With almost four years having passed since royalty rates of major minerals including iron orewere last revised, the Mines Ministry is all set to make an upward revision in these rates which the miners have to pay to states for extracting minerals from reserves falling undertheir jurisdiction.
According to official sources, a Study Group on Revision of Rates of Royalty on major minerals which is headed by Special Secretary in the Mines Ministry Gauri Kumar would be meeting secretaries of all mineral-rich states on April 26 to finalise the royalty rates. Once theseare finalised in the meeting, the Union Cabinet’s approval would be sought, most likely by end of May, 2013, they added.
The 17-member study group has already submitted a draft report on the revised rates to the ministry, and as per information, around 5 per cent hike has been suggested in royalty rates of iron ore (which currently attracts a royalty of 10 per cent), while increment in case ofother minerals are based on domestic prices as well as global rates of various indexes.
While mineral-rich states had sought significant hikes in royalty rates in the range of up to10 per cent to 15 per cent (over and above the existing rates) as they consider this as one oftheir major sources of revenue, the Centre normally goes in for nominal increments as it hasto keep the interest of the industry in mind. Therefore the draft report submitted to theMines Ministry has recommended the fresh hikes keeping this aspect under consideration.
Though royalty rates are normally revised after every three years, the latest revision gotdelayed by a year (as rates were last hiked in 2009) as the study group could not finalise its report owing to administrative changes in the Mines Ministry.
In June 2012, the then Additional Secretary in the Mines Ministry – S K Srivastava – who washeading the group, got promoted as Secretary in the Coal Ministry and due to this, the panelcould not finalise its draft report. The process got back on rails once Kumar took charge asAdditional Secretary (incidentally she was in January this year upgraded as Special Secretaryin the same ministry).
Royalty is a charge which the mine owner has to pay to the concerned state government, underwhose jurisdiction the mine which he/she is exploiting, falls. It is not related to profitsearned by the mine owner (or the lease holder), but is usually related to the quantity ofmineral exploited by him/her.
The draft report was prepared by the study group after taking feedback from the all themineral-rich states like Chhattisgarh, Jharkhand, Odisha, Maharashtra, Bihar and severalothers. Industry associations and several other related stakeholders were also taken intoconfidence while preparing the draft report.
The second schedule of the MMDR Act has enlisted 51 minerals and their rates differ accordingto their nature and qualities.