Illegal mining in Karnataka cost Rs 3,500 crore, CAG

The illegal mining committed during 2006-11 in three districts of Karnataka has resulted in the state losing a revenue of Rs 3414.45 crore and the government could recover only Rs 7.22 crore, a report by Comptroller and Auditor General (CAG) of India said.

In Chitradurga, Tumkur and Hospet divisions four lessees had extracted 14.68 lakh MT of iron ore valued at Rs 150.59 crore without the consent of Karnataka State Pollution Control Board (KSPCB), the CAG report tabled in the Assembly said today.

Mining of iron ore and stone quarrying in Karnataka was selected for the audit as they were two major contributors of revenue to the state in major and minor minerals.

Though the report does not audit specific instances of illegal mining of iron ore already conducted by Lokayukta and under investigation by CBI, the cases relate to six year period during 2006-11 and cases in 2011-12 which was not reported in the first report.

Iron ore of 9.95 lakh MT valued at Rs 107.40 crore was extracted beyond the permissible limit prescribed in the mining plan, the report said. "The cost of the mineral though recoverable, was not recovered," it added.

Out of these, the department accepted audit observations involving Rs 1,212.12 crore and recovered Rs 7.22 crore, said the second CAG report of 2012.

The report said despite the accelerated growth in turnover of the mining companies from 2003-2004 onwards, there was no upsurge in revenue from royalty.

"This indicates failure of the government to recognise the revenue mobilisation opportunity in an industrial sector which was showing an exponential growth," the report added.

It also said incorrect application of sale prices of iron ore published by the India Bureau of Mines in 36 cases in three divisions resulted in short levy of royalty amounting to Rs 13.11 crore.

The report said the lack of coordination between work executing departments responsible for deduction of royalty at source and Department of Mines and Geology resulted in non or short collection and remittance of royalty to the extent of Rs 23.75 crore to the government.

The report said though there was a provision for levy of processing fee for minor minerals, no such fee was prescribed for major minerals. "This resulted in potential foregoing of revenue of Rs 37.85 crore to the state exchequer for the period from 2007-2008 to 2009-2010," it added.