Odisha Has Not Counted What Section 9D of the Amended Mines Act Will Cost It

The news

Bhubaneswar. On Thursday, September 24, legislators across parties put as many as 13 written questions to the Odisha government about the Mines and Minerals (Development and Regulation) Amendment Act, 2026, The Hindu reports. The recent amendments by Parliament limit the power of State governments to impose taxes, cesses and other levies on mineral rights and mineral-bearing lands. The focus was Section 9D, which stops States from placing independent taxes or cesses on mineral rights or mineral-bearing lands without the Union government’s approval. A cess is a tax raised for a named purpose, and a ‘mineral right’ is the legal right to win a mineral from the ground, usually held through a mining lease. Steel and Mines Minister Bibhuti Bhusan Jena said the State has not yet made a quantified assessment of Section 9D’s effect on its revenue. “No specific estimate of financial gain or loss has been made at this stage regarding the amended provisions,” he said, adding that the State will assess the impact after the Centre frames the necessary rules and regulations. The Opposition pointed out that Odisha’s Advocate General had defended a levy on mineral-bearing lands before the Supreme Court. The Minister replied that figures and positions published in the Odisha Review, a government publication, or placed before the Supreme Court were not being treated as a departmental assessment of Section 9D’s present impact. “Any such comparison would be made only after the legal and operational implications of the amended provision are fully ascertained,” he said. Chief Minister Mohan Majhi and former Union Education Minister Dharmendra Pradhan had earlier dismissed concerns about a loss to the exchequer. The Biju Janata Dal (BJD) and the INDIA bloc parties have called protests in front of the Assembly on September 28 and 29 respectively, alleging that under the amended Act the State stands to lose over ₹1 lakh crore in tax arrears and ₹12,000 crore in annual revenue. The BJD said its president Naveen Patnaik would lead the rally demanding repeal of the Act, and that the protest would be expanded to the entire State. “Since Odisha possesses 44% of the total mineral resources available in the country, the State will suffer the maximum loss,” the party said. These loss figures are the Opposition’s; the government has offered none of its own. The syllabus link is GS2 on Centre–State financial relations and GS3 on resource mobilisation and mining.

Static syllabus linkage

1. The Constitution splits mining between Union regulation and State taxation. Entry 54 of the Union List gives Parliament power over the regulation of mines and mineral development to the extent that Parliament declares by law that Union control is expedient in the public interest. Entry 23 of the State List gives States power over mines and mineral development, but subject to Entry 54. Entry 50 of the State List lets States levy taxes on mineral rights, subject to any limitations imposed by Parliament by law relating to mineral development. Entry 49 of the State List covers taxes on lands and buildings. The Mines and Minerals (Development and Regulation) Act, 1957 is the declaration made under Entry 54, and so it is the law through which Parliament may limit the States’ Entry 50 power.
2. Mineral Area Development Authority v. Steel Authority of India (2024) gave States the power that Section 9D now limits. On July 25, 2024, a nine-judge Constitution Bench of the Supreme Court held by an 8:1 majority that royalty paid under Section 9 of the MMDR Act is not a tax but a contractual payment made to the lessor for the right to extract minerals. Chief Justice D.Y. Chandrachud wrote the majority opinion, and Justice B.V. Nagarathna dissented. The Court held that States have legislative competence to tax mineral rights under Entry 50 and mineral-bearing lands under Entry 49 of the State List. It found that the MMDR Act, as it stood, did not limit that taxing power. In a follow-up order in August 2024, the Court allowed States to recover past dues from April 1, 2005, to be paid in instalments over twelve years, and waived interest and penalties on demands for the period before July 25, 2024. This is the background to the arrears figure the Opposition in Odisha now cites.
3. The 2015 amendment moved mineral concessions to auctions and created District Mineral Foundations. The MMDR Amendment Act, 2015 made auction the only method for granting mining leases and composite licences for major minerals. The aim was to end discretionary allocation and to capture a larger share of mineral value for the State. Section 9B created a District Mineral Foundation (DMF) in every mining-affected district. Leaseholders pay the DMF an amount linked to royalty, not exceeding one-third of the royalty, and fixed at 30% of royalty for leases granted before January 12, 2015 and 10% for auctioned leases. Section 9C created the National Mineral Exploration Trust, funded by 2% of royalty. DMF spending is guided by the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY).
4. Royalty and taxes are different instruments with different owners. Royalty rates for major minerals are fixed in the Second Schedule of the MMDR Act, and the Centre may not revise them more than once in three years. Although the Centre fixes the rates, royalty is collected by and belongs to the State government, since minerals are part of the land. A tax on mineral rights or mineral-bearing land is a separate sovereign levy, which under Article 265 must have the authority of law. Section 9D, as The Hindu describes it, does not touch royalty. It touches this second, separate stream, which the 2024 judgment had opened up for the States.

