DMF best practices: Are DMFs actually functioning to their potential and promise?

The answer is no for the most part, according to a new report of the Centre for Science and Environment

By Chinmayi Shalya
Published: Tuesday 14 April 2020

*This is the second section in a multi-part series

District Mineral Foundations (DMFs) leave a lot to be desired according to a new report by Delhi-based non-profit Centre for Science and Environment (CSE).

The document, DMF: Implementation Status and Emerging Best Practices, was released by CSE on its website on April 10, 2020.

DMF Trusts have been set up across mining districts in India since 2015, since the amendment of the Mines and Minerals (Development and Regulation) Act in that year.

The amendment asked for a non-profit trust to be set up to work for the “interest and benefit of mining-affected areas and people.” With this, for the first time, the rights of communities to benefit from natural resource extraction was recognised.

Since its inception in 2015, close to Rs 36,000 crore has been collected in DMFs across the country, according to the latest Union Ministry of Mines data, and about Rs 6,000-7,000 crore is estimated to come to DMFs annually in the coming years.

One of the main drawbacks is the DMFs’ primary engagement in physical infrastructure. Such infrastructure remains the biggest areas of sanctions across the 13 states reviewed by CSE for its report.

In states like Andhra Pradesh and Telangana, the sanctions on physical infrastructure are about 55 per cent of total sanctions.

This is in stark contravention of the Pradhan Mantri Khanij Kshetra Kalyan Yojna (PMKKKY) guidelines. No more than 40 per cent of DMF funds are to be spent on areas such as physical infrastructure, energy and watershed, irrigation put together, according to PMKKKY.

Drinking water is a key area of focus for most states among the high priority areas listed under PMKKKY, according to the report. 

Most sanctioning has been done in Jharkhand, which had a state government mandate to invest only in drinking water supply and sanitation for the first three years. The state’s collective allocation for drinking water is about 77 per cent of its sanctions.

Another state, Uttar Pradesh, has allocated close to 45 per cent for drinking water. Other sectors with sizeable investments are healthcare and education.

However, most of this is for construction of big hospitals or classrooms and hostels. The report underscores that while there are some investments in nutrition and livelihood that try to improve upon quality and delivery of services and income enhancement, they are mostly at a nascent stage.

Investment across states and districts remain construction driven only.

Obligations remain unfulfilled

While investments through DMF are being made, there are certain fundamental obligations that still remain unfulfilled, according to a review done as part of preparing the report.

One of the biggest is that despite being a fund meant for people, DMFs lack representation of mining-affected people in decision-making. The governing body, the report states, remains dominated by elected representative like members of Parliament, members of Legislative Assembly and district officials.

Chhattisgarh is the only state where non-elected Gram Sabha members are part of the governing body according to the amendments made in August 2019.

As DMFs are non-profit trusts, they must have identified beneficiaries or mining-affected people. The PMKKKY also asks for this.

However, no district has identified DMF beneficiaries so far. “No identification has been done to include displaced people, people whose livelihoods were affected due to mining, people who might need any special and direct assistance, etc, despite a clear mandate in states’ rules and the PMKKKY,” the report states.

The delineation of directly-affected areas is also arbitrary and not methodical. The report cites that all districts in Odisha have taken a blanket 10 kilometre-radius as the directly affected area, while in Rajasthan, entire districts are being considered directly affected.

DMFs remain poor on planning. Despite mid- and long-term planning mandates in state rules of Odisha, Chhattisgarh and Madhya Pradesh, no district has made a perspective plan.

The report finds that even the public accountability mechanisms are weak. Apart from a financial audit, no other scrutiny, such as a social or a performance audit of DMFs has been done. States like Chhattisgarh and Maharashtra have provisions for it, but no compliance.

Other states lack even provisions in their rules. No information on DMF is available in the public domain, barring basic accruals and sanctions.

Only two districts, Ramgarh of Jharkhand and Keonjhar, the report notes, provide details of DMF sanctions, governing body, annual and audit reports etc on their websites.

Even though this flouts the PMKKKY guidelines, there is no momentum to make information public.

The PMKKKY specifies that “DMF trusts have a website providing clearly the composition of DMF bodies, list of mining-affected areas and people, DMF plan, budget, sanction and progress of works, meeting minutes and action reports, details of problems in implementing etc,” the report states.

“There are state and district DMF portals, but they lie defunct,” it added.

*Watch this space for the third instalment of the series

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