Context

• India’s mineral resources are concentrated in States such as Odisha, Jharkhand, Chhattisgarh and Karnataka.
• These resources support industrialisation, employment and public revenue. However, mining also causes displacement, environmental degradation, infrastructure pressure and depletion of non-renewable resources.
• The Mines and Minerals (Development and Regulation) Amendment Act, 2026 raises important questions about the distribution of mining benefits and burdens.
• Although the amendment seeks to promote investment, it has significant implications for State fiscal autonomy, constitutional federalism and resource justice.

Mineral Wealth and Unequal Regional Development

• India’s mineral economy reflects the geographical concentration of natural resources.
• Odisha, Jharkhand, Chhattisgarh and Karnataka possess valuable deposits of coal, iron ore and other minerals that supply industries across the country.
• Mining generates investment, employment and industrial growth. Royalties, auction premiums and other payments strengthen State finances.
• However, mineral-producing regions frequently bear the direct costs of extraction, including:
  • Displacement and resettlement of communities.
  • Environmental damage and ecological loss.
  • Pressure on roads, water supply, healthcare and other public infrastructure.
  • Long-term economic consequences of extracting non-renewable resources.

Section 9D and the Question of State Revenue

• Section 9D restricts State Governments from imposing taxes, cesses or other levies on mineral rights or mineral-bearing land except under conditions prescribed by the Centre.
• The Central Government argues that the provision will create a predictable taxation environment, prevent excessive levies and encourage long-term investment.
• Mining projects involve substantial capital and operate over extended periods, making financial stability important for investors.
• However, the issue extends beyond existing revenues. The Centre maintains that 90% of mining sector revenue accrues to States and that this arrangement will continue.
• The larger concern is whether States will retain the ability to raise additional revenue from mineral resources in the future.
• A mineral-rich State possesses a natural economic advantage. Restricting its ability to use that advantage for development may reduce its fiscal flexibility.
• NITI Aayog’s Fiscal Health Index has recognised the revenue mobilisation performance of Odisha and Chhattisgarh and the role of mining receipts. 

The Federal Problem

• Under Entry 50 of the State List, States possess the power to tax mineral rights, subject to limitations imposed by Parliament through laws relating to mineral development.
• The 2026 Amendment raises questions about the extent to which Parliament can restrict these powers through mineral-development legislation.
• While Entry 50 permits limitations on taxation of mineral rights, extending restrictions to mineral-bearing land may create a separate constitutional issue concerning Entry 49.
• The amendment therefore raises a broader question: can a Central law regulating mineral development substantially restrict a State’s independent power to tax land?

Fiscal Federalism and Resource Justice

• India’s federal system requires States to perform important responsibilities while possessing adequate financial resources.
• Mineral-producing States often bear the direct consequences of extraction, including environmental damage, infrastructure stress and social displacement.
• If States are prevented from raising resources from mineral wealth, they may face difficulties financing the development needs of affected communities.
• This creates a potential imbalance between national benefits and regional costs.
• Fiscal federalism requires a balance between national economic objectives and the financial autonomy necessary for States to fulfil their responsibilities.
• Uniformity may encourage investment, but excessive centralisation can weaken the ability of States to respond to their own economic and environmental conditions.

The Way Forward: Balancing Investment and State Autonomy

• The debate over the MMDR Amendment should not be reduced to a choice between investment and taxation. Both objectives are important.
• Investors require stable rules, transparent taxation and long-term certainty. States require adequate revenue, constitutional authority and the ability to finance public services.
• A balanced approach would seek to:
  • Maintain predictable taxation for mining investors.
  • Preserve the constitutional powers of State Governments.
  • Ensure adequate compensation for extraction-related costs.
  • Strengthen transparency in the distribution of mining revenues.
  • Encourage cooperation between the Centre and States in mineral policy.
• Such an approach would recognise that national industrial development depends partly on the economic and social stability of mineral-producing regions.

Conclusion

• The MMDR Amendment, 2026, represents an important development in India’s mining and federal governance framework.
• Section 9D seeks to promote investment certainty and prevent excessive levies, but it also raises questions about the future fiscal autonomy of mineral-rich States.
• A sustainable mining policy must combine investment certainty, fiscal federalism, environmental responsibility and equitable resource distribution.
• The long-term success of India’s mineral economy will depend not only on how much wealth is extracted, but also on how fairly that wealth and its costs are shared.