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The Comptroller and Auditor General (CAG) of India has detected huge loss of revenue worth Rs 407 crore to the Jharkhand government due to 

loss of rent, royalty, fees etc in the mining department.

The CAG, whose report was tabled in Parliament on Friday, also points to gross financial mismanagement in different government schemes. According to the report, the department has accepted the loss worth Rs 203 crore.

The CAG conducted test checks of the records of the three district mining offices between June 2007 and March 2008, in which it was found that 27.73 lakh metric tonne of coal was removed and despatched during 2005-06 and 2006-07 by six collieries according to the monthly returns submitted by them.

"The monthly returns of lessees were required to be scrutinised and verified by the mining officer with annual grade notification of coal issued by the Coal Controller which was not done. Non-verification of the grades of coal resulted in short levy of royalty amount to Rs 9.99 crore," says the report.

The report has also mentioned about loss of revenue due to downgrading of iron ore. Under the provisions of Mineral Transit Pass Regulations, 1976, if a lessee declared the mineral to be of inferior grade, he would have to produce a test certificate to that effect from the state geological laboratory, Hazaribagh and in case the lessee fails to furnish the test certificate within 60 days of the dispatch of mineral, it would be presumed that the dispatches have been of highest grade.

However, the test check of records of the district mining office Chaibasa revealed that iron ore of higher grade was extracted from the leased area on which royalty was paid by the lessees till some time.

After that, they started paying royalty at a lower rate treating it of a lower grade on the basis of a certificate of analysis of iron ore issued by a private institution. This resulted in a loss of revenue of Rs 32 lakh. Similar losses were also brought to light by the CAG, due to illegal mining.