Gaps Remain, Despite Odisha‘s Pole Position with Regards to Funds Received under District Mineral Foundation (DMF)

Report finds that there are shortfalls on various fronts, from institutional and administrative issues, to planning and budgetary allocations. However, the state Planning and Convergence Department assures that institutional issues will be resolved by the end of 2017.

  • Odisha remains the top state in terms of DMF accruals. As per the latest updates provided by the state government officials, the total DMF collection in Odisha has gone up to Rs. 3,000 crore so far. The five biggest districts in terms of DMF accrual are Kendujhar, Angul, Sundargarh, Jharsuguda and Jajpur.

  • Big allocations for physical infrastructure in the districts – 30.5% in Kendujhar and 39% in Sundargarh.

  • Odisha districts are yet to register DMF Trusts which is critical for transparency and accountability of these institutions.

  • The allocations at various instances are ad hoc and the plans mechanically list the number and types of works to be undertaken, without any elaboration on the rationale of planning

  • The administration is dominated by government officials with poor representation of people. DMFs have been functioning without a fixed administrative set-up, such as an office for planning and co-ordination, relying on intermittent meetings of the DMF body

  • Of the total of Rs 5,800 crore collected across India so far, Odisha, Jharkhand and Chhattisgarh alone account for close to 70 per cent of total money deposited in DMFs

  • All districts have missed out on pressing issues such as issues of nutrition, welfare of the vulnerable such as children, women, orphans, aged and disabled people – a common concern in all mining areas.

CSE view: to enable DMF to deliver its intended mandate, there are three important aspects that need to be addressed– institutional and administrative gaps, planning and budget allocations and a scientific approach to the planning process Bhubaneswar, July 28, 2017: “DMF is a defining opportunity to overturn the decades of injustice meted out to the thousands of people living in deep poverty and deprivation in India’s mining districts,” said CSE deputy director general Chandra Bhushan, in a multi-stakeholder meeting on

DMF implementation held in Bhubaneswar on July 28. The meeting was attended by various officials from state government and key mining districts and members of the civil society. On the occasion CSE also released it’s latest study - District Mineral Foundation (DMF) Status Report 2017 - where a major focus remains on Odisha.

Established as a non-profit Trust, DMFs in every mining district have the precise objective to work for the interest and benefit of persons and areas affected by mining related operations. The CSE report is an independent review of the progress and performance of DMFs in various mining districts of India. The report finds that there are shortfalls on several fronts including institutional and administrative issues, to planning and budgetary allocations.

The realities of Odisha allocation
Odisha remains the top state in terms of DMF accruals so far, with about Rs. 1,933 crore collected until the end of 2016-17, as per the CSE study. The five biggest districts in terms of accrual are Kendujhar, Angul, Sundargarh, Jharsuguda and Jajpur. However, the total DMF collection in the state has now has swelled to about Rs. 3,000 crore, informed state officials.

The three districts analysed in detail by CSE team- Kendujhar, Sundargarh and Jharsuguda, have touched upon most of the ‘high priority areas’ of drinking water supply, education and healthcare, which are indicated in the state DMF Rules and the Centre’s scheme for mining-affected areas, the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY). However allocations and approaches to address these ‘high priority’ issues are varied.

For instance, in Kendujhar 33.3% of the DMF budget is for clean drinking water. “However, the district has allocated a lion’s share of this budget - about 85% - without any proper rationale, for tube wells. “This is definitely not a wise investment given the high levels of ground water contamination in mining areas, a fact well recognized by authorities like Central Ground Water Board (CGWB),” said Srestha Banerjee, Programme Manager, CSE. Sundargarh, meanwhile, has allocated 7.7% of the DMF budget for drinking water more judiciously, investing about 88% of the sectoral budget for ensuring piped water supply.

A major shortcoming in Odisha is that none of the districts have registered the DMF Trust, which is crucial for its accountability. P.K. Biswal, additional secretary, Planning and Convergence Department, Odisha, informed that the issue will be soon resolved as the state is consulting the law department on the correct mechanism of registration. There is also no dedicated office for DMF in the districts. The state government has, however, directed districts with more than Rs 100 crore annual DMF accruals to set up a Project Management Unit (PMU) for looking into feasibility of DMF proposals and monitoring progress of works. “PMUs are, however, not a long-term solution as there needs to be dedicated man-power comprising experts who can look into planning and implementation on DMF in the districts,” said Bhushan.

Another concern is that the sectoral allocation made by districts is highly construction-centric.

