Odisha gains most from hike in royalty

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Odisha, Karnataka, Jhar­khand, Goa and Chhattisgarh will be the biggest beneficiaries of the government’s decision to hike the royalty rates on 23 minerals, including iron ore and bauxite, last week.

Of the 19 mineral-rich states, royalty revenues will go up by 45 per cent to 50 per cent in the five states mentioned above. Together, these five states would earn Rs 3,867.73 crore more from mining royalties over original estimates during this financial year.

Royalty incomes of all the 19 states together wo­uld rise by 41.12 per cent to Rs 13,274.17 crore from Rs 9,406.44 crore. Royalty rate on iron ore has been raised to 15 per cent from the prevailing 10 per cent, following persistent demands from state governments.

Odisha will be the biggest beneficiary with mineral revenues set to rise by 50.17 per cent to Rs 4,879.92 crore from Rs 3,249.54 crore two years ago on account of the 0.1 per cent increase in royalties on bauxite and 5 per cent in that on iron ore.

Chhattisgarh’s revenues from mineral royalties will rise by 46.77 per cent to almost Rs 2,000 crore from Rs 1,346.31 crore. Karnataka, where the mining ban was lifted recently, will gain 45.57 per cent more reven­ues with mineral royalties rising to Rs 513.44 crore from Rs 352.71 crore now.

Goa will gain 49.99 per cent more at Rs 1,413.98 crore against Rs 942.74 crore at present.

Andhra Pradesh, Chhattisgarh, Jharkhand, Odisha and Rajasthan had demanded a hike of between 12 per cent and 32 per cent in iron ore royalty rate. While the local industry has been opposing a hike in royalty rates that are due for revision once in three years, the government seems to have stuck to the recommendations made by an expert panel after a meeting between the prime minister and secretaries of the eight infrastructure ministries.

The finance minister had proposed to hike royalty rates on the 23 minerals in his budget speech on July 10 “to ensure greater revenues for the states”.

While the state governments collect royalty on minerals, the Centre has the power to revise them periodically. Royalty rates on major minerals barring coal, lignite and sand are revised every three years. The rates were last revised in August 2009.

Opposing the proposed hike, industry bodies had pointed to lower duties in countries like Brazil, which is the largest producer of iron ore, at 2 per cent, South Africa at 3 per cent and Australia between 2.7 per cent and 7.5 per cent.

In the case of metallurgical-grade bauxite and laterite, royalty rates have been revised to 0.6 per cent of the price of aluminium prevailing on the London Metal Exchange (LME) against 0.5 per cent now.

For rock phosphate, with 25 per cent P2O5 and above, the royalty rate has been revised to 12.5 per cent from 11 per cent earlier. The rate remains unchanged at 6 per cent for lower-grade phosphates. The new royalty rate for barites has been set at 6.5 per cent against 5.5 per cent earlier.

badarinath@mydigitalfc.com

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