Trinamool, Centre lock horns over coal royalty for West Bengal

After several run-ins with the United Progressive Alliance (UPA) government, the Trinamool Congress (TMC) looks set to open another front of confrontation with the Centre over the contentious coal royalty issue.

The recent rise in royalty on coal from 13 per cent to 14 per cent announced by the Centre would mean enhanced revenues for all states, except West Bengal. Since the term of the Left Front government in the state, Bengal has been charging 25 per cent cess on coal. Therefore, it is not entitled to raise the royalty on coal.

However, the TMC is now citing the state’s “dire financial health” and demanding the UPA government make a special consideration—permit it to levy more royalty, as well as charge 25 per cent cess.

Mukul Roy, railway minister and TMC member, had raised the issue of discrimination against Bengal on the issue of coal royalty at a meeting of the Cabinet Committee on Economic Affairs (CCEA) last week. The CCEA decided to raise royalty rates on coal, but made it clear this would not be applicable for West Bengal.

When contacted, Mukul Roy told Business Standard, “We will put across our party’s views when the coal royalty issue comes up before the Cabinet. The last decision was CCEA’s. The issue will have to come up before the Cabinet as well.”

With the introduction of the ad valorem royalty on coal to 14 per cent, major coal-producing states would now earn revenue of about Rs 6,980 crore, instead of the Rs 5,950 crore at current rates.

TMC sources say the party intends to raise this issue in a big way, justifying their demand saying the state needs financial assistance and thus, has to tap additional sources of revenue.

Despite being a part of the UPA, when the TMC had voiced its demand before the CCEA, the Centre did not rush to assuage its concerns.

A senior West Bengal government official said coal royalty rates in the state have been stagnant since 1987. “We may be charging a high rate of cess, but the royalty that we get is paltry. It has been Rs 5.50 per tonne of C grade quality of coal since 1987….What happened in the past in Bengal was decided by the Left Front. Now, as an UPA ally, we cannot continue to be neglected.”

Significantly, even in 2010, during the term of the Left Front government in West Bengal, it had urged the Centre to allow it to raise royalty on coal to levels charged by other coal-producing states. However, Finance Minister Pranab Mukherjee had told asked it to reduce its cess rate if it wanted to levy the same rate of royalty as other states.

Despite the TMC claims of “neglect”, interestingly, West Bengal is the only state that gets both coal royalty and coal cess, and the aggregate revenue is much higher than the royalty other coal producing-states, including Jharkhand, Odisha, Madhya Pradesh and Chhattisgarh, get.