The state government has collected Rs 3,894 crore as part of mining revenue between April and December 2013, up by 2.4 per cent from Rs 3,803 crore collected in the same period a year ago, official data showed.
Though the growth in collections is not large, it is impressive considering the poor collections reported in the previous quarter. Until September, total collection was down by 4.64 per cent at Rs 2,582.46 crore.
"Mining activities normally picks up after monsoon season. So the rise in mining revenue collection indicates better production and higher dispatches," said a state-based miner. Mining revenue comprises of mineral royalty, surface rent, dead rent and other non-tax charges for production and sale of iron ore, coal, bauxite etc. Odisha produces highest quantity of iron ore and is the second biggest producer of coal in the country.
Experts said, better revenue realisation upto December comprises iron ore and coal revenue collections, which normally rises from October onwards. While there are 51 iron ore miners operating in the state, Coal India subsidiary Mahanadi Coalfields Ltd (MCL) is the lone coal miner.
However, despite the rise in revenue collection, mineral production, especially that of iron ore, dropped during the period. Data showed that the production of minerals, fell to 40 million tonne upto December 2013 against a total production of 43 million tonne during same period in 2012-13.
"As the government realised that production has fallen which can impact revenue collection, it decided to remove captive production from output cap," said the miner. Recently, the state government has decided to exclude iron ore produced from mines owned by steel makers from its 57 million tonne annual iron ore cap imposed in Joda and Koira mining circle, in order to boost production by nearly 15 million tonne a year.
Though the state has the capacity to produce nearly 80 million tonne iron ore every year, due to restriction imposed on mineral output such as capping on output, reservation of iron ore for state-based industries, the production has dipped.
The state government collects royalty at 10 per cent of the selling price of iron ore. For 2013-14, it has set a target of Rs 5,700 crore of mining revenue. The falling production level raised the alarm that the government might miss mineral revenue collection target by the end of the fiscal. Meanwhile, a fall in iron ore prices also raised doubts over achieving the target.
"Average iron ore prices came down in 2013 compared to 2012. The rates for high grade ore, which was around Rs 7,500 per tonne, is trading at Rs 6,000 at present. Even if the production rises, the royalty collection might get affected," said the miner. In 2012-13, the state had produced 62.3 million tonne iron ore. With the relaxation in iron ore capping, the production is expected to reach to 72 million tonne in the year ending March 2014.
In order to boost mineral revenue, the state government in October 2013 had issued notification for collection of Rs 3,000 per hectare as surface rent every year from mineral bearing areas, instead of Rs 10 collected earlier. It estimated that the hike in charges will bring in Rs 11 crore additional revenue every year.
The state government is struggling to meet its revenue requirement for the current fiscal as a series of measures taken by it to curb illegal mining has affected its financial ability to fund populist schemes such as cheap rice to BPL (below poverty line) families or free laptops to students.
Besides collection of mining revenue, it has directed the commercial tax department to find alternative means of tax collection to boost overall revenue generation of the state.