No focus on mining affected people, Despite huge accrual of funds District Mineral Foundation (DMF)

in Madhya Pradesh: says first independent assessment of the scheme done by CSE

Report also finds that there are shortfalls on various fronts, from institutional and administrative issues, to planning and budgetary allocations

  • In MP, the total DMF accruals till the end of 2016-17 is about Rs. 979 crore. The state has also created an exceptional provision of a State Mineral Fund under the DMF Rules, which will receive a percentage of the DMF accruals from various districts.

  • Over 60 per cent of Madhya Pradesh’s DMF collection so far comes from just one district – Singrauli, a major coal mining hub, whose collection stands at Rs. 615 crore.

  • However, Singrauli’s Rs 273 crore DMF budget fails to account for the pressing issues that ail people in the mining affected areas. The district has allocated more than 63 per cent of its DMF budget  for building roads and bridges, giving a miss to the basics such as  clean drinking water, nutrition and child development issues, healthcare, livelihood etc.

  • Overall, the district has allocated about 80 per cent of the budget towards issues noted as ‘other priority areas’ in the state DMF Rule and PMKKKY. Rules stipulate that not more than 40 per cent of the total budget should be spent on these areas.

New Delhi, June 13, 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, releasing the Centre’s latest study on the status of District Mineral Foundation. The study was released in New Delhi on 8th June. 

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, including Madhya Pradesh. The report finds that there are shortfalls on several fronts including institutional and administrative issues, to planning and budgetary allocations.

Singrauli misses out on the people

The total DMF accruals in Madhya Pradesh till the end of 2016-17, are about Rs. 979 crore. The state has also created an exceptional provision of a State Mineral Fund under the DMF Rules, which will receive a percentage of the DMF accruals from various districts. Under this scheme, for accruals amounting from Rs. 5 to Rs. 25 crore, 25 per cent of the DMF fund will be transferred. For accruals above Rs. 25 crore, 50 per cent of the DMF fund will be transferred. This state fund, has been placed under the aegis of the state finance department

Over 60 per cent of Madhya Pradesh’s DMF collection so far has come from just one district – Singrauli, a major coal mining hub, whose collection stands at Rs. 615 crore. However, Singrauli’s DMF budget of Rs. 273 crore fails to address any of the pressing issues that people face in this mining affected district. The DMF budget barely has any money for clean water, nutrition and child development, education and viable livelihoods. Meanwhile, a massive share of the budget – more than 63% - has been provided for building roads and bridges. This is despite the fact that the state government already has funds for such road projects. More importantly, the DMF law clearly restricts using more than 40% of the budget on such projects. 

“The reality of Singrauli’s DMF budget is a major hindrance for the promise that DMF holds, especially for the district which fares very poorly on many basic issues of development.  In January 2010, the Union environment ministry had declared Singrauli as the ninth most critically polluted area in the country,” said Srestha Banerjee, Programme Manager, CSE. Water remains one of the most stressed resources in the district – less than 1 per cent of its rural households get treated tap water. Uncovered wells are the only source of water for over 58 per cent of the population, and hand-pumps cater to another 31 per cent. And the water on offer is believed to be severely contaminated. However, a mere 0.9% of the district’s DMF budget has been allocated for clean drinking water. Further, the entire allocation is earmarked for digging tube-wells which is a futile enterprise in an area with highly polluted ground water.

Another critical factor that has been completely ignored is the issue of child development. With an infant mortality rate of 67 and a shockingly high under-5 mortality rate of 112, the district is one of the worst in terms of child development indicators. Close to 35 per cent of children here also suffer from various symptoms of malnutrition such as stunted or wasted growth.  To address this, the state has set aside a cursory allocation of Rs 1.7 crore, which constitutes only 0.6 per cent of the district’s DMF budget.

“The education allocation too lacks any proper rationale. Only 2 per cent of the Rs. 273 crore budget mentions installing green boards, constructing waiting rooms and putting up water coolers,” said Bhushan. This would barely be enough to address the gaps in education in the district. Government statistics show that nearly half of the primary schools in district do not have adequate teachers as mandated by the Right to Education Act (2009). In addition, there is high dropout rate of 20 per cent at eighth grade.

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 fundamental fact about DMF is it is mandated to work for the interest and benefit of people and areas affected by mining related operations. Therefore, these people and the need of this areas should be put first and foremost. Also DMFs must function through utmost transparency and accountability so that the promise that it holds can be realized.

There are three important aspects that need to be addressed with respect to DMFs – 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 full-time 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. 

A copy of the report is available here:

For further information on the release of the DMF Status Report please contact Hemanth Subramanian, CSE Media Resource Centre; 9836748585;