Differences in economic rent vs. royalty for oil, natural gas and coal from 1990–2004
In a previous post, I shared findings from Rahul Basu’s research on the difference between the economic rent and royalty the government collected from Iron ore mining in Goa from 2008–12. In this post, I’ll share some more findings from Shalini Saksena (2009) on the difference between the economic rent and royalty the government got from oil, gas and coal production in India from 1990 to 2004.
I don’t understand why the difference between the resource rent and royalty starts to get larger post-1996. Maybe it had to do with the sale price of these minerals, or something else. I have a hunch that it has to do with the increasing role of private miners in India but since I haven’t studied that in detail, I would refrain from concluding anything and would reserve this issue for some other post.
UPDATE (30 March 2023): It is important to note that not all of the difference between resource rent and royalty is privatized. Most of the coal mining and oil & gas extraction in India is done by PSUs who pay regular dividends to their shareholders and whose majority shareholder is the Central government. However, the resource rent is still partly privatized since the Central government owns only ~70–80% of the two major miners, namely Coal India and Oil and Natural Gas Corporation. This means that part of the difference between the resource rent and royalty goes to the private investors in these PSUs. In addition, the states are entitled to receive royalty & other payments for sub-soil minerals; however, the part of the resource rent for them is taken by the Central government via dividends. ( Here (click) is a discussion that I had with Rahul Basu on Twitter on this, after which I decided that I should add this note to this post.)