A Parliamentary panel has recommended removal of the provision of 26 per cent profit sharing by coal and lignite miners with project-affected people and replacing it with a system based on royalty payments by the firms concerned.

The amendment was proposed by the Coal Ministry to the Standing Committee, headed by Trinamool Congress MP Kalyan Banerjee.


The Standing Committee on Coal and Steel , which on Tuesday presented its report to Parliament, gave its go-ahead to other crucial proposal of the new Mines Bill of sharing an amount equivalent to royalty by non-coal and non-lignite miners with project-affected persons.

The Mines and Mineral (Development and Regulation) Bill, 2011, seeks to replace a more than half-a-century-old law under the same name and was tabled in Parliament in December, 2011. Later, it was sent to the Standing Committee.

As per the provisions of the new Mines Bill, coal and lignite miners would have to share 26 per cent of the profits from their mines with people impacted by projects. For non-coal and non-lignite miners, the new law has proposed payment of an amount equivalent to royalty paid by the companies to the State Government. The collected money was proposed to be used for the welfare of the project-affected persons through a newly created District Mineral Foundation (DMF).

However, the Standing Committee recommended that “in case of coal and lignite, the mechanism for payment to DMF on the basis of royalty paid during the financial year may be worked out instead of an amount equal to 26 per cent of the profit and amendment be made in the relevant clause as proposed by the Ministry of Coal.”

It also called for bringing the DMF under the CAG audit purview and asked the government to increase representation of local community in the DMF council.

In its recommendations, the Committee also said the State governments should get free hand in deciding State level cess on the miners. It said the present provisions of fixing the rate of cess not exceeding 10 per cent of the royalty was ‘interfering’ with the rights of the State Government.

New provision

It also recommended adding a provision in the new Mines Bill “whereby no extra or any weightage is assigned by the States concerned for setting up of industries in that State only” while allocating the mineral concessions.

This would help in overcoming regional disparities and promote development across regions/States in setting up of mineral based industries, the Committee said.

The new Mines Bill proposes to give full powers of extension and grant of mineral concession to States.

It also provides for allocating minerals concessions for all major minerals, except coal and lignite, mainly through the competitive bidding route.

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