Minister of State for Coal Pratik Prakashbapu Patil informed parliament in a written reply that the blocks have been identified by the Ranchi-headquartered Central Mine Planning and Design Institute (CMPDI) under the ministry.
The two coal blocks with estimated reserves of 243.5 million tonnes are in Madhya Pradesh and Andhra Pradesh, while the five lignite mines having estimated reserves of 707 million tonnes are in Rajasthan and Gujarat.
"In addition to this, Coal India Ltd. (CIL) has also identified two coal blocks for taking up UCG in their command area," the statement said.
UCG is a method of converting coal underground into a combustible gas that can be used for power generation, among other uses.
"The Underground Coal Gasification technology has not been established in India," the ministry said.
It had issued a notification in July 2007 for expediting UCG development in the country.
Coal Minister Sriprakash Jaiswal earlier sought South African cooperation for UCG technologies.