Govt to set up expert group to revise royalty on minerals

The government will set up an expert group to look into royalty rates, which are due for review next year, for all major minerals other than coal, lignite and sand.

The 17-member study group will submit its report in six months. "We are very happy to constitute this group, whose approach will be innovative. It will not only review the royalty rates based on existing Act but will also recommend royalty as per the new mines Bill and the mechanism for its computation," Mines Secretary S Vijay Kumar told PTI. The committee will recommend royalty as per the new Bill after taking into account the liabilities on the lease holder as envisaged in the draft MMDR Bill, 2011, in the event of Parliament approving it, he added. The next upward revision in royalty rates is due in August 2012. Rates are revised every three years and the last revision was done with effect from August 13, 2009. Royalty is a tax levied by government on miners in lieu of transfer of ownership rights of mines and while the government views it as a source of revenue, industrialists look at it as part of production costs. The study group, headed by Additional Secretary Mines Sanjay Srivastava, will comprise 15 members. It will have a Director, Ministry of Mines, as convener. The members will include industry representatives, including Secretary General, FIMI, Director General, Confederation of Indian Industry, Secretary General, FICCI and Secretary General, ASSOCHAM besides Controller General, Indian Bureau of Mines. Besides, Mines Secretaries of Jharkhand, Karnataka, Orissa, Chhattisgarh and Rajasthan have also been inducted in the Group as members, Kumar said. Representatives of the Ministries of Finance, Coal, Steel, Atomic Energy, Governmentof India will also be memebrs of the group. The central Government has been vested with the powers under Mine and Minerals (Development & Regulation), Act, 1957 to enhance or reduce the rate at which royalty should be payable in respect of any mineral. There are 51 minerals prescribed in the second schedule of the MMDR Act 1957 and at present rates vary from mineral to mineral.The royalty on iron ore at 10%.
Meanwhile, the new Mines Bill MMDR 2011, is likely to be introduced in the winter session of Parliament after a ministerial panel, headed by Finance Minister Pranab Mukherjee, approved it in July.
The Bill provides for 26 per cent profit-sharing with project-affected people by coal mining companies, while non-coal miners will have to pay the displaced people an amount equivalent to royalty paid to the state government.
The draft Mines and Mineral Development and Regulation (MMDR) Bill, 2011, seeks to replace more than 50-years-old law under the same name.
It has also proposed a district development fund where the money accumulated from the 26% profit sharing by coal miners and an amount equivalent to 100% of royalty for non-coal miners, will be deposited.