Daily News Analysis


23rd July, 2021 Economy


  • Recently, Centre has denied Odisha government to transfer district mineral fund in the non-priority areas. It has asked the State to strictly adhere to the provisions of DMF Rules formulated under the Mines and Minerals (Development and Regulation) Act, 1957.

1. Background

  • The lopsided equation of poverty and social benefits have failed some of India's richest mining districts for decades.
  • Mining has benefited mining companies, individual miners and governments, not the communities living there.
  • After years of deliberations and negotiations in 2015, the country's central mining law, the Mines and Minerals (Development and Regulation) Act (MMDR) of 1957 was amended and District Mineral Foundation (DMF) was instituted.
  • The DMF is a non-profit statutory 'Trust' for every Indian district affected by mining-related operations, which should "work for the interest and benefit of persons, and areas affected by mining-related operations"

2.Composition and functions

  • Composition and Functions of the DMF is prescribed by the State Governments taking guidelines from Article 244 of Indian Constitution, fifth and sixth schedules,
  • Funds every mining lease holder of will pay a fraction of royalty, not exceeding one-third of the royalty, to the DMF as per rates prescribed by Central Government.
  • This fund will be used for welfare of the people affected in the mining a ected areas.
  • The Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) will be implemented by the DMFs of the respective districts using the funds accruing to the DMF.

Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY)

The overall objective of PMKKKY scheme is

  • To implement various developmental and welfare projects/programs in mining affected areas, and these projects/ programs will complement the existing ongoing schemes/projects of the State and Central Government.
  • To minimize/mitigate the adverse impacts, during and after mining, on the environment, health and socio-economics of people in mining districts.
  • To ensure long-term sustainable livelihoods for the affected people in mining areas.

Associated Challenges

  • The Centre also observed that states have been found transferring DMF funds to their own treasury and consolidated funds, and even to the Chief Minister’s Relief Fund and other schemes.
  • This, according to the mines ministry, is in violation of Section 9B of Mines and Minerals (Development and Regulation) Act that guides the DMF.
  • Ever since its establishment in 2015, the DMF has been portrayed as the saviour of communities tribals mostly that have benefitted little from mineral exploration and development in the regions they inhabit.
  • Six years down the line, there are instances galore where DMF funds have gone to areas that have little or no bearing on the lives of the vulnerable population.

Way Forward

  • The latest order by the Centre also echoes the same because putting huge financial resources to uses other than what they are mandated for defeats the whole purpose of the DMF’s creation.
  • Mineral development comes at a huge social and environmental cost, but communities living in these ore-bearing landscapes must be the principal beneficiary of the funds because they are the ones who bear the brunt but they aren’t benefited greatly.