Critically examine the fiscal federalism implications of the MMDR (Amendment) Act, 2026 in light of the Supreme Court's ruling on States' powers to tax mineral rights.

The Supreme Court's 2024 nine-judge ruling in Mineral Area Development Authority v. SAIL held that royalty is not a tax and affirmed States' power to tax mineral rights and mineral-bearing land under Entry 50 and Entry 49 of the State List. The MMDR (Amendment) Act, 2026 — passed by Parliament on 13 August 2026 — responds by inserting a new Section 9D barring States from levying any tax or cess on mineral rights or mineral-bearing land except as the Centre prescribes [1][2]. Its fiscal federalism impact is therefore genuinely two-sided.

Case for centralisation

• Creates a uniform, predictable and stable fiscal regime for major minerals, curbing multiple, uneven State levies that raised mining costs unpredictably [1].
• Investment certainty aids critical mineral security, complementing the royalty rates notified for 12 critical and strategic minerals such as Cobalt, Gallium and Vanadium, which enabled first-ever auctions of these blocks [3].
• Uses Parliament's competence over regulation of mines under Entry 54, Union List, extending Central control to "mineral-bearing lands" defined by prescribed mineral content [2].

Concerns for fiscal federalism

• It narrows an autonomous revenue source the Court had just restored to mineral-rich States like Jharkhand, Odisha and Chhattisgarh, which bear mining's land, health and ecological costs.
• Legislative competence over regulation is used to limit a taxation entry; PRS flags this as a constitutional question likely to invite fresh judicial challenge [1].
• Substituting parliamentary law for a judicial verdict weakens cooperative federalism and consultative practice.
• Operational content is left to delegated rule-making, so States' fiscal space depends on executive discretion rather than statute.

Fiscal predictability and State autonomy are both legitimate constitutional goods, and the Act privileges the former. A durable settlement lies in institutionalising consultation — routing the prescribed conditions through the GST Council-style forum or the Inter-State Council, and strengthening compensatory transfers via District Mineral Foundations, so that resource security advances alongside, not at the cost of, federal balance.