NATIONAL COAL INDEX

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Context: The National Coal Index (NCI) increased by 3.83 points in September, driven by higher demand for coal, marking the first rise since April 2023.

Key Highlights

• The Union Coal Ministry announced the first increase in the National Coal Index since April 2023. This rise is attributed to the temporary increase in global coal prices.
• The National Coal Index is a price index that combines coal prices from various sources, including notified prices, auction prices, and import prices.
  • It is used to determine premiums on a per-tonne basis or revenue share on a percentage basis through a market-based mechanism.
• The ministry suggests that the upward movement in the index is indicative of rising demand for coal in India. This demand is attributed to the upcoming festive season and winter, prompting coal producers to increase domestic coal production to meet growing energy demands.
• The National Coal Index was introduced in June 2020, as a price index reflecting changes in coal prices relative to a fixed base year.
• India has experienced a surge in coal demand, especially from the power sector, driven by increased power demand. Power plants have continued importing coal as mandated by the power ministry to blend with domestic coal.
• In the fiscal year 2023-24 (April-October), India produced 507.01 million metric tonnes of coal, showing a 13.02% year-on-year growth. The government aims to achieve an annual production of 1 billion tonnes.

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