Coal royalty revision shouldn't be enforced automatically: EAC

The EAC to PM recommends that any revision in royalty on coal should not be made applicable automatically to the states levying cesses, reports Chetan Chauhan.

Published on: Dec 5, 2006, 17:37:00 IST

None | By Chetan Chauhan, New Delhi

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The Economic Advisory Council (EAC) to the Prime Minister has recommended that any revision in royalty on coal should not be made applicable automatically to the states levying cesses. West Bengal is one of the states that levies 25 per cent cess on coal.

Minister of state for coal, Dasari Narayan Rao, said in Lok Sabha on Tuesday that EAC has further recommended that royalty to these states should be adjusted for local cess so as to limit the overall revenue to the formula based yield.

The EAC has also recommended that the royalty may be shifted from specific levy to a combination of specific and ad valorem levies, he said, in a statement on a calling attention motion by Braja Kishore Tripathy of BJD and two others.

This, the EAC felt will provide a certain minimum royalty under the specific component plus a share in the price as a variable component.

Noting that the royalty rates on coal were already high as compared to those in other countries, the EAC said this should be kept in view while fixing royalty in future.

Rao contended that the incidence of cess levied by state governments together with the enhanced royalty rates would have a cascading effect on the coal consuming sectors and this would cause disparities across the states. “In 90 per cent cases the consumer is power generating companies and any increase in royalties will have an impact on the final price of the electricity,” he said.

Finance Minister P Chidambaran, who intervened in the discussion, said the decision on EAC recommendations would be made at the earliest in Cabinet Committee on Economic Affairs.

Rao assured that that interests of all the stakeholders would be taken into account while deciding on the revision of royalty rates of coal and lignite.

Royalty rates on other minerals (barring fuel and minor ones) were last revised in October, 2004 and hence no revision would be possible till October next year, the minister said. “The royalty of 16 per cent of the average price of coal is quite reasonable and comparable with international trends,” he said.

At present, ad valorem regime has been adopted in respect of as many as 39 minerals.

He said the Mines ministry has constituted a study group under the chairmanship of Additional Secretary to consider the next revision of royalty rates on major minerals (other than coal, lignite and sand for stowing).

Email Chetan Chauhan: chetan @hindustantimes.com

ABOUT THE AUTHOR
Chetan Chauhan
Chetan Chauhan is the National Affairs Editor looking into all aspects of news and features from across India. A Chevening scholar with over three decades of experience in reporting and news management, Chetan has extensively covered all important aspects of the social sector, political economy, environment and climate change nationally and internationally. He did a journalism course at the Reuters Institute of Journalism in Oxford and Digital Media training at Nanyang Technological University in Singapore. He started as a reporter with The Statesman in 1996 and joined the Hindustan Times in 2000 in the metro bureau covering environment, crime and Delhi politics. He covered hot local news, from the Jessica Lal murder case to the rebellion of Delhi Congress MLAs against then Chief Minister Sheila Dikshit, to the replacement of toxic vehicle fuel with cleaner compressed natural gas (CNG) in the national capital. Some of his stories on air pollution became part of the Supreme Court’s landmark MC Mehta versus Government of India case in the National Capital Region (NCR), forcing the government to take corrective measures. As part of the national political bureau since 2004, he covered important central sectors such as environment, education, social justice, labour, rural development, water resources, renewable energy, agriculture, broadcasting and the Planning Commission for more than a decade producing several exclusive and investigative breaking stories. His specialisation is the environment, having covered at least a dozen United Nations global conferences on climate change, biodiversity and wildlife including climate summits in Paris, Copenhagen and Bali. He also covered India’s two five-year plans ---11th and 12th and reported on drafting and execution of right based laws such as Right to Education, Right to Information and rural job guarantee law, MG-NREGA, now being introduced in new format as VG-RAM-G Act. He has in-depth knowledge of social sector issues. He was one of the first to report on tigers vanishing from Sariska and Panna wildlife reserves in 2004 and 2008, respectively, leading to the setting up of the National Tiger Conservation Authority (NTCA) and the introduction of stringent penal provisions for poaching. He has written extensively on the rising human-animal conflict in India and the degradation of India’s biodiversity hotspots because of mining and other activities. Since 2004, Chetan has covered Parliament comprehensively and participated in training on the nuanced coverage of Parliament proceedings. He has travelled extensively across India to cover national and provincial elections since 1998, especially in the Hindi heartland states, considered India’s road to power. He writes a regular column for Hindustan Times, Ecostani, on important national politics, economy, Himalayan ecology and environmental issues. His other responsibilities include providing inputs for edits and edit page articles for the publication, apart from managing news flow from across India.Read More

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