The Union cabinet's decision to raise the royalty on minerals is expected to enrich the Odisha government's coffers by Rs 2,000 crore annually.

The increase, especially on iron ore, fulfils an old demand from here. Odisha is the top ore producing state.

“We had demanded a hike in iron ore royalty to 20 per cent and the Centre has approved the revision to 15 per cent. In any case, it is welcome and will bring in incremental revenue of around Rs 2,000 crore every year f we are able to sustain the normal production levels,” said steel & mines minister Prafulla Mallick.

“Due to non-revision of royalty rates (since August 2012), we have piled up a revenue loss of about Rs 4,000 crore. We will urge the Government of India to compensate,” said Mallick.

Mining revenue is the single biggest contributor to Odisha's non-tax revenue. It had dropped by 19.9 per cent in the April-June period to Rs 1,270 crore from Rs 1,585 crore in the year-ago period, as 18 major iron ore and manganese mines continue to be under suspension on a Supreme Court order.

The opposition Congress party has also hailed the decision. “Definitely a welcome step," said Narasingha Mishra, it head and that of the opposition in the state's legislative assembly.

Bharatiya Janata Party leader Sajjan Sharma said, “Ever since the Narendra Modi government came to power at the Centre, it has been fulfiling one after the other demand of Odisha. The state will benefit in a big way due to the royalty hike.”

The royalty increases are estimated as enhancing the revenue of mineral-rich states by 41 per cent, on the whole. The previous revision was in August 2009.

The latest one was based on the recommendations given in June 2013 by a group formed by the Union mines ministry.

Source : Business Standard...