Karnataka Increases Stone Mining Royalties, Potential Impact on Real Estate Industry

The Karnataka Cabinet has approved an increase in the royalty on mining minor minerals, particularly stone quarries. The new rate of Rs 80 per metric tonne, up from Rs 70, is expected to generate an additional Rs 311.5 crore annually for the state. This hike could affect construction costs in the real estate sector, as stone is a key material for infrastructure and residential projects.

One-Time Settlement Scheme for Dues
Alongside the royalty increase, the government has introduced a one-time settlement scheme (OTS) for quarry owners with outstanding dues. A 2018-19 survey revealed violations, including excessive extraction of minerals and land encroachment. The state has estimated overdue payments of Rs 6,106 crore, five times the previous amount calculated. This settlement scheme allows quarry owners to clear their dues, which could ensure a more regulated and stable supply of construction materials.

Technological Monitoring of Mining Activities
To address ongoing mining irregularities, the government has introduced advanced monitoring technology, including Differential Global Positioning System (DGPS) surveys. These surveys have helped identify illegal mining practices, including over-extraction and encroachment. By enhancing transparency and enforcement, the government aims to regulate the sector more effectively, benefiting the construction and real estate industries by ensuring reliable material availability.

New Land Mining Tax Proposal
In an additional effort to boost revenue, Karnataka has proposed a new land mining tax for owners of land with major minerals like bauxite, chromite, and copper. The tax will be levied at Rs 100 per tonne of extracted mineral. This move ensures landowners’ rights while generating further state revenue, which could be reinvested in infrastructure projects that support real estate growth.

Impact on Real Estate Development
While the increase in royalty and the new taxes may raise construction costs, these measures are aimed at creating a more sustainable and regulated mining environment. Real estate developers will need to adjust their cost structures but may benefit from a more predictable supply of raw materials in the long run.