CAG Report Highlights Sharp Decline in Iron Ore Quality Post-Auction in Odisha

The Comptroller and Auditor General of India (CAG) has discovered a significant decline in the grade of iron ore from six mines in Odisha following their auction. This deterioration has resulted in a revenue loss of Rs 4,162.77 crore for 2020-21 and 2021-22 due to reduced royalty and premium collection.

The Comptroller and Auditor General of India (CAG) has flagged a substantial reduction in iron ore quality from six Odisha mines post-auction. Following the auction, there was an 'abrupt and abnormal decline in the grade of iron-ore,' according to CAG's audit report.

The reported decline has led to a revenue loss of Rs 4,162.77 crore for the financial years 2020-21 and 2021-22, attributed to lower royalty and premium. Despite 83% of production being of high grade in the pre-auction period, it dropped significantly in the two years post-auction.

The CAG report suggests that new lessees might be misreporting iron ore grades to avoid paying higher royalties. The state government has yet to take investigatory actions, despite the potential for substantial revenue impacts highlighted by the report.

(With inputs from agencies.)