Mining

'District Mineral Foundation’s implementation in MP half-hearted'

The state mineral resources department exhibited scant commitment to assess the impacts of sand mining activities on the environment, observed the CAG

 
By Himanshu Upadhyaya
Last Updated: Wednesday 23 January 2019
Photo: Agnimirh Basu/CSE

The Comptroller and Auditor General of India (CAG) has indicted the Madhya Pradesh mineral resources department for the "half-hearted implementation" of District Mineral Foundation (DMF), in a report on revenue receipts, tabled in the state assembly on January 10, 2019.

The Mines and Minerals (Development and Regulation) Act, as amended in 2015, asked the state governments to prescribe the contribution amount to be paid by concession holders of minor minerals to the DMF. But, auditors observed that the state government had not shown any enthusiasm in implementing this provision of the amended Act.

The District Mineral Fund was envisioned in the amended Act to create a mechanism to help community development in the vicinity of a mining area. It was only after it was caught on the wrong foot that the department told the auditors that appropriate action would be taken.

The realisation that it had failed to act dawned upon the state mineral resources department only during the exit conference—when CAG auditors presented the final draft of the audit report in October 2017.

While the new sand mining policy, announced in December 2017, prescribed that Rs 50 per cubic metre out of the royalty on sand shall be paid to the DMF, the state government did not prescribe any contribution to the DMF in respect to other minor minerals until April 2018.

CAG auditors also highlighted that the department was working with insufficient manpower and doesn’t have an Internal Audit Wing or Departmental Manual.

Carrying out a comprehensive performance audit of sand mining in the state, CAG stated that in the absence of these internal controls, various checks and balances to be exercised by department functionaries for assessment, levy and collection of revenue could not be ensured.

Cases of non-execution of supplementary agreements, fixation of lower reserve price, under-assessment of royalty, short realisation of contract money, no penal interest on delayed payments and irregular issue of permits came to surface during the test check of records. The financial implication of this was—short realisation of revenue to the tune of Rs 16.49 crore.

The performance audit also highlights the failure of the department to monitor compliance to the conditions laid down by the State Environmental Impact Assessment Authority while granting environmental clearances for sand mining.

Auditors further highlighted the abysmal state of affairs on the implementation of environmental management plans, since the department failed to ensure submission of quarterly returns prescribed for monitoring the same. Thus, the department exhibited scant commitment to assess the impacts of sand mining activities on the environment, observed the CAG.

CAG auditors flagged that instances of illegal mining cannot be ruled out since the department has, so far, not evolved any system or module for submission of quarterly returns by mineral carriers, although the same was envisioned more than a decade ago as per Rule 5A of Madhya Pradesh Minerals (Prevention of Illegal Mining, Transportation and Storage) Rules, 2006 — which was amended in 2012.

It’s important to note that former chief minister Shivraj Singh Chouhan’s government kept sitting on this CAG audit report—which was sent to the government on August 3, 2018—deliberately, and did not table any of the CAG audit reports that should have entered public domain in 2018.

CAG auditors remarked that in 153 cases, they noticed that DMF was not levied on concession holders — amounting to a loss of Rs 298.12 crore to DMF. Now, that is huge, and it shows how mining companies and district administration continue to undermine the potential of DMF to provide for community development.

The money in DMFs comes through statutory contribution from mining companies, which are required to pay an equivalent of 30 per cent of the royalty amount for leases granted before enactment of the 2015 Act, and 10 per cent for leases granted after that.

(Author is faculty at Azim Premji University, Bangalore)

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