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State revenues may dip further if Shah panel recommendations are accepted

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Reported by Chinmaya Dehury
Bhubaneswar, Jan 13:

iron ore mining
While mining activities in the state have already been hit hard ever since the Justice Shah Commission began inquiring into the multi-crore mining scam, the already dipping revenue collection from the sector is all set to sink further if the Commission’s recommendations for a cap on production of iron ore and closure of several mines in the state are accepted.
The state government had fixed a target of Rs 6600 crores as revenue from the mining sector in 2013-14. However, it had managed to collect only Rs 2190 crore by August 31, 21013 as against a collection of Rs 2256 crore by 31 August, 2012. Officials said tax collection would have been much more if all the mines were operational in the Sundargarh and Keonjhar belt.
It is to be noted that the Odisha government had set a revenue target of Rs 26,350 crore for 2013-14, 7.8 per cent higher than the budget estimate of Rs 24,430 crore set for the fiscal.
The latest position on collection of Own Tax Revenue and Non Tax Revenue till 31 August, 2013 reveals that the State Government has collected Rs. 8627 crore of Revenue of which Rs.5889 crore is from Own Tax Revenue.

“The fact remains that if the recommendations of Shah Commission are accpted, the sector will be facing tough times ahead. The commission has recommended a cap on iron ore production, review of environmental clearances of 55 mines including Tata Steel, SAIL and JSPL. It will drastically affect revenue collection from the mining sector,” said an official of the Steel and Mines department.
The Commission has recommended that production be capped between 50 and 55 million tonnes per annum (MTPA), with an increase of 7.5 per cent per annum or equivalent to the growth of steel and sponge iron industry’s requirement.
However, the state government has increased the cap on iron ore production in the state to 57 million tonnes (MTs)in 2013-14. While the cap would be 13 MTs in Koira sector, it would be 44 MTs in Joda sector.
The government had imposed a cap on iron ore production up to 52 MTs annually in Joda and Koira sector in 2012-13. Of the maximum permissible quantum of 52 MTs of iron ore output, 40 MTs was the limit prescribed for Joda mining circle with the remainder 12 MTs for Koira circle. Joda and Koira are the two most prolific iron ore mining sectors in Keonjhar district.
However, the Central government has not agreed with the commission’s recommendations in its draft action taken report. “Fixing a cap on the production of iron ore, solely on the basis of reserves and resources identified at this point of time, will not be in the interests of the industry,” the Mines ministry said.
The state government officials also favoured the argument of Central government stating that the move of the state government to increase the production of iron ore in the state to carer to the needs of the industries reeling under closure, loss of production and a nation-wide crackdown on illegal profiteering.
Concerned over rampant extraction of iron ore and its deleterious impact on environment in the state, the Odisha government had imposed restrictions on mining activities.
The state produced about 72 MTs and 66 MTs of iron ore in fiscal 2010-2011 and 2011-2012, respectively. Similarly, iron ore export from the state was 16 MTs and 10 million tonnes in fiscal 2010-2011 and 2011-2012 respectively.
Meanwhile, the analysis of the state’s finances for the half year ending September 2013-14 showed that growth in state’s Own Revenue stands at 12.07% compared to 13.02% achieved during the corresponding period of the previous year.
There has been a decline in collection of Own Tax from Land Revenue by 8.49% and 13.26% in Motor Vehicle Tax as compared to the collection made during the corresponding period of the previous year. Besides, state plan expenditure has shown growth of 8.86% over the corresponding period of previous year.