Economic Times reports that central government is mulling to share with states the export duty that it levies on export of iron ores. If this happens this will add to the revenue of mineral rich states like Orissa. Following are some excerpts of the above mentioned report.

The Centre may consider sharing a portion of the recently imposed export duty on iron ore with states. The move is aimed at providing additional revenues to mineral-rich states, where royalty rates have remained abysmally low. Resentment expressed by several states over the Centre’s decision to pocket the entire levy on the mineral may also have swayed the Union government.

This year’s Budget has imposed an export duty of Rs 50 per tonne on iron ore fines with less than 62% iron content and Rs 300 for the remaining ore. The Centre expects to collect over Rs 2,000 crore from this duty. Even if half of it is shared, mineral-rich states — including Jharkhand, Chhattisgarh, Orissa and Karnataka — could get over Rs 1,000 crore. This would be four times the Rs 250 crore that states receive annually as royalty on iron ore.

“Minerals belong to the states and there is no reason why the Centre should levy a duty and pocket all its benefits. The idea behind the duty was to create a deterrence for exports. The Centre should either pass on the entire collection from this duty to states or share a substantial portion with them,” a Planning Commission official said.

At earlier meetings on the subject of iron ore exports, a few states raised the issue of sharing the export duty and changing royalty rates on minerals from the present specific duty to ad valorem duty. In fact, the Hoda committee, which framed the new mineral policy, has also recommended that royalty should shift to ad valorem rates benchmarked against Western Austrian levies, which works out to about 7.5% of the per-tonne price of minerals.