DMF best practices: CSE studies how district mineral funds help

CSE reviewed key mining districts that are focussing on sectors such as livelihood, healthcare, education, nutrition and drinking water

By DTE Staff
Published: Friday 10 April 2020

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

Emerging good practices from across India’s key mining districts and positive use of District Mineral Foundation (DMF) funds have been documented in a new report by Centre for Science and Environment (CSE), a Delhi-based think tank.

Key mining districts in India are utilising the funds to focus on sectors such as livelihood, healthcare, education, nutrition and drinking water to not only build on requisite infrastructure, but to deliver goods to the people, according to the new report.

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

Two in-depth evaluations by CSE of the DMF implementation in 2017 and 2018 showed that the potential of DMF could not be realised due to lack of planning or need assessment and ad hoc investments.

The people-centric spirit of The Mines and Minerals (Development and Regulation) Amendment Act, 2015, was undermined, with no people’s participation in planning, decision-making or even monitoring.

The investments were focussed singularly on physical infrastructure, with few and misplaced investments on drinking water, healthcare and education.

However, over the course of two years, there has been some course-correction both on the policy front from certain states, as well as on investments made by the districts. This is covered in CSE’s new report

About DMFs

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.

The collection is contribution from mining companies — equivalent to 30 per cent of the royalty amount for leases granted before 2015, and 10 per cent for leases granted after that — and accrues at the district level. So far, 571 districts across 21 states have set up DMFs.

The concentration of the highest proportion of funds (about 73 per cent) is with big mining states such as Odisha, Jharkhand, Chhattisgarh, Madhya Pradesh and Rajasthan. Within the states too, some big districts have the lion’s share of the funds.

In Odisha, five districts account for about 85 per cent of the state’s Rs 9,500 crore. Keonjhar has had a collection of Rs 4,000 crore so far, the highest in the entire country and more than even the total collection of Madhya Pradesh and Rajasthan.

In Jharkhand too, the highest collections are shared between four coal mining and one iron-ore mining district.

With such a corpus, DMFTs provide a huge potential to alleviate poverty and improve the human development indicators in mining areas of the country. The fund is untied and non-lapsable, and can be used for both immediate and long-term investments.

Since mining-affected communities have a key role to play in deciding the fund use and in monitoring of works, it can work to strengthen local self-governance as well.

*Watch this space for the second instalment of the series

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