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Jharkhand; Struggling With Fund-Crunch

Amid a deficit budget of Rs. 80,200 crore for 2018-19 fiscal, the State exchequer is said to be reeling under acute financial crunch. The Government is believed to have been left with no option except to point out defaulters in a bid to regain its financial strength

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Is Jharkhand struggling to cope with a financial crunch? The way the BJP-led Raghubar Das Government in the State is mulling ways to mobilise resources, the answer would be in the affirmative.


Amid a deficit budget of Rs.80,200 crore for 2018-19fiscal, the State exchequer is said to be reeling under acute financial crunch. Various payments to the tune of about Rs.1000 crore are said to have been withheld for want of adequate balance in the Government’s treasuries. Sources confided that the crisis confounded owing to the Government decision to exercise populist-measures at the cost of major revenue sources. They contended that major sources of revenue included Land Revenue, Excise duties on liquor and Royalties from minerals mining. Incidentally, the present dispensation came out with the major decision to dole out land-deed to women by reducing registry cost to Rs.1, make partial ban on selling of liquors and close down 21 iron ore mines. Besides, thousand of appointments made in different sectors cost the Government dearly in form of their salary payments. The Government is, as such, believed to have been left with no option except to point out defaulters in a bid to regain its financial strength.

If well-placed sources in the Government are to be believed, the Government aims to realise substantial funds from penalties to be imposed on defaulters in the mining sector in particular. As per an estimated target, the Government is supposed to mobilise substantial liquidity of over Rs. 33,000/- crore from penalties in the mining sector, sources said.

It is said that the Government has pegged a target of Rs. 2700 crore to be realised from penalties imposed on companies dealing in iron-ore mining in the State and Rs. 30,000 crore from penalties on coal and other minerals mining operations.

The Jharkhand Government has cancelled leases to 21 iron-ore mines in Kolhan region of the State in the light of the recommendations of the MB Shah Commission that was constituted at the behest of the Supreme Court to probe into illegal mining of iron-ore across the country. The decision not only dealt a blow to mining operations and employment, but it has had a major collateral impact on the functioning and employment at factories that depend largely on iron-ore for their production and the crusher industries as well. Of the total 1978 crushers -- that also include those of stone-chips -- around 500 iron-ore crushing units have consequently been shut down in the area.

Although the State Government had initially come out with a figure of Rs.7,598 crore to be realised against penalties from illegal mining of iron ore in Jharkhand in the light of the calculation made by the Shah Commission, the figure has been subsequently slashed down to around Rs 2700 crore with modifications in the Supreme Court’s decision to waive interest amount on dues and change base year for calculation of accumulative penalties from 1994-95 to 2000-01.

If well-placed sources are to be believed, 18 companies have been identified as defaulters including Steel Authority of India Limited (SAIL), Tata Steel, Anil Kumar Khirwal, Rungta, Mines, Usha Martin, Adhunik and Shah Brothers.

SAIL alone has been levied a penalty of Rs. 1300 crore and it is said to have deposited around Rs. 150 crore while Anil Kumar Khirwal has made a payment of about Rs. 2 crore as penalty. Mining companies have been slapped penalties for extracting excess iron and manganese ore beyond the limits approved under environment clearance (EC).

The Supreme Court had, however, set the deadline of December 31, 2017 for making the recovery from the mining companies. But barring a few, most of the defaulters have failed to pay the penalty so far. Incidentally, the court has directed to accrue interests of 24 per cent on the payment of penalties after the deadline of December 31.

Similarly, penalty to the tune of around Rs. 30,000/- crore have been slapped on coal and other minerals - including bauxite, limestone, manganese ore, etc- mining companies for extracting beyond the permissible limit.

Meanwhile, as per the statement made by Union Coal Minister Piyush Goyal in Parliament in 2016, none of the 21 coal mines auctioned or allocated to companies including Essar Power, Hindalco, JSW Steel, SAIL and NTPC were operational and awaiting various clearances. The Minister had said "21 coal mines located in Jharkhand have been auctioned/allocated under the provisions of the Coal Mines (Special Provisions) Act, 2015 and the Rules made thereunder. However, none of the coal mines has commenced production of coal as various clearances are under progress,"

The minister further informed that Rs 1,12,398 crore was the estimated revenue which would accrue to Jharkhand from the auction and allotment of these coal blocks during the life of mine/lease period.

"The total revenue earned so far from the coal mines allotted and auctioned in Jharkhand is Rs 458,10,61,334 crore,out of which an amount of Rs 453,31,90,720 crore has already been transferred to the state," the minister had said.

Some of the mines in Jharkhand which were auctioned include Tokisud North bagged by Essar Power MP Ltd, Kathautia and Dumri won by Hindalco Industries Ltd and Moitra bagged by JSW Steel Ltd. Mines and which were allocated include Parbatpur-Central and Sitanala Mines to Steel Authority of India Ltd (SAIL), Chatti Bariatu, Chatti Bariatu South and Kerandari mines to NTPC, among others.

Incidentally, barring Chatti Bariatu coal-block that has been allocated to NTPC, other mines are yet to be made operational. Essar Power is said to be unwilling to retain Tokisud mines in the State and offered to surrender it for reasons best known to the company only.

Enjoying accolades as one of the country’s richest States in mineral resources, Jharkhand has 27.3 per cent of India’s coal reserves, 26 per cent of India’s iron ore reserves, 18.5 per cent of India’s copper ore reserves, besides gold, uranium, mica, bauxite, granite, limestone, silver, graphite, magnetite and dolomite. Jharkhand is the only state in India to produce coking coal, uranium and pyrite. With 25.7 per cent of the total iron ore (hematite) reserves, the state ranks second among the states.

According to data released by Department of Industrial Policy and Promotion (DIPP), the State is claimed to have attracted Foreign Direct Investment (FDI) equity inflows worth US$ 113 million during the period from April 2000 to June 2017.

Notwithstanding, the Jharkhand Government appears to be groping in the dark to bridge the financial gap in its kitty with the support of penalty on illegal mining and it is, in fact, poised to replenish its coffers in a clear violation of the court order: the apex court has been articulate in getting its views across that the money recovered against illegal mining was to be spent on wellbeing of the locals residing around the leased area who have been directly affected by the violations that have taken place against the set environmental norms.


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