)
Odisha, the biggest iron ore producing state in the country, is sore over the Centre's proposal to raise royalty rate on iron ore to 15 per cent of sale price on ad-valorem basis, up from 10 per cent presently.
"The Government of India has notionally agreed to raise royalty rate on iron ore from 10 per cent to 15 per cent. But this hike is not acceptable to us. We believe that the royalty rate of 15 per cent is not enough. The Centre should fix the royalty rate after proper examination of profits made by miners. Earlier, we had brought to the notice of the Central government regarding the super normal profits earned from mining activities," said director (mines) Deepak Mohanty.
Refusing to quantify the royalty hike demanded by the state government, he said "We are not demanding in percentage terms. Let the Central government take a call on royalty hike after factoring in super normal profits earned by the mine owners."
Mining revenue, the single biggest contributor to the state's non-tax revenue segment, stood at Rs 5,352.94 crore in 2012-13 as against a target of Rs 5,700 crore. In 2011-12, the mining revenue collection was Rs 4,586.64 crore.
It may be noted that the state Chief Minister Naveen Patnaik has been demanding introduction of mineral resource rent tax (MRRT) on windfall gains made by the miners to ensure that the super normal profits earned from mining activities do not get accumulated in the hands of few merchant miners.
Justifying the need for introduction of MRRT, Patnaik had pointed out that during 2001-11, iron ore sales have jumped ten-fold from Rs 1,092.98 crore to Rs 11,285.33 crore while net profit has surged 27 times in the same period from Rs 343.94 crore to Rs 9,727.17 crore.
As per the audited financial results of public sector miner National Mineral Development Corporation (NMDC), the average sales income from iron ore per tonne has risen from Rs 625.99 in 2001-02 to Rs 4,287.74 in 2010-11, a jump of 585 per cent. Odisha stood to gain around Rs 5,000 crore annually if the Centre agreed to tax windfall gains of miners. However, the Central mines ministry had dealt a blow to the state government's demand, stating that it would be difficult to establish if miners made super normal profits. The ministry said any decision on hike in royalty of minerals will be taken on the basis of recommendations given by a study group formed for the purpose.
The study group has suggested royalty for iron ore at 15 per cent of sale price against 20 per cent demanded earlier by the state. Similarly, for all grades of manganese ore, the study group has recommended royalty at five per cent of sale price, lower than the state's demand of 12 per cent. For manganese ore concentrates, the group has suggested that the existing rates may continue.
