Centre-state compromise on mines, minerals is in tatters, Pg11

Key Highlights:

• The Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) was amended in 2026, granting the central government control over all mineral and mineral land taxation.
• This amendment effectively dispossesses state governments of their right to tax major minerals, turning it into a discretionary allocation by the Union.
• The change could impact 10-20% of annual revenues for states with large mining economies.
• The amendment is seen as a challenge to fiscal federalism and potentially unconstitutional, given a 2024 Supreme Court ruling on states' rights over mineral taxation.

Detailed Insights:

• Historically, the MMDR Act, 1957, and its amendments progressively shifted control of major minerals from states to the Union government.
• An "uneasy federal compromise" previously allowed states to tax minerals or underlying land, despite the Union allocating mining rights.
• The MMDR Amendment Act, 2026, was passed after minimal discussion in Lok Sabha (5 minutes) and Rajya Sabha (40 minutes), despite its significant fiscal implications.
• The article suggests that the centralization of fiscal power, without providing "escape valves" for states, could lead to increased pressure on state finances, contrasting with China's approach to fiscal decentralization.
• It argues that mining requires delicate negotiation and that companies must earn the social and political right to mine, rather than just paying for a license.

Key Concepts Involved:

• Mines and Minerals (Development and Regulation) Act, 1957 (MMDR): The principal legislation governing the mining sector in India, regulating the development and exploitation of minerals.
• Fiscal Federalism: The division of financial powers and responsibilities between central and state governments in a federal system.
• Major Minerals: Minerals specified in the First Schedule of the MMDR Act, 1957, typically including coal, iron ore, bauxite, and others, whose regulation falls under the Union government.