National Mineral Policy 2006 - Department of Mines
National Mineral Policy 2006 - Department of Mines National Mineral Policy 2006 - Department of Mines
Chapter 6Augmenting State Revenues(Term of Reference no. 6)To examine ways of augmenting State revenues from the mineral sectorREVENUE TO STATES FROM MINING SECTOR6.1 Augmentation of their own sources of revenue has been a major concern of the stategovernments. The share of own tax receipts of states in the GDP has remained stagnant ataround 5–6 per cent. Non-tax receipts (including royalty from minerals) have also beenstagnating at around 3–4 per cent of the GDP. With ever increasing expenditure and growingrevenue deficits, the states are searching for means to augment their revenue receipts. It isnatural for states owning minerals to expect a fair share of revenue and economic benefitsfrom the mining sector.6.2 The major revenue accrual to the state governments from the mining sector is by wayof royalty on minerals extracted from the mines within the state. Besides royalty, dead rentalso accrues to the states from lessees who have not been operating their mines for any reasonand thus not paying any royalty. In addition to royalty and dead rent, the states also get somerevenues from the initial application fee payable by a concession seeker, annual fee payableby RP/PL holder on the basis of the area held, surface rent, sales tax or VAT, local area tax(e.g. Panchayat tax), and stamp duty. Some states, for example, Orissa and West Bengal,have also imposed a cess as well as a surcharge on minerals in the belief that they have thenecessary powers to levy taxes under entries 49 and 50 in List II of the Seventh Schedule.However, revenues from all these sources are meagre, even in comparison with the modestreturns from royalty and dead rent.6.3 Conceptually, royalty is a payment made by the mining lessee to the state as owner ofthe mineral as a consideration for the mineral extracted and sold by the lessee. Dead rent is acharge to be paid by the lessee for that area included in the ML from which minerals are not120
extracted. The main purpose of levying dead rent is to discourage the lessee from keeping themineral property idle. The existing rates of dead rent are based on the area of the lease andthe value of minerals. Accordingly, the dead rent applicable is higher for the higher valuegroup of minerals. There is also a provision under the MMDR Act that if there is a differencein the amount of royalty payable on the minerals extracted from an area and the amount ofdead rent payable for that area, the mine owner will be required to pay the higher of the twoamounts.6.4 Annexure 7 gives the total collection of revenue from royalty on minerals in the years2002–03, 2003–04, and 2004–05 in states with significant mining activities. Annexure 8gives figures of mineral-wise collections from royalty in the major mining states of thecountry, viz. Chhattisgarh, Jharkhand, Karnataka, Madhya Pradesh, Orissa, and Rajasthan.This statement brings out the following significant features: (a) coal constitutes the majorproportion of the royalty revenue of four of the six major mining states, accounting for 70–95per cent of the royalty revenue in 2004–05; (b) royalty collection from minerals other thancoal (Annexure 8) accounted for modest amounts of Rs 139.79 crore, Rs 38.33 crore, Rs172.49 crore, Rs 118.11 crore, Rs 303.05 crore, and Rs 144.37 crore in Chhattisgarh,Jharkhand, Karnataka, Madhya Pradesh, Orissa, and Rajasthan, respectively, in the sameyear; (c) the significant minerals contributing to royalty revenue in 2004–05 were limestone(Rs 119.95 crore) for Madhya Pradesh, iron ore (Rs 23.52 crore) and bauxite (Rs 10.54 crore)in Jharkhand, and iron ore (Rs 42.33 crore) and limestone (Rs 62.06 crore) in Chhattisgarh;Orissa has a fairly diversified mineral sector and the main minerals contributing to royaltyrevenue in 2004–05 were iron ore (Rs 72.85 crore), chromite (Rs 44.03 crore), bauxite (Rs29.05 crore), manganese (Rs 11.18 crore), and limestone (Rs 10.35 crore). Rajasthan’srevenue from royalties in 2004–05 is the highest, and their main income is from lead and zinc(Rs 151.23 crore), limestone (Rs 116.56 crore), and rock phosphate (Rs 30.84 crore);Rajasthan has substantial royalty collection from minor minerals with marble (Rs 96.48crore), masonry stones (Rs 24.66 crore), and sand stone (Rs 38.96 crore) as the mainminerals. Karnataka’s main royalty revenue in 2004–05 was from iron ore (Rs 79.75 crore),limestone (Rs 54.24 crore), and gold (Rs 8.32 crore). A concern of the major mining states isto increase their revenue from the mineral sector, which is at a very low level. Since four ofthe major mining states are also industrially underdeveloped, their concern is also that if enduseof the minerals is made in other states a major proportion of the economic benefits isappropriated by those states. The revenue generation by the mineral sector thus gets linked to121
