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| Photo Credit: The Hindu
A first-of-its-kind analysis of the District Mineral Foundations (DMF) shows that despite collecting about ₹1-lakh crore in the past decade, more than half the funds is unspent.
Moreover, the funds are often diverted to activities that are not directly linked to the welfare of mining districts — a contravention of the Centre’s guidelines. The DMFs are non-profit trusts set up in mining districts, covering coal, lignite, major minerals such as iron, manganese, and bauxite, and minor minerals, and tasked with ensuring that a portion of the revenues generated from mining is spent on the development of the districts. They have been established in 645 districts across 23 States.
The report was prepared by iForest, an independent research group.
In September 2015, the Centre launched the Pradhan Mantri Khanij Kshetra Kalyan Yojana to drive transformational change in mining-affected areas through investments in various developmental projects and activities. The PMKKKY is implemented through funds accrued to the DMFs. Following the setting-up of DMFs and promulgation of the PMKKKY guidelines, State governments have developed and notified the State DMF Rules. These Rules outline the governance structure of the DMFs, fund utilisation priorities, and mechanisms for planning, monitoring, and implementation. Presently, the DMF fund is one of the largest financial resources for immediate, medium, and long-term interventions to improve the lives and livelihoods of people in the mining-affected areas.
The DMF funds come from statutory contributions by mining leaseholders. Companies contribute directly to the district’s DMF Trust, paying 10% of the royalty for leases granted after January 12, 2015, and 30% for leases granted earlier.
For their decadal assessment, iForest conducted a pan-India review of all 23 States where DMFs have been set up. Further, the assessment looks into the status of the DMFs in the top 21 mining districts. These districts have at least ₹I1,000 crores in DMF accrual, and account for over 65% of the DMF funds. Non-coal major minerals account for over 51.5% of the total accruals. The share of coal and lignite is about 37%. Minor minerals contribute about 11.5% of the total DMF funds.
Odisha accounts for the highest share of DMF funds, about 29% (₹30,126 crore) of the country’s total. This is followed by Chhattisgarh and Jharkhand accounting for over 14% (14,564 crores) and 13% (13,791 crores) of the funds, respectively. Collectively these three States account for over 56% of the total DMF funds collected in the past 10 years in the country, the report noted.
“Overall, the pattern of infrastructure-heavy investments does not align with the objectives of the DMF.The prime focus of DMF and PMKKKY is to alleviate poverty and deprivation, which requires a balanced investment in human resources and infrastructure. However, this balance has not been achieved in any district. Consider the example of Dhanbad. Out of 1,164 projects sanctioned in Dhanbad till 2024, only ₹1.86 crore have been allocated for skill development and livelihood generation. Similarly, in Kendujhar, project details evaluated until 2022 show that only about 3.2% of the total allocations are for livelihood and skill development projects,” the authors noted.
The biggest challenge, however, is in the design of the DMFs themselves. DMFs are practically an extension of the District Collectorate. Their GCs and MCs are dominated by officials and elected representatives. There is minimal representation of the mining-affected communities, such as from the Gram Sabhas of the mining-affected villages, the report underlined.
The overall projections done by iFOREST show that the total DMF accruals in the next 10 years (2025-26 to 2034-25) could be as high as ₹2,50,000 crore to ₹3,00,000 crore — two-and-a-half times to three times of the accruals in the previous 10 years. The annual accruals will range from ₹20,000 crore to ₹30,000 crore, it said.
“With a total fund accrual of over ₹1 lakh crore, DMFs have a pivotal role in addressing developmental challenges in India’s mining districts, which are some of the most underdeveloped regions of the country. However, sub-optimal institutional design, inefficient fund utilisation, lack of systematic and long-term planning, and lack of people’s engagement in identifying and designing intervention measures are hindering their full potential. DMFs need to be redesigned as an independent public welfare fund to fulfill its mandate,” Chandra Bhushan, CEO, iFOREST, said in a statement.
Published – March 26, 2025 11:36 pm IST
