DMF funds for mineral-rich states grossly underutilised

Financial Express | Oct 18, 2019

Of the DMF collections, states have approved Rs 22,999 crore towards various projects, categorised as ‘priority areas’ like drinking water supply, education and healthcare and ‘other priority areas’ like developing physical infrastructure.

Mineral-rich states have utilised only 22% of the Rs 31,833 crore accrued to the district mineral foundations (DMF), a facility meant for the development of mine-affected areas and its people, mostly tribals. In contrast, the annual budget for the tribal affairs ministry for the 2019-20 fiscal stands at just Rs 6,895 crore.
Mining royalty is earned by the respective states where the leases are located.

As per the Mines and Minerals (Development and Regulation) Amendment Act, 2015, lease holders are to make between 10-30% of the royalty as statutory contributions towards DMF. The Act empowers states to prescribe benefits to project-affected persons. The compositions and functions of the DMF is also decided by the states.

Of the DMF collections, states have approved Rs 22,999 crore towards various projects, categorised as ‘priority areas’ like drinking water supply, education and healthcare and ‘other priority areas’ like developing physical infrastructure. However, only about Rs 6,944 crore has been utilised so far. As per the amended Act, 60% of the proceed is to be utilised in priority areas and the remaining on ‘other priority areas’.

Through a notification issued on September 16, 2015, the Centre sent advisory to all states to establish a DMF in every district affected by mining related operations. Though the Centre has sent numerous advisories, prodding the states to set up DMFs, couple of states, including Meghalaya, are yet to follow the directive.

Odisha, the first state to formulate the DMF rules, has accumulated Rs 8,257 crore under DMF and has approved Rs 7,065 crore. Te utlisation, however, is only Rs 1,134 crore. Cumulative accrual for Jharkhand stands at Rs 4,585 crore, approved amount at Rs 3,841 crore and the state’s utilisation of fund stands at Rs 1,165 crore.

The mines ministry will write again soon to the states suggesting ways and means for improving fund utilisation under DMF. The ministry has also received suggestions from various government departments to converge Revised National Tuberculosis Control Program (RNTCP) with Pradahan Mantri Khanij Kshetra Kalyan Yojana (PMKKY), funded through the proceeds of DMF. Ministry of women and child development has also suggested convergence of the DMF fund with ‘Poshan Abhiyaan’, which aims to reduce malnutrition, anaemia, stunting etc. in children, women and girls. A source in the mines ministry said these suggestions are being examined.

There could be some changes in the categorisation of priority and other priority areas. At present, irrigation has been categorised in the ‘other priority areas’. Irrigation and healthcare could come under ‘high priority areas’. The division of 60:40 ratio for high priority and other priority areas could also be tweaked. State may be allowed to change the ratio to address the priority.