The petition has alleged that the Goa government has neglected the demands by those affected by mining and has instead diverted the funds for Covid-19 management
The Bombay high court (HC) at Goa has directed the Pramod Sawant-led government to respond within two weeks to a petition alleging misuse of funds by the two District Mineral Foundations (DMFs) in the coastal state.
The petition was filed by Sudesh Narayan Gaonkar and Nilesh Harishchandra Velip, who are residents of two mining-affected villages such as Velguem and Collem, respectively. The petitioners were supported by the Goa Foundation, a non-governmental organisation (NGO) known for its environmental activism.
The petition has alleged that the Goa government has neglected the demands by those affected by mining for long and has instead diverted the funds for the management of the raging coronavirus disease (Covid-19) outbreak in the state. The move is outside the scope of the DMFs, the plea added.
The petition has challenged the legal basis of the circular that has been issued by the state ministry of mines, which have recommended the diversion of the DMFs’ funds.
“There is a proposal to divert up to 30% of DMFs’ funds for Covid-19 relief measures in the state, while glossing over the primary objective of the reason behind the setting up of the mechanism. The persons for whom DMFs’ funds have been set aside by Parliament have suffered the ill-effects of mining activities for over two decades, as compared to the Covid-19 epidemic that was first reported in Goa less than six months ago,” alleged Claude Alvares, director, Goa Foundation.
Various mining-affected villages have filed proposals for improvement of their village assets, including water resources and agricultural fields, and have sought funds from the DMFs’ kitty to alleviate their woes.
However, the proposals have allegedly fallen on the state authorities’ deaf ears .
For instance, over 40 proposals have been received by a DMF alone for financial support, including for rehabilitation of village assets such irrigation sources and paddy fields.
“The two DMFs have abandoned their statutory responsibilities and the applications are still pending with the state government,” the petition alleged.
In 2018, the HC had lashed out at the Goa government for its failure to utilise the funds sanctioned under the DMFs.
“This state of affairs is shocking. The state government did not make the DMFs operational, despite collecting ₹180 crore for the past two and half years. We have been told that the money was invested, but we have not been informed under what heads the sum was utilised. The affected villages have been approaching us for basic amenities such as drinking water. Those affected by the mining cannot be made to toil for benefits that are rightfully theirs and in whose name hundreds of crores of rupees are collected by these foundations,” the HC had said in March 2018.
“We repeatedly asked the additional advocate-general for an explanation for such colossal neglect, but none was forthcoming. We are at a loss for words to describe the (state government’s) apathy,” the court had observed.
Under Section 9(B) of the Mines and Mineral (Development and Regulation) Act, 1957, each state is obligated to establish a DMF for a district that is affected by mining activities.
Goa has two such DMFs, one each for north and south Goa.
DMF is entrusted with the responsibility to work for the interests and benefits of the public and the areas affected by mining activities.
The District Mineral Foundation funds have nearly Rs 23,800 cr after less than 40% of the amount accumulated over the past five years was spent.
Mumbai/New Delhi: An under-utilized $3.1 billion fund targeted at the poorest in India’s mining belt could prove to be a crucial resource in the South Asian nation’s fight against the coronavirus pandemic.
Created under a new law in 2015, the so-called District Mineral Foundation funds have nearly 238 billion rupees, after less than 40% of the amount accumulated over the past five years was spent, according to data from the country’s mines ministry. The funds were created from contributions by miners in addition to royalty payments and were aimed at improving the lives of people in areas affected by mining.
That could come to the aid of mining states, which decide how the funds should be used, after a nationwide lockdown shut factories, malls and offices, bringing the economy to a halt. As restrictions begin to ease, the states will need the funds to buy protective equipment, strengthen their medical infrastructure and create jobs.
“The DMF has come as a huge support for mining districts,” Amit Kumar, the deputy commissioner of Dhanbad district in Jharkhand known for its coal mines, said on Friday. “At the moment we have seven positive cases, but should the numbers rise, we will not be short on funds to deal with this.”
Dhanbad has used the funds for filling in staff vacancies at hospitals and for water and sanitation projects, an investment that’s being put to good use today, Kumar said.
The contagion is escalating in the South Asian nation of 1.3 billion people, with 150,793 infections, including 4,344 deaths as of Wednesday, according to data from Johns Hopkins University. To combat the virus, India’s government introduced the world’s biggest lockdown in March and extended it until May 31, while easing restrictions in certain sectors to boost economic activity.
The lockdown has had a damaging economic impact, with the country hurtling toward its first full-year contraction in four decades. An estimated 122 million people lost their jobs in April while consumer demand has evaporated.
Under-Utilized “DMFs in various states and districts cannot afford to put the issue of livelihood in the backseat anymore,” Srestha Banerjee, a consultant at Brooking India, said in a report. “Given the urgency of the economic situation, the states and districts must shore-up investments towards this.”
Bureaucratic hurdles, ignorance by local political representatives of the DMF and its aims, lack of monitoring mechanisms and little pressure from the affected communities for its adequate utilization are some of the reasons for the slow deployment of funds in projects, according to Oxfam.
