Mining, Money & Federalism: Why a New Law is at the Centre of a Political Tussle in Odisha

Key Highlights & Summary 

• Enactment of MMDR Amendment Act, 2026: In August 2026, Parliament passed the MMDR Amendment Act, establishing a uniform national tax framework for major minerals and limiting the power of state governments to levy taxes on mineral-bearing lands.

 • Overriding Nine-Judge Supreme Court Ruling: The 2026 amendment directly overrides a landmark July 2024 Constitution Bench judgment (8-1 majority) that affirmed state powers to levy royalty/tax on mineral extraction and mineral-bearing lands.

 • Insertion of Section 9D Restriction: The legislation introduced Section 9D, prohibiting states from imposing any tax, cess, or additional levy on mineral rights or mineral-bearing lands except under conditions prescribed directly by the Union Government. 

• Expansion of Central Control: Amendments to Sections 2 and 13 expand central authority over mineral-bearing lands, granting the Centre sole rulemaking power to restrict state tax mandates on minerals.

 • Fiscal Friction and Revenue Impact: Opposition parties in Odisha (BJD, Congress) allege the law strips state financial rights, forfeiting an estimated ₹1 lakh crore in past arrears and ₹12,000 crore in annual state revenues, while the Centre cites the need to prevent arbitrary levies.

 • Growth in State Mining Revenue: Official counterarguments highlight that post-2015 competitive auction reforms, Odisha’s mining revenue rose from ₹5,000 crore to over ₹50,000 crore, augmented by District Mineral Foundation (DMF) funds. 

Essential Definitions 

 • Off-Budget Mineral Levies: Taxes, cesses, or surcharges imposed by state governments on mineral rights or land value outside the central royalty framework set under the MMDR Act. 

• District Mineral Foundation (DMF): A statutory non-profit trust established in mining-affected districts under the MMDR Act to work for the interest and benefit of persons and areas affected by mining operations. 

• Royalty on Minerals: A statutory fee paid by a leaseholder to the resource owner (the State) for the extraction and commercial exploitation of minerals, regulated under central schedules. 

Legal and Constitutional Framework 

• Entry 23 vs Entry 54 (Seventh Schedule): Entry 23 (State List) gives states power over regulation of mines and mineral development, subject to Entry 54 (Union List), which empowers Parliament to declare central control in the public interest. 

• Entry 49 & 50 (State List): Grants states taxation power over lands and buildings (Entry 49) and taxes on mineral rights subject to limitations imposed by Parliament (Entry 50). 

• Mines and Minerals (Development and Regulation) Act, 1957: The principal central law governing mine allocation, mineral concessions, DMF, and regulation across India.

 • July 2024 Supreme Court Judgment: Landmark 8-1 decision affirming that royalty is not a tax and confirming states\' constitutional power to levy taxes on mineral-bearing lands under Entry 49. 

Conclusion The MMDR Amendment Act, 2026 has intensified federal friction by restricting state taxation powers over mineral-bearing lands. Balancing uniform national resource pricing with state revenue autonomy under the Seventh Schedule is critical to preserving cooperative fiscal federalism in India. 

UPSC Relevance

 • GS Paper II: Issues and Challenges Pertaining to the Federal Structure, Distribution of Legislative Powers (Seventh Schedule), Centre-State Fiscal Relations.

 • GS Paper III: Indian Economy (Mineral Resources, Revenue Autonomy, Fiscal Federalism, MMDR Framework).

 • Key Focus: MMDR Amendment Act 2026, Section 9D Restrictions, Seventh Schedule Entries 23, 49, 50 & 54, July 2024 SC Ruling on Mineral Taxation.