Centre consulting states on increasing royalty on mining: Govt

The Centre is in discussion with chief ministers o mineral producing states on their demand for increasing royalty on mining, and issue will be addressed by a proposed law, finance minister Pranab Mukherjee said today.

"I had discussions with chief ministers," he said in the Rajya Sabha during his reply on the Finance Bill.

He said suggestions have been received from chief ministers of Orissa and Chhattisgarh, while Jharkhand is also an interested state.

Mukherjee said their demand would be reflected in the new legislation and issue will be addressed.

The states had demanded that royalty rate needs to be made ad valorem for all minerals and be raised to at least 20% of the value.

At present the royalty is paid to the state on specific rates irrespective of the sale prices of the mineral.

A new mining legislation - Mines and Minerals (Development) Regulation Act 2010 is on the anvil that will replace the existing Act.

A ministerial panel, headed by the finance minister, has already arrived at a broad consensus on the bill that will address the royalty issue also.

On hike in export duty of iron ore, Mukherjee said he preferred preserving the raw material for the domestic industry and shipment of value added products.

He said there were juxtaposed views and one opinion was that it was colonial economy's nature to export raw material.

Mukherjee said he would not like to encourage export of iron ore but prefer outbound shipment of "pellets."

The government has quadrupled export duty on fines to 20% in the Budget for 2011-12. For lumps, the duty has been raised to 20% from 15% earlier.

India had shipped over 100 million tonnes iron ore in 2009-10 and 70-80% of that was in the form of fines.