In an attempt to corner the central government, the Hemant Soren-led Jharkhand government is getting entangled in its web. According to the Supreme Court’s ruling in the MADA vs. SAIL case in July 2024, states can impose taxes on mineral rights under Entry 50 of List II of the Constitution. This landmark decision by a nine-judge bench overturned the 1989 ruling of a seven-judge bench in the India Cement case. With an 8:1 majority, the judgment grants states the power to levy taxes on minerals and land containing minerals — a boon for mineral-rich states like Jharkhand.
However, the Supreme Court also laid down some conditions to balance the interests of state governments and mining companies. The first condition was that the mining tax could be imposed only from April 1, 2005. Considering the immediate financial burden on mining companies, the court allowed the payment of this tax in installments over 12 years, starting from April 1, 2026. Also, the Supreme Court explicitly stated that no penalty or interest would be charged on this amount.
The Jharkhand government, one of the 80 petitioners in the case, had written to the central government in 2022, demanding dues worth ₹1.36 lakh crore under categories like washed coal royalty, common cause, land acquisition, and interest. In response to a related question posed in December 2023 by a then-serving MLA from Godda, the state government reported the amount as ₹1.48 lakh crore. During the elections, Hemant Soren frequently mentioned this figure of ₹1.36 lakh crore in his speeches and campaign posters. However, in response to an unstarred question posed in Parliament by Pappu Yadav, the amount cited was ₹1.40 lakh crore.
This discrepancy in the amount raises two key questions. First, the 2022 letter to the Centre included ₹60,000 crore as interest. Since the Supreme Court had explicitly ruled that no penalty or interest would apply to the outstanding dues, why did the Jharkhand government not reassess this amount after the verdict? The presentation of the same 2022 amount reflects negligence on the part of the state government and its officials. Second, after the Supreme Court’s ruling, the Jharkhand government introduced the Jharkhand Mineral-Bearing Land Tax Bill in September 2024. This bill established additional charges for various minerals, such as ₹100 per metric ton of coal, ₹70 for bauxite, and ₹50 for manganese. After passing this bill, the government should have re-estimated the dues based on the state’s mineral production and updated the figures accordingly. However, no such proactive measures were taken.
Rather than focusing on a procedural and well-structured approach to collecting the dues, the state government and its leader, Hemant Soren, appeared more interested in the political narrative. The state is currently grappling with a financial crunch as it struggles to fulfill its election promises. For instance, the Maiyan Samman Yojana alone requires around ₹17,000 crore for implementation. In the recently presented second supplementary budget, the government reduced allocations for nearly every department and diverted funds to just two — ₹6,390 crore for the Maiyan Samman Yojana and ₹2,577 crore for the waiver of electricity bills. In contrast, last year, the Rural Works Department received ₹1,413 crore in the second supplementary budget, but this year it was allocated a mere ₹2.66 crore.
Despite this, the government failed to disburse the Maiyan Samman payments to over 5.5 million women in the state on the promised date of the 11th of the month. To ease the financial strain, District Collectors (DCs) were also directed to verify the eligibility of beneficiaries who had already received payments before the elections. If any discrepancies were found, their names were to be removed from the list. To shift the blame for this delay, the government orchestrated a question through Pappu Yadav in Parliament regarding the pending dues. Hemant Soren hoped that any mention of pending dues from the Centre would bolster his political narrative. However, this move backfired as it was posed to the wrong authority.
The Union Minister of State for Finance categorically stated that none of the four heads under which funds are transferred from the Centre to state governments had any pending dues. The minister even presented data on the funds transferred to the Jharkhand government over the past three years. During the financial year 2023-24, the Centre transferred ₹56,065 crore to Jharkhand.
With this statement from the Centre, JMM’s political strategy crumbled. In response, JMM spokesperson Supriyo Bhattacharya held a press conference and threatened that if the dues were not received within 15 days, not a single piece of coal would be allowed to leave Jharkhand. However, this statement reveals a lack of political prudence and two major flaws.
First, since the Supreme Court’s decision applies to all minerals and all mining companies, JMM should have clarified whether it intended to take the same action against private companies like Tata Steel, Hindalco, and Jindal, which operate mines in the state. Simply targeting Coal India Ltd. (CIL) appears to be an attempt to corner the central government. Second, since the Supreme Court clearly stated that the payments are to be made in 12 installments from April 1, 2026, threatening mining companies to recover dues before this date raises questions of contempt of court.
According to estimates, the Supreme Court’s decision could require mining companies to pay around ₹1.5 lakh crore to state governments, collectively. If Jharkhand’s share is assumed to be 40%, the state's portion would amount to Rs 60,000 crore — far from the Rs 1.36 lakh crore being claimed. If only Coal India’s dues are considered, the amount becomes even smaller. When split into 12 annual installments, Jharkhand would receive only a few thousand crores annually. Hemant Soren is well aware of this reality but seems determined to shift the blame for his inability to fulfill election promises. His easiest option was to target the central government, but by asking an incorrect question through Pappu Yadav to the wrong authority, he exposed his misstep.
Since independence, Jharkhand has borne the brunt of discriminatory policies, despite its rich mineral resources. A major reason for its economic underdevelopment was the Freight Equalization Policy implemented in 1953, which remained in effect until 1993. This policy aimed to equalize mineral prices across the country by subsidizing transportation costs, thereby nullifying Jharkhand's natural advantage of proximity to mineral deposits. As a result, factories were established near ports in Tamil Nadu, Gujarat, and coastal Maharashtra, instead of in Jharkhand and nearby mineral-rich states.
The Supreme Court’s verdict on mining offers an opportunity to correct this historical injustice. It is hoped that the Jharkhand government will rise above political manoeuvring, engage in constructive dialogue with mining companies, and ensure a technical assessment of dues. The focus should be on creating a clear schedule for receiving payments. The additional funds should be used to fund long-term development of the state through prudent capital expenditures.
The author is BJP Jharkhand's election management chief and an expert on financial matters. Views are personal.
