Centre to take complete control of DMF funds

Centre to take complete control of DMF funds

This move is expected to trigger political storm acorss states

Representative Image. Credit: iStockPhoto

The Centre has decided to take complete control of the district mineral foundation (DMF) funds, bypassing the state's right to sanction or approve any expenditure out of the funds.

The move by the Ministry of Mines to control the funds, which is collected from mandatory contributions from mining lease holders, is likely to trigger a political storm and states may accuse the NDA government of encroaching upon their fiscal rights, threatening the federal structure.

Defending its decision, the Ministry of Mines officials said the Centre took control of funds spending after complaints of diversion of money by the states instead of using it for the purpose which it was meant for.

According to the Ministry of Mines, total Rs 50,499 crore has been collected in the DMF since its inception in 2015-16 out of which Rs 47,288 crore has been sanctioned and Rs 24,499 crore has been spent on various projects.

DMF fund collections have been the highest in mineral-rich Odisha (Rs 13,728 crore), followed by Chhattisgarh (Rs 7,151 crore), Jharkhand (Rs 6,974 crore). In Karnataka, a total Rs 2,712 crore collected out of which Rs 994 crore spent so far for different projects.

The Ministry in its order dated July 12, 2021 said "No fund shall be transferred in any manner from the District Mineral Foundations to the state exchequer or state level fund (by whatever name called) or Chief Minister's Relief Fund or any other funds or schemes."

The order further said, "No sanction or approval of any expenditure out of the fund of the District Mineral Foundation shall be done at the State level by the State Government or any State level agency.”

However, the Ministry of Mines order says, "move was necessitated as there are instances where a part of the funds of the DMF are being transferred to the treasury/consolidated fund of the state or state level funds (by whatever name called) or Chief Minister’s Relief Fund or other funds or schemes,” thereby “defeating the very purpose” of the creation of the DMF.

As per the MMDR (Amendment)  Act 2015, the state government must set up DMFs in all districts for the welfare of mining affected persons to which contribution is made directly by the holders of mineral concession, apart from royalty.

The money from the DMFs are required to be used for the welfare of persons and areas hit by mining-related operations which includes drinking water, education and infrastructure development. The scheme implemented under DMF is called Pradhan Mantri Khanij Kshetra Kalyan Yojana.

Though the MMDR Act has a provision, where the Ministry of Mines can give direction to the states about the utilisation of the funds, the latest order deprived the states discretion in the utilisation of funds, said an official from the state government.

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