Odisha miners to pay royalty for tribal welfare

State CM approves formulation of new mining regulation; funds to be used for local infrastructure in Scheduled Areas

By Sugandh Juneja
Published: Thursday 13 June 2013

Odisha chief minister Naveen Patnaik has recently approved formulation of a new mining regulation in the state aimed at tribal welfare. Once approved by the State Cabinet, the Odisha Scheduled Areas Development of Mine Bearing Area Regulation 2013 would enable collection of funds from mines working in the Scheduled Areas of the state.

Profit for people

The regulation aims to collect an amount equal to royalty from mine owners. Royalty is a tax paid to the state for extracting a mineral. The collected amount will go to the peripheral development fund (PDF) already operational in the Scheduled Areas. Now, there is a proposal to form a peripheral developmental committee (PDC), which would collect funds from the mining lessees, to be deposited in the PDF. The funds would be used by the PDC for setting up and maintenance of water resources, hospitals, schools, drinking water, sanitation, communication and road infrastructure in the Scheduled Areas.

Recently the Mines and Minerals (Development and Regulation) Bill 2011 (MMDR) was tabled in Parliament which aims to introduce the profit sharing provision for the first time in the country. According to the Bill, all major mineral mines such as iron ore and limestone, will have to shell out an amount equal to royalty to a district mineral foundation (DMF). This foundation will then decide where and how the money can be spent in that particular district. For minor minerals such as granite, the percentage of royalty has to be decided by the state. For coal, while the Bill suggested sharing 26 per cent of the profit with DMF, the standing committee has suggested that a certain percentage of royalty be worked out for this resource as well.

Given the fact that the MMDR Bill is in the Parliament, this additional similar regulation is a surprise. It is indeed even more interesting since Patnaik has recently opposed the MMDR Bill in a letter to the Prime Minister on the ground that it encroaches on the state’s rights by transferring certain powers of the state to the Centre.

According to an analysis by Delhi-based NGO Centre for Science and Environment, if the MMDR Bill provision is implemented, Odisha will receive Rs 1,665 crore annually for DMFs.

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