The Supreme Court on Wednesday has cancelled 214 coal blocks, which were declared illegal by it in a previous judgement. The apex court has exempted 4 coal blocks allocated to SAIL, NTPC and Sasan UMPP from cancellation.

Commenting on court ruling on coal block allocation, Kotak Institutional Equities said, ''The decision underscores the need for long awaited reforms. Even as in the short-term India may not experience significant negativity in real economic variables, the negative externalities in the medium-term on the investment cycle outlook may be profound if the government fails to take the necessary steps. We hope some convergence is achieved between the government's plan horizon and the markets' expectation of the same to avoid a major disappointment in the medium term.''

''We believe coal block auctions are likely only over a 1-2 year horizon. Consequently, there may be shortfalls in coal production and negative implications for the power and manufacturing sectors. We await clarity on fuel pricing (gas and LPG), land-acquisition issues, the Center's initiatives on labor reforms and taxation issues (GST, GAAR).''

''We hope the seeming disconnect between the government's plan-and-implementation horizon and the markets' expectations of the same converge over the next 4-6 months. In the absence of this convergence, the markets are likely to be disappointed with the pace and quality of reforms,'' it added.

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