Draft Cabinet note floated on increasing royalty on minerals

The Mines Ministry has floated a draft Cabinet note on increasing royalty on minerals like iron ore and bauxite for inter-ministerial discussions.
If approved by the Cabinet, the annual revenue collection of mineral-bearing states would swell by 41 per cent to Rs 13,270 crore, a source in the ministry said.
Chhattisgarh, Odisha, Jharkhand, Karnataka and Goa are mineral-rich states.
"The note on revision of the royalty rates, pending since 2012, has been circulated for inter-ministerial discussions. They have been requested to give their feedback within a fortnight and then the proposal would be placed before the Cabinet in a month from now," the source said.

The proposal seeks to raise the royalty rate on iron ore and chromite to 15 per cent from 10 per cent now.
For bauxite, it wants the royalty to be hiked to 0.6 per cent from 0.5 per cent now.

There are also plans to hike the rate for manganese to 5 per cent from 4.2 per cent.
The rates of royalty, revised in every three years, for major minerals excluding coal, lignite and sand for stowing were last revised in August, 2009.
The current proposals are based on the recommendations of a study group set up by the UPA-II regime in 2011.

Royalty is a tax levied by government on miners in lieu of transfer of ownership rights of mines. While the government views it as a source of revenue, industrialists look at it as part of production costs.
There are 51 minerals prescribed in the second schedule of MMDR Act 1957 and the rates vary from mineral to mineral.
Almost all minerals including bauxite, limestone, zinc and copper would be impacted by new royalty rates.
States have been asking for a steep hike in the royalty rates for the minerals. While the royalty is collected by the states, Centre is bestowed with the power to revise them.