Critically examine the fiscal federalism implications of the MMDR (Amendment) Act, 2026 on mineral-rich states.

Mineral taxation straddles Entry 54 of the Union List and the States' powers over land and mineral rights. The MMDR (Amendment) Act, 2026 — passed by Parliament on 13 August 2026 — bars States from imposing any tax, cess or levy on mineral rights or mineral-bearing lands except on conditions prescribed by the Centre [1][2], reopening a core fiscal federalism question.

Case for the amendment: fiscal certainty

• Creates a uniform and predictable fiscal regime, reducing investor uncertainty and cost divergence across States, and giving impetus to investment in mining [1].
• Royalty (Section 9), District Mineral Foundation (9B) and NMET (9C) contributions and auction premiums remain untouched, protecting district-level welfare funding [1].
• Government's claim that around 90% of total taxes and statutory payments in mining continue to accrue to States indicates no wholesale fiscal loss [1].
• Prevents cascading, competing State levies that could distort a nationally strategic sector, including critical minerals.

Concerns for mineral-rich States

• Removes an autonomous revenue lever affirmed by the Supreme Court's nine-judge bench in MADA v. SAIL (2024), which the Act effectively reverses [2].
• Retrospective invalidation of unpaid past levies, with collected amounts non-refundable, wipes out large expected arrears — Odisha alone anticipated over ₹1 lakh crore [2][3].
• Leaving conditions to be prescribed by the executive shifts effective control to the Union; PRS flags risks of excessive delegation, legislative competence over land taxation, and unequal treatment of compliant and non-compliant taxpayers [2].
• Deepens political friction: BJD's dharna at Lok Bhavan and memorandum through the Governor to the President reflect resort to constitutional channels [3].

The Act trades State fiscal autonomy for national regulatory predictability — defensible in intent, but weakened in process. A consultative mechanism on the GST Council model, transitional compensation for affected States, and clear statutory guidance limiting executive discretion would reconcile investment certainty with the cooperative federalism the Constitution envisages.