CoalGate - Scam Within a Scam..

The State Government of Odisha/Chattisgarh made two key demands to the Union Government.

1) Royalty Share between State and Central govt.

2) Fixing of Coal Royalty on Ad-Valorem  Basis.

The Chief Ministers of Odisha and Chattisgarh wrote to the Union Government several times on the Issues of Royalty and Fixing of Coal Royalty on Ad=Valorem basis. The Union Government which blames the state Governments for delay in auction procedure and auction of coal was silent and did not reply to the State Government on this issue.

Royalty 

Usage based payments made by one part the "Licensee" to another the "Licensor for the right to ongoing use of the asset/mines.Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset.

Ad-Valorem 

 Its a tax that is based on the monetary value of the Product. Literally the term means 'According to the Value'  Ad-Valorem has the advantage of adjusting the Tax Burden according to the amounts the Consumer spends on the taxed item. Thus avoiding the serious discrimination of specific rates against the Low Priced varieties of the Commodities.

State Governments in 2005/2006/2007 wrote to the Union Government for increased share in Royalty from the Mineral resources. They wanted more share of Royalty fee from Mineral resources so that they use that money to develop backward areas and contain the Maoist Problem. The Union Government has not acted on those demands from State Government.

As per the Mines and Mineral Development & Regulation Act 1957, the centre is bound to revise royalty on coal and other minerals every three years. The Act provides that the state should be compensated accordingly for the delay in revision of royalty. The Union Government ought to have revised the royalty on coal in 2005 but failed to do so. It revised the royalty in 2007. The State and The Union Government lost revenue due to the lack of professionalism and lack decision making within the Union Government. Prime Minister himself was the Coal Minister during those times. The Union Government has not compensated to the State Governments for the loss in revenue it caused the states due to its indecision.

Private players who mined the Natural resources benefited from the indecision of the Union Government. 

State Governments opposed the Union Government's formula for calculating royalty on the basis of a Fixed Percentage of the the Net or Gross Revenue.. State Governments as Early as 2007 wrote to the Union Government stating Royalty should be based on Ad-Valorem basis. Union Government sat on those demands from the state government for 5 years and finally approved the Royalty will be based on Ad-Valorem basis on April 12th 2012.

The delay in decision by the Union Government has resulted in loss in huge revenue to both the State as well as the Central Government. 

The Prime Minister cannot blame Coalition compulsions for non-revision of the revision of Royalty on Natural Resources. Its squarely in the domain of the the Union Government and Minister In-Charge who happens to be the Prime Minister.

Coal Prices were in the upswing continuously,Non-Performance on revising the Royalty of Natural resources every 3 years and Indecision in shifting to Ad-Valorem basis resulted in huge loss to State and Union Exchequer.

Whom will The Prime Minister blame for the these indecision?

Don't know whether the Comptroller and Auditor General has calculated the loss occurred due the indecision of the Union Government in revising the Royalty on Natural Resources.

Media won't tell you about the Skulduggery of  the Union Government and its indecision that resulted in loss loss in revenue to the Exchequer.