Answer:

The authority of states to tax mineral rights is enshrined in the Indian Constitution, specifically under Entry 50 of the State List in the Seventh Schedule. However, this power is subject to limitations imposed by Parliament. These parliamentary restrictions aim to ensure a uniform approach to mineral development across India, balancing state autonomy with national interests.

Positive Effects of Parliamentary Restrictions:

• Uniform Regulation: Parliamentary restrictions ensure uniform regulation of mineral resources across states.
  For example: The Mines and Minerals (Development and Regulation) Act, 1957, standardised mining practices, preventing discrepancies between states.
• National Interest: These restrictions protect national interests by preventing state exploitation of mineral resources for short-term gains.
  For instance: Uniform mineral taxation can avoid over-extraction, preserving resources for future generations.
• Economic Stability: By limiting state taxation powers, parliamentary restrictions maintain economic stability and prevent arbitrary tax hikes. This helps industries operating in multiple states to plan better, fostering a stable investment environment.
• Preventing Market Distortion: Uniform tax policies prevent market distortions caused by states imposing varying tax rates on minerals.
  For example: A uniform GST rate on minerals helps maintain consistent pricing across the country.
• Ensuring Adequate Supply: Parliamentary control ensures an adequate supply of minerals for national projects.
  For instance: The central regulation of coal ensures its steady supply for power generation across India.

Negative Effects of Parliamentary Restrictions:

• Limited Revenue Generation: States face reduced ability to generate revenue from mineral resources, impacting their financial health.
  For instance: States rich in minerals like Jharkhand may feel financially constrained due to limited taxing powers.
• Reduced Fiscal Autonomy: Parliamentary restrictions reduce the fiscal autonomy of states, hindering their ability to fund local development projects.
  For instance: States like Odisha, with significant mining activities, may struggle to finance infrastructure improvements.
• Administrative Challenges: Centralised control can lead to administrative challenges and delays in implementing local policies.
  For instance: States may face bureaucratic hurdles when seeking central approval for mining projects.
• Economic Disparities: Restrictions can exacerbate economic disparities between resource-rich and resource-poor states.
  For instance: States without significant mineral resources might find it harder to compete economically with those that do.
• Conflict of Interests: Parliamentary restrictions can lead to conflicts of interest between state and central governments.
  For instance: States may prioritise local economic benefits, while the central government focuses on national interests.

Influence on Financial Autonomy:

• Dependence on Central Grants: States become more dependent on central grants and revenue sharing, reducing their financial independence. This dependence can affect states’ ability to plan and execute local development projects effectively.
• Budgetary Constraints: Limitations on taxing mineral rights can impose budgetary constraints on states, affecting their ability to invest in infrastructure and social welfare programs. This can slow down regional development and economic growth.
• Reduced Policy Flexibility: States have limited flexibility to design policies suited to their specific economic contexts, leading to a one-size-fits-all approach. This can stifle innovation in local governance and economic planning.
• Impact on Welfare Programs: Financial constraints due to limited taxing powers can hinder the implementation of welfare programs, affecting the socio-economic well-being of the population.
  For instance: States may struggle to fund health and education initiatives.
• Impediments to Local Development: Restrictions on mineral taxation can impede local development initiatives. This can lead to uneven regional development and increased socio-economic disparities.
  For instance: States may lack the necessary funds to support infrastructure and public services.

The Supreme Court’s landmark ruling empowering states to tax mineral rights underscores the delicate balance between state autonomy and national interests. While parliamentary restrictions ensure uniformity and stability, they also constrain states’ financial autonomy, impacting local development. Contemporary debates on federalism and fiscal policies continue to shape this dynamic, reflecting evolving priorities in India’s governance framework.

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