District Mineral Foundation (DMF) Fund

Recently, the Standing Committee on Coal, Mines and Steel, raised serious concerns regarding the diversion of District Mineral Foundation (DMF) funds in multiple States.

Findings of the Parliamentary Panel

• The panel expressed concern over the repeated diversion of DMF funds across several States, as reported by the Ministry of Mines.
  • These diversions reportedly involved transferring DMF resources to State treasuries, Chief Minister’s Relief Funds, or other unrelated State-level funds and schemes.
• It emphasized that such fund transfers violate both the letter and spirit of the Mines and Minerals (Development and Regulation) (MMDR) Act, 2015, which had mandated the creation of DMFs.
• The committee warned that these practices defeat the core purpose of DMFs, which is to ensure the welfare and development of communities affected by mining operations.
• It also recommended imposing penalties on DMFs where funds are diverted, to discourage such unauthorized transfers.
• The Ministry of Mines has issued directives to prevent the misuse of DMF funds, and the committee has insisted on being regularly updated about any cases of fund diversion.

About District Mineral Foundation (DMF)

• Establishment: District Mineral Foundations (DMFs) are statutory bodies, established as non-profit trusts under the Mines and Minerals (Development and Regulation) (MMDR) Amendment Act, 2015.
• Purpose: To work towards the welfare and sustainable development of mining-affected communities.
  • The DMFs align with the objectives of the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) to ensure equitable and effective utilization of the collected funds.
• The Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) is implemented through funds accrued to the DMFs.
• Fund Utilisation: PMKKKY provides for utilization of at least 70% of the funds for high priority areas like:
  • Drinking water supply, Housing and Sanitation.
  • Environment preservation and pollution control measures
  • Health care, Education; and Welfare of women and children
  • Welfare of aged and disabled people; 
  • Skill development, Agriculture, and Animal husbandry.
• It provides up to 30% of the funds shall be utilized for:
  • Physical infrastructure; Irrigation; energy and watershed development, and 
  • Any other measures for enhancing environmental quality in the mining district.
• Funding Mechanism: DMFs are funded through contributions from holders of major and minor mineral concessions.
  • The contribution rates are prescribed either by the Central Government or by the respective State Governments.
• Jurisdiction and Governance
  • The operation, composition, and functions of DMFs fall under the jurisdiction of State Governments.
  • State Governments are empowered to prescribe rules regarding the functioning and governance of DMFs.
  • Funds collected by DMFs are managed at the district level to ensure a targeted and localized approach to development.

Current Status of DMF Funds and Projects (As of January 2025)

• DMFs have been established in 645 districts across 23 States in India.
• A total of ₹1,04,250.74 crore has been collected under DMFs.
• Approximately 3.69 lakh projects, valued at ₹88,483.24 crore, have been sanctioned.
  • Out of these, 2.08 lakh projects have been completed, with a total expenditure of ₹55,923.65 crore.