Bhubaneswar :
While the central government is yet to take any
decision on the royalty rates, Odisha, the largest iron ore producing state in
India, has demanded to raise royalty rate of iron ore to 20 percent of the sale
price on ad-valorem basis taking into account either FoB price of NMDC or 10
per cent less from CIF price at China.
Presenting
the views of Odisha government before the study group on revision of rates of
royalty and dead rent for minerals state principal secretary Steel & Mines,
Rajesh Varma has said that the proposed 15% royalty on iron ore is meager as
compared to the huge profits accrued by miners. The study group has been formed
by the union mines ministry for revision of royalty of iron ore, manganese ore,
chromite, bauxite, limestone and dolomite. Headed by the Special Secretary,
Ministry of Mines, the group has proposed to raise royalty rate on iron ore to
15 per cent of sale price on ad-valorem basis, up from 10 per cent presently. Mr.Verma
said that super normal profit or windfall gains being generated in iron ore
mining sector far exceed the level of investment or risks involved in the
activity.
These
vast profits run into thousands of crores of rupees competing with annual plan
size of Odisha, said he, adding the state unfortunately gets only a meager amount in terms of royalty, while fabulous profits are being made by a few
private mining companies.
Giving
out details, Mr.Verma said, as the lessees earn abnormal profits in mining of
iron ore and the percentage of average profit before tax (PBT) to ex-mines cost
ranges between 304.47 per cent to 1423.89 per cent in case of iron ore. He said
that taking this type of super normal profit into account, Mineral Resources
Rent Tax (MRRT) should be levied on iron ore, to be charged at 50 per cent of
the surplus rent, which should accrue to the State adding as and when surplus
rent decreases the tax too will automatically decrease. The tax collected will
be utilized for improving social and physical infrastructure and strengthening
welfare measures to improve the livelihood of the poor people of Odisha, said
Verma.
The
study group has suggested royalty for iron ore at 15 per cent of sale price
against 20 per cent demanded by the State. Similarly, for all grades of
manganese ore, the group has recommended royalty at five per cent of sale
price, lower than the State's demand of 12 per cent. On chromite, the group has
recommended a hike of 2 per cent from existing 10 per cent, while state has
demanded 20 per cent of the sale price on ad-valorem basis taking into account
either FoB price of NMDC or 10 per cent less from CIF price at China.
During
2008-09, Odisha collected royalty to the
tune of Rs.1380.59 crore, which went up to Rs.2020.71 crore in 2009-10.In
2010-11, the state collected Rs.3330.46 crore, in 2011-12, Rs.4586.64 crore and
in 2012-13, Rs.5352.94 crore of royalty from various minerals, according to
official sources.
-Tapan Moharana
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