in coal belts, it is challenging to implement a just transition, asking people to switch to other forms of livelihood. Unlike the Sundarbans, where there is a lot of poverty, it is easier to convince locals to agree to alternative income initiatives,” says Basu.

Although Jharkhand has one of the lowest per capita income levels in the country, it is abundant in both human and natural resources. “Jharkhand houses 15% of India’s critical minerals like copper, nickel, graphite, silicon, lithium, required for energy transition. Then there’s the possibility of capturing methane being released from mines. With the presence of hard-to-abate industries like steel and cement, producing hydrogen can be another alternative,” says Ashwani Ashok, director of just transition at the think-tank Center for Environment and Energy Development (CEED). 

He also emphasised the non-coal opportunities from renewables, to biomass, pumped hydro, and waste to energy fuel. According to him, if Jharkhand — which does not have huge electricity demand — utilises a fraction of its energy potential, it can be an exporter of energy. 

But for renewable energy projects to come up in Jharkhand, a big obstacle is land acquisition. The areas that have coal mines have limited scope for new energy projects as of now, while the remaining land is mostly forest land, granted to tribal communities through the Forest Rights Act, 2006. 

“For RE projects, especially solar, it helps having grasslands and open areas — that kind of land availability is not viable in Jharkhand. The existing habitats and density of forests will require displacing people, getting clearances from the Ministry of Environment, Forest and Climate Change (MOEFCC). Also, if you’re cutting down forests for solar projects, how is it environmentally friendly?” says Amalendu Jyotishi, a professor at Azim Premji University. 

Talking about western India, he says the flat, marshy lands of Kachchh in Gujarat are much more preferable for renewable energy projects, than the undulating terrain of the coal belt in east India. 

“In Gujarat, a lot of unproductive land is state-owned, unlike Jharkhand, where land is privately, or community-owned. If the state decides to lease out land at cheap prices for RE projects in Gujarat, then achieving economies of scale would be much easier,” says Jyotishi.

Money matters

Also, there’s the question of money — who is making the financial investment?

“The capital that comes for new projects are not from local entrepreneurs in Jharkhand, unlike Gujarat, where there are big industrialists investing in new projects,” he says.

 Also, Jyotishi says that underdeveloped or deprived areas and mining areas often overlap. Citing Odisha’s example, he says that state revenue has increased due to mining activities, but the economic benefits have not reached everyone equally.

 “Jharkhand will continue being poor unless the state invests in its people — improving their skills, employment opportunities so that there is no outward migration of labour,” says Jyotishi. 

A report by the Task Force says that 32% of Jharkhand’s revenue in FY23 came from fossil fuels, and “any revenue reduction due to the energy transition will negatively affect social sector spending.” To overcome this, implementing green budgets — which incorporates environmental considerations into planning and execution — and setting up a Just Transition Fund is crucial. One of its suggestions is using a mix of sustainable finance through “private, public and blended capital sources, such as green bonds and blended finance mechanisms, to attract investment”.

According to CEED’s Ashok, the agriculture department already has come up with a green budget, and he expects other departments will catch up soon.

According to him, one viable funding option, at least to initiate the just transition process, is the District Mineral Foundation Trust (DMFT) fund, set up to address societal and developmental needs of people living in mining areas.

“The DMFT fund can be utilised to enhance the livelihood of affected communities. There is more than ₹10,000 crore in the fund, while districts also have some unused amounts,” he says.

As of now, while these funds haven’t been used directly for just transitional purposes, some of it has been invested in setting up renewable energy capacity, infrastructure building like roads and health centres, and setting up fisheries in abandoned mines, says Ashok.  

CEED, which works with the Task Force, is focusing on understanding the skill gap of Jharkhand’s population, among other things. 

“We are mapping out the existing skill set of the people, and what gap exists in skilling them for upcoming, green industries. If the economy is going to shift in the future, how can these people be reskilled?” he says.

But until that happens, Jyotishi expects labour migration to happen from east to west India. “It is not surprising that wherever new project activities are happening, and the requirement of labour is informal, and unskilled, a good number of workers will come from eastern states like Bihar, Jharkhand, and parts of Uttar Pradesh, Odisha and West Bengal. They will work as security guards or construction workers in the new RE projects,” he says.

And that is precisely what the Task Force and CEED want to avoid. “If people start moving out, then revenue of the state will fall, and our objective is to arrest that movement of people. Fossil fuel is a finite resource, but before ending, it needs to move to an alternative economy. For the state to survive, we have to skill and reskill the present workforce so that they can move on to other options. For that, we are assessing the skill gap of locals,” says Ashok.

A growing labour problem

A reason behind a possible labour migration is the informalisation of the coal sector workforce, according to Jyotishi. 

“If you look at CIL, it is increasingly engaging contract workers for mining, or giving private companies to do its work for them. This results in a precarity in informalising the formal workforce in the coal sector,” he says, adding that due to this, children of formal CIL employees may end up working as informal labour for private miners with much less wages and no social security benefits.

Questions mailed to Coal India on this remain unanswered. The copy will be updated once CarbonCopy receives the responses.

