Even as the shock of the 15 per cent ad valorem duty imposed by the Centre on iron-ore exports is sinking in, it faces the spectre of being delivered another blow, now by the Karnataka government.
The state, on a resource-mobilisation drive, has proposed to collect road toll from iron-ore exporters and also to step up pressure on the Centre to increase royalty on iron-ore from the present Rs 27 per tonne to Rs 200 per tonne.
These moves, which the state finance department officials contend will net additional revenues of around Rs 1,000 crore to the exchequer, is expected to reduce cash problems plaguing the new BJP government of chief minister B S Yeddyurappa. It is in a tearing hurry to unleash its populist schemes.
Pegging the overall revenue (including royalty) from the mining sector at Rs 367.50 crore in 2006-07, finance officials told Business Standard: "If royalty is increased to Rs 200 per tonne of iron ore, it will easily fetch us more than Rs 500 crore from the present Rs 80 crore."
Karnataka's iron-ore deposits are estimated to be around 893.37 million tonnes, of which 714.18 million tonnes are available in the politically-volatile Bellary district. There are 55 iron ore exporters in the state and the annual exports are around 28-30 million tonnes; and most of it goes to China where sales happen on a spot-basis.
The public works department, which has been drawing flak for its poor road conditions, has mooted the idea of collecting toll from iron-ore laden trucks that use the state roads to reach the ports.
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According to the department, the damage caused to roads by these trucks is around Rs 1,700 crore per annum. "We are preparing a plan to convert the routes used by ore-laden trucks into toll roads.
That will help us maintain the roads," public works minister C M Udasi said. An announcement to this effect is likely to be made in the state budget to be presented on July 17.
The government's moves, however, have made the exporters jittery, as these will hit their bottomlines. Describing the proposed royalty-increase and toll collection as a