Why UPSC loves this

1. GS2 asks about fiscal federalism through concrete disputes. Mains has repeatedly asked about the working of Centre–State financial relations, the GST compensation dispute and the role of the Finance Commission. The mineral taxation dispute is a newer and sharper case. A Supreme Court verdict expanded State taxing power, and Parliament then narrowed it through a limitation that the Constitution itself provides for. An answer that quotes the exact wording of Entry 50 will stand out.
2. Prelims tests Seventh Schedule entries and the royalty question. UPSC has asked which subjects fall in the Union, State and Concurrent Lists, and whether particular levies are taxes or fees. After the 2024 judgment, ‘royalty is a tax’ has become an obvious trap statement. The DMF, its funding and PMKKKY are regular Prelims material on mining and tribal welfare.
3. GS3 links mineral policy to investment and regional development. Mining questions in GS3 have covered the auction regime, critical minerals and the resource curse in eastern India. The Odisha debate lets a candidate show both sides. Investors want predictable costs, while mineral-rich but poorer States want a fair share of the value taken from their land.

Analysis

1. Section 9D is constitutionally secure, but its timing makes it look like an override of the Court. Entry 50 expressly makes the State’s power ‘subject to any limitations imposed by Parliament by law relating to mineral development’. So a Union law requiring Central approval for new levies is exactly what the Constitution contemplates. The Supreme Court in 2024 said only that the MMDR Act, as then written, contained no such limitation. It did not say Parliament could not add one. The political cost comes from the sequence: a judgment in favour of the States, then an amendment that narrows what they won. States will read this as the Union reversing a result it lost in court, even though the method is lawful.
2. The more important question is the arrears, and the papers do not settle it. The Opposition’s ₹1 lakh crore figure is described as tax arrears, which points back to the dues the Supreme Court allowed States to recover from 2005. The report does not say whether Section 9D acts only on future levies or also affects the recovery of past demands. If it only requires approval for new taxes, the arrears claim may be overstated. If the rules reach back to past demands, the loss is real and very large for one State. This is why the Minister’s answer, that nothing can be assessed until the Centre frames rules, is true but also an admission that the State’s largest fiscal question now depends on New Delhi.
3. Not counting the cost is itself a governance failure. A State that holds 44% of the country’s mineral resources, in the BJD’s figure, should have a working estimate of the fiscal effect of a major change in mining law. It should have one even if it is only a range with stated assumptions. The government told the Assembly that the figures it placed before the Supreme Court do not count as a departmental assessment. That is a lawyer’s distinction, not an analyst’s. The counter-view is fair: until the rules say which levies need approval and on what criteria, any figure is guesswork, and publishing a guess could weaken the State’s bargaining position with the Centre.
4. Investors gain predictability, but the price is paid by mining districts. Industry’s worry after 2024 was that every mineral State would add its own cess on top of royalty, DMF and National Mineral Exploration Trust contributions, making Indian minerals and the steel and power made from them costlier. A single approval gate reduces that risk and keeps auction bids comparable across States. But the people who live with the dust, water stress and displacement of mining are in the same districts whose governments now lose an independent revenue tool. The DMF was meant to return value to them. If State levies are capped, the fairness of the mining bargain depends even more on whether DMF money is actually spent well.
5. Odisha’s internal politics shows why federal questions become party questions. Odisha has a BJP government, and the Chief Minister and a senior BJP leader have dismissed the loss concerns, while the BJD and INDIA bloc are mobilising on the street. When the same party rules in Bhubaneswar and New Delhi, a State government has little room to fight the Centre on a federal question. Ruling party legislators still joined the questioning, according to the report, which suggests the fiscal worry crosses party lines even where the public positions do not. Federalism works best when States defend their fiscal base whichever party is in power, and this episode tests that.

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