This has been the case in Manki. The previous generation were permanent employees of CIL, but since the mine closed, none of the children were able to secure permanent employment. The primary school also shut down, forcing kids to travel several kilometres to get an education.

Some of the young men bagged contractual work as drivers for CIL, earning barely enough to feed their families. However, the contractors took hefty cuts from their earnings, the men told CarbonCopy. The not-so-lucky ones had to find work as construction or mining labour elsewhere in the state and outside. 

CIL’s policy has a role to play here. India is leading in opening new coal mines, accounting for a third of all new coal proposals globally in 2024, according to the Global Energy Monitor. By 2030, it wants to extract around 1.5 billion tonnes of coal.

To grow production to that level, the Ministry of Coal means to double down on the Mining Developers cum Operators (MDOs) model “to significantly enhance coal production, reduce reliance on imported coal, and introduce cutting-edge technology into the mining sector”, according to a press release dated 13 August 2024.

The Coal Ministry has also leased abandoned, underground coal mines to private players as CarbonCopy reported previously.  While there are benefits like technological advancement, energy  security, and reduction in coal imports, less number of permanent jobs in Coal India means more workers end up as contractual labour. 

In FY24, India’s total coal production was 997.8 MT. Coal India’s contribution was 773.6 MT – roughly 77.5%. Out of that, around 7 MT, or 9% came from outsourced operations, specifically through MDOs, according to Coal India’s annual report. Furthermore, in the same year, CIL also awarded 11 mines on a revenue sharing basis to private companies, with combined annual production amounting to 17.8 MT/year.

Its consolidated net revenue was ₹1,42,324 crore, a marked increase from ₹ 1,38,252 crore it posted in FY23. Net profits (after tax) also increased by around ₹6,000 crore from FY23 to hit ₹37,369 crore.

In other words, business is booming. 

But this revenue growth is not complemented by the growth of CIL’s workforce. The number of permanent workers keeps decreasing, year by year. As of 31 March 2024, CIL’s workforce stood at 228,861, with a reduction of 10,349 workers as compared to the previous year.

From FY23 to FY24, CIL’s expenditure on paying salaries and wages decreased by around ₹1,820 crore. 

According to two trade union leaders, the decrease in numbers is due to people retiring. But new workers aren’t being hired. 

Questions mailed to Coal India on this remain unanswered. The copy will be updated once CarbonCopy receives the responses.

CIL’s workforce has decreased by approximately 67% since its formation. In 1975, CIL’s manpower was 700,000-strong. Even a decade back, in FY13, CIL’s numbers stood at 356,000.

Who will fill the gap?

“Locals have a legacy dependency on coal. Coal India took care of some dependencies in their operational areas through CSR and other welfare measures. But due to limited capacities, these states often face challenges in providing services to their people. A forward-looking approach and proactive planning could be beneficial,” says Rishi Kishore, an analyst at Swaniti Global. 

According to Kishore, the steady revenue and cess from the coal sector provide significant financial support to coal-producing states, which may reduce the urgency for diversifying economic priorities. In Jharkhand, coal contributes roughly 8.9% of the Gross State Value Added (GSVA), according to Mongabay. Replacing that will be challenging.

As of now, there isn’t an alternative industry that can utilise the particular skill set of a coal worker.

“Just transition is not a day’s affair. Positive narrative and capacity needs to be created within the legislature, policy makers, and with officers at the district level. Implementation of the Task Force’s recommendations requires capacity building of all stakeholders to smoothen sustainable just transition,” says Rastogi.

According to Basu, however, governments are more interested in providing loans to people for setting up their own businesses, rather than creating employment sources through new industries.

“All the big wind and solar projects are coming up in the west, but only scattered projects are happening in the east – so where is just transition?” he asks.

For Jharkhand, hope rests in its ample forests. “There is a growing pharmaceutical market for forest-based ayurvedic products. Companies like Dabur and Himalaya have been selling these. Also, there is a low-scale possibility in forest-based livelihoods, through non-timber forest produce (NTFP) like mahua, tendu leaves, sal leaves, etc.,” says Jyotishi.

Rastogi and Ashok both confirm that there is growing interest in NTFP products, as small enterprises are selling locally available forest and mahua products. “About 70% of Jharkhand’s population is dependent on agriculture and allied activities. So, alternative livelihoods will be a mix of agro-based food processing industries, and industrialisation based on locally available resources,” says Rastogi.

But the focus needs to shift away from extractive industries to alternative livelihoods, infrastructural development to boost the green economy, and the state government needs to think and act strategically about a post-coal future, says Ashok.

In a few decades, states like Gujarat, Rajasthan, Tamil Nadu and Andhra Pradesh, which have embraced newer energies and green technologies like electric vehicles on industrialised scales, will be further ahead of coal-producing states like Jharkhand.

But these states will also have a generous amount of labour who need jobs. Will coal workers from Jharkhand be able to take up green jobs — which require a fair amount of training and skill? Or will they fall behind, just like in Manki?

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Shaswata Kundu Chaudhuri

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