District Mineral Foundations (DMF)

An independent research analysis of the District Mineral Foundations (DMF) has shown gross underutilisation and misutilisation of funds.

Key Details in the Report

Prepared By: The report was prepared by iForest, an independent research group.
Assessment: iForest conducted a decadal pan-India review assessment of all 23 States where DMFs have been set up.
Findings:
- Unspent Funds: More than half of the over ₹1-lakh crore funds collected in the past decade are unspent
- Mineral wise Share: Non-coal major minerals account for over 51.5% of the total accruals followed by share of coal and lignite with about 37% share.
  - Minor minerals contribute about 11.5% of the total DMF funds.
- State wise Share of DMF funds:
  - Odisha( 29%)
  - Chhattisgarh ( 14%)
  - Jharkhand (13% )
  - Collectively these three States account for over 56% of the total DMF funds collected in the past 10 years in the country.
- Future Projections: iFOREST has projected the future total DMF accruals in the next 10 years (2025-26 to 2034-25) ie. to the tune of ₹2,50,000 crore to ₹3,00,000 crore.
  - The annual accruals will range from ₹20,000 crore to ₹30,000 crore
Concerns Raised:
- Sub Optimal Institutional Design: DMFs are practically dominated by officials and elected representatives with minimal representation of the mining-affected communities, such as from the Gram Sabhas of the mining-affected villages.
- Inefficient Fund Utilisation: The spending pattern of DMF funds is mostly in infrastructure-heavy investments while undermining the investments in human resources and developing social infrastructure in all the districts.
  - Example: In Dhanbad, out of the 1,164 projects sanctioned till 2024, only ₹1.86 crore have been allocated for skill development and livelihood generation.
    - In Kendujhar, only about 3.2% of the total allocations are for livelihood and skill development projects till 2022.
- Systematic and Long-term Planning: There is no long term planning for the utilisation of funds and often the funds are diverted to activities that are not directly linked to the welfare of mining districts.
- Local Participation: Lack of people’s engagement in identifying and designing intervention measures are hindering their full potential.

About District Mineral Foundations (DMF)

The DMFs are non-profit trusts set up in mining districts by the respective State Governments.
- The fund is one of the largest financial resources for immediate, medium, and long-term interventions to improve the lives and livelihoods of people in the mining-affected areas.
Minerals: The fund covers coal, lignite, major minerals such as iron, manganese, and bauxite, and minor minerals.
Coverage: They have been established in 645 districts across 23 States.
Legal Act: DMFs are set up under Section 9B of Mines and Minerals (Development and Regulation) Amendment Act, 2015
Objective: To alleviate poverty and deprivation in mining affected districts and work for their interest and development.
Funds Source: The DMF funds come from statutory contributions by mining leaseholders.
- Mining Companies contribute directly to the district’s DMF Trust, paying 10% of the royalty for leases granted after January 12, 2015, and 30% for leases granted earlier.
State Government Role: The State governments are required to develop and notify the State DMF Rules outlining the governance structure of the DMFs, fund utilisation priorities, and mechanisms for planning, monitoring, and implementation.
- The operation and composition of DMF comes under the jurisdiction of the State Governments.
The Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) is implemented through funds accrued to the DMFs.

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