The 2026 amendment to the Mines and Minerals (Development and Regulation) Act gives the Union full control over mineral taxes, threatening a 10‑20% revenue loss for many states. The move raises serious questions about fiscal federalism and constitutional authority.

  • The MMDR 2026 amendment grants the central government absolute control over all mineral and mineral‑land taxes.
  • State governments risk losing 10‑20% of their annual revenues.
  • Creates profound constitutional and fiscal‑federalism risks.

The Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) and its successive amendments have gradually stripped state governments of the right to exploit major minerals within their borders. The 2026 amendment finalises this process, handing the Union complete authority over mineral taxation.

For half a century, an uneasy federal compromise existed: the Union allocated mining licences, while states retained the power to tax minerals or the underlying land at renegotiated rates. The new law eliminates that balance, potentially cutting 10‑20% off the revenue streams of mining‑dependent states.

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Historical Background

In the 1950s, B.C. Roy travelled to Poland to discuss coal‑mining technologies, envisioning a coal‑driven industrialisation for West Bengal. At that time, coal had not been nationalised and states could claim major mineral rights. The 1957 MMDR gradually shifted those rights to the centre, sowing the seeds of a centre‑state fiscal tug‑of‑war.

The latest amendment was debated for a mere five minutes in the Lok Sabha and forty minutes in the Rajya Sabha, bypassing calls from several MPs for a standing committee review. This rushed passage underscores a troubling erosion of parliamentary scrutiny.

Why This Matters

BozokMedia analysis shows that the erosion of state fiscal autonomy could destabilize India's federal structure, discouraging investment in mining‑dependent states and igniting regional political tensions.

"Without fiscal autonomy, India's federal model risks losing its foundational stability," remarked a constitutional law expert.
Did You Know?: In 1994, China centralised fiscal management but allowed provinces direct access to capital markets, spurring regional growth.

Frequently Asked Questions

Q1: Which states are likely to be most affected?
A: Mineral‑rich states such as Jharkhand, Odisha and Karnataka could see the biggest revenue cuts.

Q2: Can this amendment be challenged constitutionally?
A: Yes, after the 2024 Supreme Court ruling protecting state rights over mineral taxation, the amendment may be deemed unconstitutional.