Mineral royalty revenue jumps 32% for states during FY17 to FY22

Mineral rich states got a mining boost

The Supreme Court, on July 26, granted states the power to levy taxes on mineral rights, contending that royalty is a contractual consideration, opening the doors for the states to earn more revenues from mining operations.

A Moneycontrol analysis of data from ministry of mines shows that the states have already witnessed a surge in revenues from mining, as royalty revenues expanded at a compounded annual growth rate of 32 percent between FY17 and FY22.

The top five states, including Odisha, Chhattisgarh and Jharkhand, have earned every higher royalty revenue during this period.

In the case of Odisha, for instance, royalty payments from mines jumped seven times between FY17 and FY22 to Rs 17,983 crore. Chhattisgarh’s royalty payments increased eight-fold during this period to Rs 8,839 crore.

Mineral production earnings in Odisha were twice as much in two years after the pandemic than what was garnered in the six years between FY16 and FY21.

More recent data shows that India’s mineral production has doubled to Rs 1.4 lakh crore in 2023-24 from five years ago.

India has auctioned 385 mines since FY16, with Rajasthan, Odisha and Madhya Pradesh accounting for nearly half of the auctions.

The judgment is likely to open more revenue streams for states, especially as they look to auction critical minerals, which are important for India’s foray into renewable energy and new economy areas like electric vehicles.

The fourth tranche of critical mineral auction was launched in June, with 21 blocks expected to be put on auction. The government had announced royalty rates for some of the critical minerals in February.