Punjab has doubled its mining revenue from around Rs 300 crore to nearly Rs 600 crore during the 2025-26 financial year, with nearly one-fourth of the total collections coming from an infrastructure cess imposed on mining material entering the state from neighbouring Himachal Pradesh and Haryana.
According to senior officials in the Punjab mining department, about Rs 150 crore was generated through the border infrastructure cess levied on both finished and unfinished mining material transported into Punjab. Nearly 75 per cent of this amount came from material entering the state from Himachal Pradesh, making it the single largest contributor to cess collections.
Officials, speaking on condition of anonymity, said the department now earns between Rs 40 lakh and Rs 45 lakh per day through the infrastructure cess collected at border check posts. Of this, Rs 30 lakh to Rs 35 lakh is collected daily from vehicles carrying mining material from Himachal Pradesh.
The infrastructure cess of Rs 3000 per tipper was introduced after the department found it increasingly difficult to verify the source of mining material entering Punjab. Officials said substantial quantities of sand, gravel and crusher material were entering Punjab from adjoining states, but there was often no mechanism to determine whether the minerals had been extracted legally or through illegal mining operations.
The cess, officials said, has enabled the government to bring all incoming mining material under a structured taxation and monitoring framework. The revenue generated is being used to strengthen surveillance infrastructure, set up digital monitoring systems and improve software-based tracking of mineral transportation across the state, an official said on condition of anonymity.
However, the figures also highlight the scale of the mining economy operating along the Punjab-Himachal border, where illegal mining has remained a persistent challenge for enforcement agencies. Riverbeds and seasonal rivulets along the inter-state boundary have long been vulnerable to unauthorised extraction, with mining vehicles frequently transporting material into Punjab for processing and sale.
Officials admitted that while Punjab can regulate the movement of mineral material entering the state, it has limited powers to verify whether the material was extracted legally in the neighbouring state. The continuing concerns over illegal mining are also linked to the large amount of unaccounted money generated through the trade.
Enforcement agencies have in the past unearthed cases where illegal mining proceeds were allegedly laundered through fake GST invoices, bogus mining slips and shell transactions. Investigations have also revealed instances where operators allegedly maintained parallel cash transactions outside the official royalty system.
In one such investigation, statements recorded by enforcement agencies indicated that crusher operators allegedly collected royalty payments in cash while fake documentation was used to legitimise illegally mined material. Such cases highlighted how illegal mining not only led to loss of government revenue but also generated substantial unaccounted cash, which was later routed through fraudulent financial transactions.
Officials said strengthening digital tracking of mining vehicles, integrating check-post surveillance and expanding online verification systems are aimed at reducing this cash-driven illegal economy by ensuring better traceability of mineral transportation.
Interestingly, Punjab’s earnings of around ₹150 crore through the border infrastructure cess alone are nearly half of the approximately ₹300 crore annual mining revenue of the Himachal Pradesh government. Officials believe the figures reflect the enormous volume of mining material moving across the Punjab-Himachal border.
