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District Mineral Foundation – Issues and way forward

District Mineral Foundation – Issues and way forward

UPSC CSE Mains Syllabus: GS-3- Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and Bodies constituted for the
protection and betterment of these vulnerable sections.

District Mineral Foundation – Issues and way forward

In news:

  • The Ministry of Mines has recently proposed “reforms” in the mining sector under the Atmanirbhar Bharat scheme to stimulate economic growth in the wake of the COVID-19pandemic.
  • A key proposition of the reform draft is to amend rules/guidelines for the use of District Mineral Foundation (DMF) funds to increase focus on creating “tangible assets”.
  • The Ministry of Mines (MoM), wants to direct a large corpus of funds meant for mining-affected communities towards only creating infrastructure.

What is DMF:

District Mineral Foundations (DMF) is a trust, setup as non-profit body in all districts of Chhattisgarh, to work for the interest and benefit of persons and areas affected by mining related operations. It is funded through the contribution from miners. They derive their legal status from section 9B of mines and minerals (Development and Regulation) Act, 2015. This amendment came into force from 12 January 2015.


In all 27 reveue districts, District Mineral Foundation Trust is established by the State Governments by notification as a trust or non-profit as perpetual body in the mining operation affected districts.


The objective of District Mineral Foundation is to work for the interest of the benefit of the persons and areas affected mining related operations in such manner as may be prescribed by the State Government.

Composition and Functions:

  • Composition and Functions of the DMF is prescribed by the State Governments taking guidelines from article 244 of Indian Constitution, fifth and sixth schedules, Provisions of the Panchayats (Extension to the Scheduled Areas) Act, 1996 and the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006.
  • Funds every mining lease holder of will pay a fraction of royalty, not exceeding one-third of the royalty, to the DMF as per rates prescribed by Central Government.
  • This fund will be used for welfare of the people affected in the mining affected areas.
  • The Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY)will be implemented by the DMF’s of the respective districts using the funds accruing to the DMF.

The overall objective of PMKKKY scheme will be-

  • To implement various developmental and welfare projects/programs in mining affected areas, and these projects/programs will be complementing the existing ongoing schemes/projects of State and Central Government.
  • To minimize/mitigate the adverse impacts, during and after mining, on the environment, health and socio-economics of people in mining districts.
  • To ensure long-term sustainable livelihoods for the affected people in mining areas.

Issues in the new rules:

  • The proposal undermines the very law under which DMFs have been instituted.
  • It also opens the floor for misdirection of funds.
  • DMFs are non-profit trusts set up in all mining districts of the country under the Mines and Minerals (Development and Regulation) Amendment Act, 2015 to work for the “interest and benefit of people and areas affected by mining-related operations.”
  • Mining companies contribute 10-30 per cent on the royalty amount that they pay to the government to DMF Trust in the district they are operating in.
  • The idea behind the contribution is that local mining-affected communities, mostly tribal and among the poorest in the country, also have the right to benefit from natural resources extracted from where they live.

DMF – issues:

  • DMF is a huge corpus available at the district level; it is not tied to any specific scheme, is non-lapsable, and comes with a mandate to improve the socio-economic well-being of the mining-affected communities.
  • This gives scope as well as provision for decentralised planning for the use of funds.
  • At this critical time, when the effort is to bring the economy back on its feet, this is an opportunity to invest in building income security through local livelihoods, adequate healthcare and nutrition access to the most vulnerable group of people in mining districts.
  • These areas are also considered high priority under PMKKKY on which districts are mandated to spend at least 60 per cent of their DMF funds.
  • Over the last five years, the biggest problem with the DMF investments across states has been a blind focus on construction of infrastructure.
  • Analysis of data from states and key mining districts until March 2020 shows that investments in the physical infrastructure sector through DMF have been the highest, ranging from 30-40 per cent of the total investment. This is for roads and bridges alone.
  • This has happened because investments have so far been ad hoc and unplanned.
  • By putting the focus on creation of tangible assets, MoM would only end up diluting the very idea behind the institution of DMFs, reinforcing poor investments, quick to show on paper, but not of real value to the people it is meant to serve.

What is needed:

  • States must be given clarity on how to clearly and scientifically identify mining-affected people and delineate their respective mining-affected areas so that investments can be targeted towards them.
  • Focus must be on achieving better human development indicators and building economic resilience among local communities.
  • Investment in infrastructure should strictly be a means to an end, and not an end in itself.
  • Given the potential of DMFs, spending on infrastructure, in fact, must be brought down, monitored closely and tightly capped.
  • The overarching PMKKKY guideline needs strengthening.
  • However, tying it to tangible assets is not the solution.
  • Instead, the mandate must be for participatory local planning to address long-term needs of mining-affected areas and people.
  • It must also ensure that districts are equipped with required expertise to aid their staff with this planning and implementation.

Source:”Hindustan Times”.


Assess the concerns raised against the recently proposed rules/guidelines for the use of District Mineral Foundation (DMF) funds to increase focus on creating “tangible assets”.