CSE disappointed by Centre's Rules on Mines and Minerals (Contribution to DMF) and Pradhan Mantri Khanij Kshetra Kalyan Yojna

  • Centre has notified Rules on DMF, which require 10 per cent and 30 per cent royalty as contribution to DMFs; it has also instituted Pradhan Mantri Khanij Kshetra Kalyan Yojna (PMKKKY)
  • CSE says this is much less than what was promised in MMDR (Amendment) Act and will affect the prospects of mining-affected communities

  • PMKKKY scheme has cracks and DMF funds can be sucked into developmental works that DMF is not meant to support

  • Scope of DMF Rules and Scheme is less than it could have been, but if they are developed and implemented well, can still bring some benefit to mining-affected communities

NEW DELHI, September 18, 2015: Centre for Science and Environment (CSE) has expressed its disappointment on the Central government’s Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 notified on September 17. 

The Rules require mining lease-holders to pay merely 10 per cent of royalty as contribution to the DMF for leases granted on and after January 12, 2015. For leases granted before this date, lease-holders are required to contribute only 30 per cent of the royalty. This is in contrast to the MMDR Amendment Act, 2015 which required an amount up to an equivalent of the royalty for mines leased before the commencement of the Act, while for new mines leased after the commencement of the Act, the amount prescribed was up to one-third of the royalty.

“Such low percentages of DMF contributions reflect a significant watered down version of what has been proposed in the Mines and Minerals Development and Regulation (Amendment) Act, 2015. This will grossly undermine the objectives of the DMFs and will dash the hopes of mining affected communities across the country,” said Chandra Bhushan, deputy director general of CSE.

On September 16, the Centre had also brought out the ‘Pradhan Mantri Khanij Kshetra Kalyan Yojna (PMKKKY)’. The PMKKKY gives a blueprint for using the DMF funds to improve the socio-economic conditions of people in mining-affected areas.

Rules are a compromise on the best intent of the law
According to the MMDR Amendment Act, the money to be paid to the DMF by lease-holders for major minerals was to be prescribed by the Centre. “It was an opportunity for the Centre to determine an amount keeping in mind the best intent of the law, i.e. one-third of the royalty equivalent for new lease-holders, and an equal royalty for old lease-holders. By reducing these amounts through notified Rules to one-third of what has been prescribed in the Act, the central government has missed the opportunity for ensuring optimum relief to the mining-affected communities of India who have been carrying the burden of poverty and under-development for long,” said Bhushan.

PMKKKY does not hold ground either
CSE finds that even the PMKKKY Scheme is below the expectations of the people and confuses the DMF picture. “The scheme is vague and leaves cracks through which the DMF funds may be sucked up into the ongoing government developmental schemes and programmes,” said Bhushan.

The PMKKKY allows for use of DMF funds for creating infrastructure such as roads, bridges, building, staffing, purchasing vehicles, etc. which may lead to gross misuse of these funds. Moreover, the advised use of DMF funds for effluent treatment plants, pollution prevention technologies, etc. is highly objectionable as the scheme itself mentions that ‘Activities meant to be taken up under the ‘polluters pays principle’ should not be taken up under the PMKKKY’, hence making the Scheme self-contradictory,” 

Next steps are crucial: baton has been passed on to states
Although the notified DMF contribution rates are not agreeable, but if applied well the DMFs still have a potential for improving the lives and livelihoods of some of the poorest communities of India. Bhushan stressed the importance of being vigilant about keeping the DMF money separate from the state coffer. “Also, it is important to ensure that the DMF does not become a top-heavy institution and that it is rather developed as an inclusive one where communities are made a part of the decision-making process,” he added. 

CSE has developed Model Rules for DMF in order to assist various mining states of the country in developing their DMF Rules. “These Model DMF Rules serve the best interest of the law and realize the objective for which it has been instituted,” said Bhushan. 

CSE is doing a detailed analysis of the Scheme and will come out with a position paper soon.


For further information, please contact Souparno Banerjee (souparno@cseindia.org / 9910864339) of The CSE Media Resource Centre.