The Hindu Business Line : Orissa, Chhattisgarh, Jharkhand seek ad valorem royalty for all minerals

DISCUSSING ROYALTY: The Orissa Chief Minister, Mr Naveen Patnaik, greets his Jharkhand counterpart, Mr Madhu Koda, at the Chief Ministers' conclave in Bhubaneswar on Wednesday. The Chhattisgarh Chief Minister, Mr Raman Singh, is also present. — Ashoke Chakrabarty

Bhubaneswar , Dec. 27

The Chief Ministers of Orissa, Chhattisgarh and Jharkhand, Mr Naveen Patnaik, Dr Raman Singh and Mr Madhu Koda respectively, came together on Wednesday to urge the Central Government for a revision of royalty on iron ore, coal and other minerals.

Royalty on iron ore should be fixed at the rate of 20-25 per cent of its sale price ex-mine without any linkage with the land tax on mineral-bearing lands, they said in a joint memorandum addressed to the Prime Minister, Dr Manmohan Singh.

They also demanded that export of iron ore be reduced gradually and banned eventually.

The conclave was organised here on the initiative of Mr Patnaik.

They said that exports of iron ore, particularly lumps, should be frozen at the current level and a mechanism be worked out to reduce them gradually to ensure availability of iron ore for the domestic value adders at economic prices.

Ad valorem rates

They pointed out that while most minerals had fully ad valorem rates of royalty at present, iron ore, limestone and dolomite had tonnage-based royalty.

Royalty on iron ore worked out to only 1-2 per cent of its sale price, they said. "The present tonnage-based royalty system be changed over to ad valorem regime of royalty for all minerals and that the tax or cess levied by the State on mineral bearing lands should in no way be linked with the payment of royalty on minerals."

While opposing the recommendation of the Hoda Committee for continuing the present regime of iron ore exports, the Chief Ministers, however, welcomed the Committee's stand that the States having mineral deposits should be encouraged to follow the strategy of value addition in order to maximise employment opportunities for the local youths and enhance generation of tax and non-tax revenue.

In another memorandum, the trio urged the Centre to make rules to enable the States generating electricity impose tax on generation or production of power. They told presspersons that they would meet the Prime Minister soon to apprise him about the various issues involved "so that the mineral-rich States will not continue to be the most backward States".