The Ministry of Mines has constituted a committee for examining the double calculation of royalty due to inclusion of the same in calculation of average sale price (ASP) of minerals and developing national mineral index (NMI) for valuation of mineral resources.
The committee has prepared an approach on developing NMI. The committee has invited suggestions on the same from state governments, union territories, mining industries, stake holders , industry associations etc.
Structure of the NMI system
Two levels of indices are proposed. First is a state mineral index (SMI), calculated from a weighted median of sales made from the mines within the state as compared to the central value of sales in the base month. Second is a central value taking into account all the sales made within the country (either for domestic consumption or exports), and also imports of the specified month. The same will be compared to the central value for the base month, to arrive at the NMI.
The value of SMI for the base month would be taken as 100. This base month can be any month which the government may decide or can even be a month which has gone by, since the sales and import data are being captured every month in the present systems but should attempt to be as reflective of the realities of the sector as far as possible and not be distorted due to any black swan event, such as pandemic.
In a similar way, we can consider all the states together along with imports with grades now having national proportions as weights to compute the national index.
The relative sale of various grades over past four years could be taken into account, and the basket will be revised once in three years by the government to capture the changing trends in consumption in the country.
The NMI can theoretically have multiple uses, such as for the purposes of auction over which premium can be calculated, or for determination of liability towards statutory payments, such as royalty (where it is expressed in ad valorem terms), DMF and NMET contributions; as a parameter for quoting premium on auction; can be used as an indicator for national price for any mineral at any point of time for use in other indices; for commodity trading as an index which can be traded on (akin to BSE index or NSE index); etc. But we have to see for what purposes this index would be suitable.
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