“This defeats the core purpose of DMF by ignoring the creation of social capital,” said Bhushan. This trend is clear in allocations for education and healthcare, where 90-100% sectoral budget in these districts are for construction of physical infrastructure. For example, Kendujhar’s total allocation for education is 7.6% of the DMF budget, and the entire amount is intended for construction of additional classrooms.

None of the districts have made the required investments in primary healthcare or child development, both of which are crucial issues in almost all mining affected areas in the state, noted the CSE report.

Organisations such as Orissa Voluntary Health Association (OVHA) which has been working in key districts for the last 35 years, also pointed out critical shortfalls in health resources highlighting that there is need for at least 12,000 allopathy doctors to deliver effective health care in rural areas. “A big challenge is having good doctors in the rural areas. One of the ways this can be addressed is by providing better incentives and salaries,” said Dilip Samal, Executive Director, OVHA.

Acknowledging the major shortfalls in health resources, the district magistrate and collector of Jharsuguda district, Bibhuti Bhusan Pattnaik said that the focus has to be brought to health and nutrition in the district.

Members of community groups also stressed upon sound planning and people-centric approach for the success of DMF. Saroj Mahapatra, Integrator, Pradan (Professional Assistance for  Development Action), said that that planning should have people as the focus. “District planning should focus on fundamental needs of the district such as health, livelihood issues, instead of projects which can look apparently interesting but will serve little to improve the situation of mining affected people,” he said. Concurring to this Chhita Ranjan Pani of Vasundhara added that traditional livelihoods are key for the people in mining areas, particularly tribals. Community members also emphasised upon the need for involvement and representation of mining affected people through gram sabhas, an important part of DMF which is currently lacking across districts.

About DMF
DMF was instituted in March 2015 under India’s central mining law, the Mines and Minerals (Development and Regulation) Act (1957). DMF has also been aligned to an important scheme of the Government of India, the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) that was launched in September 2015. According to the provisions of DMF, miners and mining companies are required to pay a sum to the DMF Trust of the district where the mine is located. This sum is determined on the basis of their royalty payments.

The fund is clearly a bounty for some of India’s poorest and under developed districts, many of which are in the country’s top mining states. In India’s top three mining states – Odisha, Jharkhand and Chhattisgarh, nearly 40 per cent of the people live below the poverty line. Various districts in these states, also identified as backward districts by the Niti Aayog, fare very poorly in terms of various human development indicators such as nutrition and health, mortality rate, access to clean water, sanitation and education, among others.

With a huge non-lapsable and an untied resource cover, clear objectives guiding the implementation, targeted beneficiaries and focussed intervention areas, DMFs hold a huge promise to address years of deprivation and inequality afflicting people living in India’s mining areas. “The Government had rightly observed that DMF and PMKKKY are ‘revolutionary’ steps.

However, the success of this move now lies in its relevance to, and participation of the people, and the transparency and accountability mechanisms through which the institution operates in the coming years,” said Bhushan.

CSE’s recommendations
“The core mandate of DMF is to work for the interest and benefit of people and areas affected by mining related operations, and it is this directive that should assume top priority. In addition, DMFs should also function with utmost transparency and accountability so that the promise that it holds can be realized,” added Bhushan.

To enable DMF to deliver its intended mandate, there are three important aspects that need to be addressed– institutional and administrative gaps, planning and budget allocations and a scientific approach to the planning process:

  • Register all DMF Trusts.

  • Set up DMF offices for activities like coordination, planning, monitoring and accounting – with fulltime staff. There should also be an active engagement with subject experts and line department officials.

  • Each mining district should provide all information related to DMF on specific websites for the purposes of transparency and accountability.

  • Invest on social capital and not on physical capital. Some critical issues to concentrate on should be nutrition and food security, clean water access, healthcare and education.

  • Focus on improving livelihood opportunities in mining affected areas, particularly around local resources.

  • Set aside money for future security. Mining areas often suffer from the problem of becoming ‘ghost towns’ once mining ends. This should not be the case now that DMFs are in play.

  • Determine the focus areas of intervention and prioritise issues through proper scientific assessment, taking into account the views of mining-affected communities.

  • Undertake scientific and comprehensive planning to address immediate as well as long -term needs and provide future security.

  • Perspective planning must be undertaken to address immediate and long-term needs and sustain investments.

  • DMFs can converge and integrate with other schemes of the Centre and state governments. This should however, be done only after thorough assessment of gaps.

  • A bottom-up planning process must be followed by involving Gram Sabhas as per the mandate of the law.

For further information on the release please contact Souparno Banerjee ( / 9910864339) of The CSE Media Resource Centre.


For the copy of the CSE report on DMF status, follow the link: