With the NDA Government fast approaching 100 days in office, the Mines Ministry has begun work towards getting the stalled implementation of the revised royalty rates for major minerals like iron ore, a move which it believes will considerably increase the revenue of State Governments.
According to official sources, a draft note is being prepared by the Mines Ministry, seeking to expedite the implementation of the recommendations of a working group which had suggested a 5 per cent increase in ad valorem rate for iron ore, which is currently at 10 per cent.
They further added that the note will be sent to concerned stakeholders within a week’s time and once their comments are received, a detailed Cabinet Note on the implementation of the new royalty rates will be moved before the end of August to the Union Cabinet, so that the rates can become applicable by September.
Hiking royalty rates for key minerals had been listed as a key priority area by the Mines Ministry and Mines Secretary Anup Pujary in his presentation made before Prime Minister Narendra Modi in June, had stated that these rates will be revised within three months.
The NDA Government is keen to prioritise the implementation of higher royalty rates as had been suggested by a working group of the Mines Ministry last year, as it is of the opinion that this will not only increase the revenue of mineral-rich States, but also help in reviving the sector’s growth and increase its contribution to the country’s industrial production index.
Moreover the urgency being shown by the Mines Ministry in the matter also stems from the fact that though these royalty rates are to be revised after every three years, there has been no revision in them since 2009.
In 2012, a working group had been set up by the Mines Ministry under the Chairmanship of the then Additional Secretary to suggest revision of royalty rates, and it had recommended substantial hikes in royalty rates for various minerals. However however the new rates could not be implemented owing to difference of opinion between the Centre and various mineral-rich states on the matter. The Mines Ministry in its 100 days agenda programme, had earmarked revision of royalty rates as an important item.
“Royalty on minerals can be revised after a period of three years. The last revision took place in August 2009. A Committee was formed and its report is available for implementation. The major recommendation is for increase ad valorem duties on iron ore from 10 per cent to 15 per cent. Enhancement in royalty rates has been generally proposed for other minerals. This shall lead to enhancement of State revenues and strengthening of its resources,” the ministry had said in the agenda presentation, which was made before Modi.