Mineral royalty rates raised

To boost income of states & increase production cost

In line with its Budget announcement of enhancing the royalty on minerals, to boost the income of states in which these are produced, the government on Wednesday raised the rates for 33 of these.

The previous revision was in 2009. "The Cabinet in-principle approved revision of mineral royalty. This (revision) excludes coal, lignite and sand for stowing," Communications and Information Technology Minister Ravi Shankar Prasad said after a meeting.

Under the Mines and Minerals (Development and Regulation) Act, 1957, the central government by notification in the official gazette, revises the rate at which royalty is payable in respect of any mineral. This cannot be done more than once every three years. There are 51 minerals prescribed in the second schedule of the Act, the rates varying from mineral to mineral.

Iron ore and bauxite would now see a rate rise to 15 per cent against the earlier 10 per cent. Manganese ore would attract a royalty equivalent to five per cent from 4.2 per cent of the notified sales price.

This should lead to an increase in input prices for all mineral-based industry, especially steel and cement. It should also substantially boost state government revenue. By unofficial estimates, annual revenue collection of mineral-bearing states could swell about 40 per cent, to around Rs 15,000 crore. Chhattisgarh, Odisha, Jharkhand, Karnataka and Goa are among the 11 mineral-rich states.

The Cabinet proposal had sought to raise the royalty rate on iron ore and chromite to 15 per cent from 10 per cent now. For bauxite, it wanted the royalty up to 0.6 per cent against 0.5 per cent now.

The current proposals are based on recommendations of a 17-member panel set up by the previous regime in 2011.

Royalty is a tax levied by government on mining entities, in lieu of transfer of ownership rights of mines. The earlier revision, in 2009, was when the government shifted to an ad valorem (percentage) basis of charging royalty.