Like steel production, energy production is one of the significant parameters of stage of advancement of a developing economy. Availability of energy at the right price is vital for development Coal is a primary resource of energy. The price of coal has been a very important parameter in the Indian economy. In the past 20 years coal has been marketed at administered prices. There has been a very complex mechanism at work for this purpose. There have been a lot of incentives given to this industry. These, in fact, are tantamount to subsidies. The role of subsidies is well acknowledged and is considered quite useful to the economy. A detailed analysis by carefully studying the methodology of mining and delineating various stages in mining has been conducted and the subsidies, which have traditionally not been quantified, have been calculated. The impact of each parameter on the total subsidy has been studied to facilitate continuance or change In the subsidy by adopting a suitable strategy for coal pricing, as presently the considerations show unaccounted-for subsidies to be more than 70% of the price charged.