India’s rapid economic ascent as one of the world’s fastest-growing major economies relies heavily on coal, which powers much of its electricity and industrial growth. Yet this dependence comes with profound hidden costs—environmental degradation, severe health impacts, agricultural losses, and long-term economic burdens—that far exceed the apparent affordability of coal-based power.
A recent Financial Times film, “India and the true cost of coal,” highlights how coal fuels India’s boom while exacting a heavy toll on communities, ecosystems, and public health. Coal mining devastates forests, alters landscapes, disrupts water systems, and releases pollutants like methane, while burning it emits nitrogen oxides (NOx), sulfur oxides (SOx), and fine particulates that blanket regions in smog.
Environmental and Agricultural Toll
Coal-fired power plants are a major source of air pollution, contributing to ecosystem damage and reduced crop productivity. Nitrogen dioxide (NO₂) emissions from these facilities have been linked to substantial yield losses in staple crops. Recent research indicates that in many agricultural areas near coal plants, wheat and rice yields drop by 10% or more due to this pollution. Eliminating coal-related NO₂ emissions during key growing seasons could recover an estimated $820 million annually in wheat and rice output, with roughly $400 million each from the two crops. These losses hit small and marginal farmers hardest, exacerbating food security challenges in a nation where agriculture remains vital.
Beyond crops, coal operations cause widespread deforestation, biodiversity decline (particularly in mining hotspots like Odisha and central India), water scarcity, and significant contributions to climate change—coal accounts for roughly half of India’s CO₂ emissions.
Health Impacts and Human Costs
Air pollution from coal combustion is a leading driver of premature mortality and illness. Fossil fuel-related PM₂.₅ (fine particulate matter) contributed to over 1.7 million deaths in India in 2022, with coal alone linked to around 394,000 of these, primarily from power plants. This pollution causes respiratory diseases, cardiovascular issues, and reduced life expectancy, disproportionately affecting vulnerable populations in mining regions and near thermal plants. Communities face displacement, toxic dust exposure, and livelihood disruptions, fueling local protests over health hazards and land loss.
The monetized value of premature deaths from outdoor air pollution reached about $339 billion in 2022—equivalent to roughly 9.5% of GDP—underscoring how these unpriced externalities erode economic gains.
Economic Realities: The “Social” Cost of Coal
On paper, coal provides cheap baseload power amid surging demand. However, when external costs—health damages, mortality, crop losses, and other environmental harms—are factored in, coal’s true price skyrockets. Studies from around 2018–19 estimated external costs at approximately ₹1.64 per kWh (about 2.4 US cents/kWh), dominated by air pollution-related mortality. Adding these to private generation costs showed that most coal plants’ social operating costs exceeded those of new solar and wind at the time. Over half (and in some analyses, two-thirds) of existing coal capacity was more expensive on a social basis than renewables.
Projections indicate that by the mid-2020s, renewables with storage would match or undercut even the cheapest new coal plants’ social costs—without needing carbon pricing. Recent analyses reinforce that there’s no strong economic rationale for new coal plants when domestic externalities are considered.
Phasing out coal would carry transition costs—potentially over $1 trillion over decades for mine closures, plant retirements, and worker support—but early retirement scenarios in key states could yield net benefits in the hundreds of billions through reduced pollution and health gains.
A Shifting Landscape
India achieved record coal production (over 1 billion tonnes in recent fiscal years) to bolster energy security and curb imports, with coal still fueling about 70% of electricity. Yet 2025 marked a historic shift: coal power generation fell by around 3% year-on-year—the first significant drop in decades not tied to a crisis like COVID-19. This decline stemmed from record clean energy additions (solar, wind, hydro), milder weather reducing demand, and slower overall power growth. Non-fossil sources grew enough to cover rising needs, signaling renewables’ accelerating role.
While coal remains central for reliability and manufacturing ambitions, plummeting renewable costs and falling coal trends point toward an inevitable transition. The true cost—measured in lives lost, crops diminished, ecosystems scarred, and economic drag—reveals coal as far more expensive than statistics suggest. Balancing growth with sustainability will define India’s energy future.
About The Author
