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Home / News / India /  ‘Jharkhand is suffering due to GST; we get peanuts in the form of royalty’

NEW DELHI : Jharkhand is suffering huge annual revenue loss due to a reduction in Goods and Services Tax (GST) on coal, and favours extending the GST compensation to states by another five years, said state chief secretary Sukhdev Singh. 

In Delhi, at an investors meet to promote Jharkhand’s Industrial and Investment Promotion Policy 2021, wherein MoUs totalling Rs10,000 crore for proposed investments were inked, Singh, a 1987-batch IAS officer, in an interview also spoke about concerns such as mineral wealth proving to be a bane due to environment, health and land related issues in the state that has 40% of India’s mineral resources. 

He also spoke about left wing extremism (LWE) being in its last stage in Jharkhand and reservation in private sector jobs not being an impediment for attracting investors. 

Edited excerpts.

The Goods and Services Tax (GST) council meeting is round the corner. How is Jharkhand financially placed in the backdrop of extraordinary economic pain points brought by coronavirus pandemic?

We have been saying since day one that the implementation of GST has some structural issues because of which we are going to suffer permanent loss of revenue. And in the presentation that we made before the 15th Finance Commission, we estimated that Rs3,000-4,000 crore is the annual revenue loss that we are going to suffer. It's largely because of the rates that they have reduced in respect of coal, given that we are dependent on revenue from coal and minerals.

There is an issue of royalty and GST also. So, till 2022, we are getting the compensation. We have been always saying that what will happen after that? We have always been demanding for this period to be extended by another five years specially in view of the structural losses that it has caused to the state and us. It is a serious issue as of now for us. We have been raising it.

In view of the focus on environment, sustainability and governance (ESG), we may not see many takers for coal in the long run. Given that Jharkhand has huge coal reserves, what is the state’ plan?

As far as Jharkhand is concerned, for us coal is just a mineral. We already have sufficient number of thermal power stations. So as far as use of coal for power sector is concerned, we have enough capacity. We will in any case be power surplus state by 2022.

But then what do you do with this huge mineral wealth, the window for which is shortening?

It is not a mineral wealth. In a very interesting articulation we made before the 15th Finance Commission, wherein I was the finance secretary at that time, and I told them that contrary to the notion that mineral is a wealth I can prove that it is a curse.

Because when you mine it out, as much land becomes unavailable for agriculture. Can you think of agriculture in Dhanbad? Can you think of agriculture in Bokaro? You can’t think of agriculture in Ramgarh. I am only talking about the negative externalities related to the so-called wealth that people talk about. Then you have pollution issues. Then you have air pollution. Due to uranium at Jaduguda you have radiation issues, deformed babies are born.

Then you have overloaded trucks which tread the roads made for 10 tonne (haulage). So, the road which should last for 10 years, last for one year. So, I said if all the health effects, environment and air pollution are counted and some economist can convert it into actual negative cost then compare it with what we get. We get peanuts in the form of royalty.

You have said that left wing extremism in your state is in its last stage. What is the status?

There are two very important things. The tribal kid now has access to the internet and is also aware of the developments in the world. Now, he doesn’t want to carry a gun and spend nights in the jungle. So, they are not getting volunteers. They are not getting enough ammunition and weapons because of the way central paramilitary forces camps have been set up. So, they don’t want to engage in fire-fights as they will lose men. Once they lose men, they don’t get new recruits.

Now they are only into three-four pockets—one is Buddha Pahad in Gadhwa, then you have a tri-junction of Ranchi—Chaibasa—Khunti and pockets in Parasnath hills. They are holed up in two-three pockets and fortified themselves. Since, they don’t have free movement, they don’t disturb the investors. But they can’t remain holed up for long.

Where are the next set of road shows going to be held and what is the goal?

From here, we intend to move to south India. We intend to have a summit in Hyderabad and then Bangalore. We hope to get a good response.

The chief minister is intending to target an employment for 5 lakh people. Initially the target was to create 1 lakh jobs per annum but because of the pandemic and the way economy went haywire, so that couldn’t be achieved. The impact of a pandemic is that normally people have gone out of jobs. So, now we have to not only meet the backlog and then create additional job opportunities both in the private as well as the government sector. So, in the government sector we are trying to change the policies, recruitment rules, and making some conditions where locals can get more jobs. That we are trying to do but the government sector is very limited. So, more jobs are to be anticipated in the private sector.

You name a mineral, Jharkhand has it. The only working gold mine is in Jharkhand after Kolar (Gold Fields) collapsed. We have tremendous reserves of iron ore and coal. Even the kimberlite rock that is supposed to contain diamond has been found in Gumla and Lohardaga districts. We have uranium and bauxite. Nature has been crazy in bestowing it. Then, we have 33% of forests.

You have talked about setting up India’s largest floating solar project.

We have a huge potential because of a very large number of sunny days in entire India. The tropic of Cancer passes through Jharkhand. So, the number of sunny days in a year are very high and because of the water bodies that were created around 1960s when we were a part of Bihar. It’s a plateau area. So, plateau offers a topography where you can make a dam and create a huge reservoir. So, we have huge reservoirs in the form of Chandil dam, Tenughat dam, Patratu dam, then we have DVCs (Damodar Valley Corporation) dams. If you go into interiors (of the state), there are huge water bodies.

So, when this technology came you need lot of land for solar (parks). In Jharkhand, the problem is large part of open land is largely afforest land. So, when forest land is there, there is a lot of logistics issue of clearances. So, this was thought of as a great alternative in the form of large water bodies and it reduces evaporation also. We have signed an MoU with Solar Energy Corp. of India (SECI) for setting up a floating solar project in Patratu. SECI will call for bids. We are planning to go for solar in a big way.

Jharkhand has gone for job reservation for locals in private sector jobs.

We have formulated a legislation which ensures 75% reservation (for locals) in private sector for class-III and class-IV employees but it is yet to be notified. It is in the process.

Will it not act as an impediment for private sector investment as concerns have been raised against similar measures in states such as Haryana?

No…It is an impediment where people in the labour class or landless people are less in number for example in Haryana. But in a backward or poor state like Jharkhand, you don’t need to bring people from outside.

How has Jharkhand’s experience been with commercial coal mine auctions?

I will not comment on this for two reasons because one is our state had opposed it and moved the courts. So, I will not comment on this because there is a friction between the Centre and the state on this issue. The case is sub-judice.

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