Mines and Minerals (Development and Regulation) Act of 1957

Context (TH): SC Affirms States’ Right to Tax Mineral Lands.

The Supreme Court clarified that the royalty paid by mining companies to the government is not considered a tax but a contractual payment.

The Mines and Minerals (Development and Regulation) Act of 1957 (MMDRA) governs the exploration, mining, and regulation of mineral resources. It aims to ensure the orderly and efficient development of these resources while safeguarding the nation’s interests.

Key Provisions of the MMDRA

• Central Control: The Act places mines and mineral development under the Union government’s control for national interests.
• Prospecting and Mining Licenses: All prospecting and mining must be conducted under licenses or leases issued by the government.
• Restrictions on Mining: Imposes limits on mining areas and quantities of mineral extraction.
• Environmental Protection: Mandates measures to prevent pollution and environmental damage.
• Safety Measures: Establishes stringent safety regulations for miners and mining operations.
• Mineral Conservation: Promotes efficient use and exploration of new mineral reserves.
• Role of State Governments: While the central government oversees overall control, state governments regulate minor minerals and administer the Act within their territories.

Significance of MMDRA

• Sustainable Mining: Requires reclamation plans to restore mined areas, promoting sustainable practices.
• Pollution Control: Provisions to prevent air, water, and soil pollution from mining activities, with recent amendments enhancing these measures.
• Tax and Royalty Framework: Establishes a system for taxes and royalties on mineral extraction, contributing to government revenue.
• State Finances: Provides mechanisms like District Mineral Funds (DMFs) for sharing mineral wealth with states and addressing mining impacts.
• Miner Welfare: Includes provisions for miners’ safety, insurance, medical facilities, and housing.
• Corporate Social Responsibility: Mining companies undertake welfare activities for locals.
• Raw Material Supply: Ensures a steady supply of minerals essential for industrial growth.
• Employment Generation: Creates direct and indirect employment opportunities in the economy.

Challenges of MMDRA

• Environmental Degradation: Illegal mining in Goa has led to extensive deforestation and ecological damage affecting water sources and wildlife.
• Ineffective Implementation of Reclamation Plans: In Jharkhand, many mining sites remain unreclaimed, resulting in barren land and pollution.
• Corruption and Illegal Mining: Corruption and inadequate enforcement have undermined the Act’s goals, exemplified by the SC’s halt of iron ore mining in Bellary, Karnataka, in 2011 due to illegal activities and corruption.
• Disputes Over Revenue Sharing: Mechanisms like DMF face issues of equitable fund distribution and effective utilization, as seen with DMF fund mismanagement and inadequate local development in Odisha.
• Insufficient Social Welfare Measures: Miners in Chhattisgarh report poor access to health facilities and inadequate living conditions despite existing welfare measures.
• Slow Response to Technological Advancements: The Act does not fully incorporate recent environmental technologies or advanced mining techniques.
• Complex and Bureaucratic Licensing Process: Companies experience long delays in obtaining mining licenses, affecting project timelines and investments.
• Lack of Local Community Involvement: In Meghalaya, inadequate consultation and compensation have led to conflicts between mining companies and local communities.

Way Forward

• Ensure Comprehensive Environmental Impact Assessment (EIA): The Niyamgiri Hill case in Odisha stressed the need for rigorous EIA before starting mining operations.
• Mine Closure and Rehabilitation: The Jharia Coalfield fires in Jharkhand highlight the necessity for effective mine closure plans and regulations.
• Water Management: Water scarcity in the Cauvery basin due to excessive groundwater extraction for mining underscores the need for integrated water management.
• Circular Economy Principles: Finland’s closed-loop mining model offers a sustainable approach, using waste from one operation as input for another.
• Biodiversity Conservation: The Kudremukh National Park case highlights the need for biodiversity offsets and conservation plans.
• Technology Adoption: Satellite imagery in Goa effectively detects illegal mining.
• Community Involvement: Anti-mining committees in Madhya Pradesh empower locals to report illegal mining.
• Fair Revenue Sharing: Increased mineral royalty rates in Karnataka have boosted state revenues.
• Digitalization: Blockchain technology in Jharkhand improves transparency and prevents illegal mining.

Difference between Tax and Royalty

Feature	Tax	Royalty
Imposed by	Government	Resource Owner
Purpose	Generate Revenue	Compensation for Resource Use
Basis	Legal Framework	Contractual Agreement
Nature	Compulsory Payment	Payment for Privilege
Example	Income Tax, Sales Tax	Author Payment, Mineral Rights Payment

Constitutional Provisions

• Article 246: Governs the distribution of powers between the Centre and the States.
• Entry 49 of the State List: Pertains to taxes on lands & buildings, which includes mineral-bearing lands.
• Entry 50 of the State List: Pertains to the regulation of mineral development but does not restrict state taxation powers.