India's Coal Transition Must Overcome Many Challenges

As India forges ahead with its renewable energy goals to combat climate change, the transition away from coal presents a complex economic challenge.

- RAKTIMAVA BOSE AND CHETANA CHAUDHURI

While the environmental urgency is clear, the macroeconomic consequences—especially those impacting employment and state finances—carry a weight that policymakers can no longer afford to overlook.

Coal has long powered India's economy, currently generating over 70 percent of the country's electricity. For several states, including Jharkhand, Chhattisgarh, and Odisha, coal is more than just a fuel—it supports budgets, livelihoods, and local development. Jharkhand receives nearly 30 percent of its own tax revenue from fossil fuel-based royalties and levies; Chhattisgarh follows closely. Together with a few other states, they account for most of India's coal reserves and production, making the transition highly regional in both risk and impact.

Moving away from coal will not be cheap. India is estimated to require about $900 billion to $1 trillion over the next three decades to fully steer its power sector away from fossil fuels. Nearly half of that cost will fund non-energy needs—worker reskilling, land repurposing, livelihood support, and economic diversification. These are not peripheral concerns; they are essential to making the energy transition socially and economically viable.

Employment is where the transition dilemma becomes most immediate. Coal supports the livelihoods of over 13 million people across mining, transport, thermal power, steel, brick kilns, and other linked sectors. Formal employment numbers tell only part of the story. Many workers are hired through contractors or are informally engaged—making them both invisible in official data and vulnerable to job losses. In Jharkhand alone, nearly 300,000 are employed in formal coal work, with at least a million tied indirectly to the industry.