- Page 80 and 81: ICMM AND SDF3.8 The ICMM membership
- Page 82 and 83: higher level. The basic approach is
- Page 84 and 85: (i) To minimize displacement and to
- Page 86 and 87: affected PAPs in the mining operati
- Page 88 and 89: that a well-regulated and responsib
- Page 90 and 91: (iii)Notwithstanding the above, sur
- Page 92 and 93: egard, all ‘forest’ land must b
- Page 94 and 95: Figure 3.1: Procedure for Processin
- Page 96 and 97: should be authorised to grant or re
- Page 98 and 99: formulation and appraisal of the EI
- Page 100 and 101: 3.41 Recognising the need to make t
- Page 102 and 103: Figure 3.3: Public Hearing/NOC from
- Page 104 and 105: Chapter 4Infrastructure Needs and F
- Page 106 and 107: 4.5 Logistics is the key to access
- Page 108 and 109: Table 4.1: Mineral Production in In
- Page 110 and 111: necessary, therefore, that in infra
- Page 112 and 113: to the ports of Haldia and Paradip
- Page 114 and 115: Connectivity of Major Ports, brough
- Page 116 and 117: (iv)(v)(vi)(vii)At Visakhapatnam Po
- Page 118 and 119: was of the opinion that while the m
- Page 120 and 121: such an arrangement, the Ministry o
- Page 122 and 123: developed, controlled, and run by s
- Page 124 and 125: subject to overt and covert restric
- Page 126 and 127: consideration to the end use of the
- Page 128 and 129: (iii)parameters laid down in existi
- Page 132 and 133: the value addition question conside
- Page 134 and 135: In a system of ad valorem rates of
- Page 136 and 137: must provide revenues sufficient to
- Page 138 and 139: Box 6.1: Methods of Valuation of Ro
- Page 140 and 141: Another point to be borne in mind b
- Page 142 and 143: ailable, cognisable criminal offenc
- Page 144 and 145: e worked out. This should be string
- Page 146 and 147: 7.3 Considering the high-risk natur
- Page 148 and 149: Table 7.2: Minimum Listing Requirem
- Page 150 and 151: (ii)(iii)only. Such funds have not
- Page 152 and 153: addition, the minimum post-issue fa
- Page 154 and 155: and hence this ore should be conser
- Page 156 and 157: miners distort the market for their
- Page 158 and 159: 7.22 The current law does not make
- Page 160 and 161: is mostly of low grade magnetite. H
- Page 162 and 163: Most magnetite findings are entirel
- Page 164 and 165: in UK 206 kg, and in China it grew
- Page 166 and 167: metres. The use of down hole drill
- Page 168 and 169: 7.42 Despite the fact that SME mini
- Page 170 and 171: also be a consideration. However, t
- Page 172 and 173: price, reduce profitability, and pu
- Page 174 and 175: IMPACT ON DOMESTIC IRON ORE PRICES
- Page 176 and 177: 7.58 Export of iron ore fines on a
- Page 178 and 179: POLICY ON BEACH SAND MINERALS7.64 B
Chapter 6Augmenting State Revenues(Term <strong>of</strong> Reference no. 6)To examine ways <strong>of</strong> augmenting State revenues from the mineral sectorREVENUE TO STATES FROM MINING SECTOR6.1 Augmentation <strong>of</strong> their own sources <strong>of</strong> revenue has been a major concern <strong>of</strong> the stategovernments. The share <strong>of</strong> own tax receipts <strong>of</strong> states in the GDP has remained stagnant ataround 5–6 per cent. Non-tax receipts (including royalty from minerals) have also beenstagnating at around 3–4 per cent <strong>of</strong> the GDP. With ever increasing expenditure and growingrevenue deficits, the states are searching for means to augment their revenue receipts. It isnatural for states owning minerals to expect a fair share <strong>of</strong> revenue and economic benefitsfrom the mining sector.6.2 The major revenue accrual to the state governments from the mining sector is by way<strong>of</strong> royalty on minerals extracted from the mines within the state. Besides royalty, dead rentalso accrues to the states from lessees who have not been operating their mines for any reasonand thus not paying any royalty. In addition to royalty and dead rent, the states also get somerevenues from the initial application fee payable by a concession seeker, annual fee payableby RP/PL holder on the basis <strong>of</strong> the area held, surface rent, sales tax or VAT, local area tax(e.g. Panchayat tax), and stamp duty. Some states, for example, Orissa and West Bengal,have also imposed a cess as well as a surcharge on minerals in the belief that they have thenecessary powers to levy taxes under entries 49 and 50 in List II <strong>of</strong> the Seventh Schedule.However, revenues from all these sources are meagre, even in comparison with the modestreturns from royalty and dead rent.6.3 Conceptually, royalty is a payment made by the mining lessee to the state as owner <strong>of</strong>the mineral as a consideration for the mineral extracted and sold by the lessee. Dead rent is acharge to be paid by the lessee for that area included in the ML from which minerals are not120