Coal India Ltd. (CIL), is a holding company under the coal ministry that contributes 85% of coal production in India and are free to fix the selling price of fuel, but only after prior approval from the government. The price of coal were last revised in December 2007 and the latest revision is expected to partially bridge the gap of international coal prices, which about a third higher.

Some time ago a small mining company proposing an increase in coal prices by 11%. According to the analysis of small, 11% increase in coal prices, only a marginal influence inflation. Little hope that an increase in coal prices could help the company increase sales revenue of Rs 4.629 crore coal and increase profits before a public offering on the stock market.

However, some economic observers worried about the impact of India’s coal price increases for other sectors. Sectors that will be affected by rising coal prices, among other things: the power sector, coal prices for the electricity sector to Rs 77 per ton, which would work out to about 5 paise per unit of power generated; cement sector, the impact would be around Rs 20 per ton that would work out to about 80 paise in 40 kg bags.

Here are some of the conditions of economic and industrial growth in India who will be affected by the increase in coal prices.

Overall annual inflation as measured by the WPI, is still contracting and -1.74% on August 1. But there, the fear that inflation could bounce back at the end of the year, mainly because food price inflation continues to be the company – the pressure will only aggravate the state declared drought in 171 districts in the middle of the season’s most important crops, kharif.

National Council of Applied Economic Research in the monthly report on August 12 said that the possibility of inflation in the current fiscal can not be excluded.

“Rise of the basic raw material prices may have a multiplier effect on inflation, other than a direct impact on the index, which at the time of recession, may have adverse effects on the economy,” said Dipesh beaten, principal consultant (mining) with audit and consulting firm PricewaterhouseCoopers.

Ltd. Crisil principal economist D.K. Joshi said: “The increase in coal price will impact on energy-intensive industries. However, I do not see it as a major problem in the inflation for several months. Going forward, it will increase the cost of materials.”

Cil believe that fuel prices will help Cil partially offset the rising cost of inputs, such as higher wages in the collection account the Sixth Pay Commission, and thus indicates a healthy balance sheet ahead of its proposed listing on the stock.

“That (list) of ideas. In declining profitability, which will invest? This will help us with a list of our proposals,” Bhattacharyya said.

Indian coal (with a calorific value of 3500 kilocalorie per kilogram) at a price of about $ 38 (RS1, 835) per ton, approximately 30-40% lower than international prices.

India has 256 billion tons of coal reserves, of which around 455 million tonnes (mt) per year mined. Cil is targeting production of 435 mt this year, against 403.73 mt achieved in 2008-09.

Demand for coal is estimated at around two billion tonnes per year by 2031-32, about five times the current level of extraction, with the maximum demand coming from the electric sector.

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