While some states like Chhattisgarh have spent a big portion of the funds on welfare projects, others like Odisha, which has collected the highest amount at 100 billion rupees, have spent about 35% so far, according to the mines ministry.
There is a lack of transparency and public accountability in the implementation of various welfare projects, Oxfam said. There is need for a mandatory monitoring mechanism tracked by the federal government, to ensure these funds are spent on projects that benefit communities and their local environment and livelihood rather than on capital and infrastructure projects only, it said. –Bloomberg
The Prime Minister of India held a meeting on April 30, 2020 to consider reforms in the mines and coal sector to jump-start the Indian economy in the backdrop of COVID-19. The mining sector, which is a primary supplier of raw materials to the manufacturing and infrastructure sectors, is being considered to play a crucial role for the resurgence of the economy post the lockdown and in the coming years.
While several reforms are being mulled over to boost mining businesses, the Centre and the state Governments also need to consider boosting local livelihoods. In the context of mining districts, the District Mineral Foundation (DMF) funds can be used for prioritising livelihood generation and creating local jobs. The Prime Minister in the latest meeting has also discussed the scope of improving “community development activities” through the fund.
DMF was instituted in March 2015, under the Mines and Minerals (Development and Regulation) Amendment Act 2015. It has been conceptualised as a benefit-sharing mechanism with mining-affected communities, recognising them as partners in natural resource-led development. Set up as a non-profit trust in all mining districts of India, DMF comes with the precise objective to ‘work for the interest and benefit of people and areas affected by mining’, through a participatory process. In September 2015, the Centre further aligned DMF with the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) scheme, to implement various developmental projects and welfare programmes in mining-affected areas using DMF funds.
Livelihood and income generation is a key issue that DMFs need to focus on for mining-affected communities across the country. This has been emphasised through the MMDR Amendment Act 2015 and the respective State DMF Rules developed under it, as well as the PMKKKY scheme. The emphasis comes in three ways.
Firstly, considering the fact that mining-related activities lead to significant displacement and loss of livelihoods in these areas, the law specifically notes that people who have lost their land rights (including user and traditional rights) due to mining or whose livelihood has been affected by such activities, constitute DMF beneficiaries. Secondly, one of the defined objectives of PMKKY is to ensure long-term sustainable livelihood for the people affected by mining. Finally, following the PMKKKY guidelines, livelihood and skill development have been recognised as ‘high-priority’ issues under all state DMF Rules on which districts must invest adequately.
Besides regulatory prerogative, the economic situation in the mining districts also clearly point out why income generation and creation of diverse livelihood opportunities should be a focus of DMFs. For example, in most of the mining districts, particularly in the rural areas where most mines are located, the income level among the local population is extremely low. As per socio-economic caste census of the Government of India, in a majority of these districts, 80 to 90% of the rural households have the highest earning member getting below Rs. 5,000 per month (Table 1: Distribution of household earnings in rural areas of some top mining districts). What adds to the low-income levels is the income uncertainty, as more than 50% of the workforce comprise of manual and casual labourers in these districts. Poverty and uncertainty of income also undermines the access to adequate food, proper healthcare, education and all such basic needs.
Table 1: Distribution of household earnings in rural areas of some top mining districts
Households having monthly income of highest earning household member less than Rs. 5,000 (%)
Households having monthly income of highest earning household member between Rs. 5,000 to10,000 (%)
Households having monthly income of highest earning household member more than Rs. 10,000 (%)
Source: Socio economic caste census, 2011, Government of India
Neglected so far, livelihood investments must now be a priority for DMFs
Despite the mandate to improve livelihood and income among communities in the mining-affected areas, DMFs in almost all mining states have failed to make the required investments on this extremely important sector so far. For instance, in most of the top mining states, the funds earmarked for livelihood and skill development are negligible compared to the total cumulative accrual of DMF funds (Table 2: Allocation of DMF funds for skill development and livelihood in top mining states). The allocation towards this account for only 0-4% of total allocations for various developmental works in these states. 
Table 2: Allocation of DMF funds for skill development and livelihood in top mining states
Total DMF accrual(Rs. Crore)
Allocation for livelihood and skill development(Rs. Crore)
No information available
Source: Ministry of Mines, Government of India, DMF fund status up to February 2020 and State Government mining departments. 
The course must now be corrected. As policymakers at the Centre and state levels discuss relief measures for the poorest and reviving their income, they have an opportunity to strengthen implementation of key programs like PMKKKY and DMF to improve the ground situation. For this, the Centre and respective state governments need to provide clear directions to all districts.
With more than Rs. 36,858 crores in DMFs across the country, the potential of this fund is enormous for improving socio-economic conditions of local communities in the mining districts. As we start a new financial year, it is also the time for DMFs to start planning and budgeting for the 2020-2021. The law requires DMFs to undertake such annual planning considering the situation on the ground and capturing the need and aspirations of local communities.
For DMFs in all districts, much attention must be paid to skill development and providing other resource support for sustainable income generation. This, as noted earlier, is also enshrined in the third objective of PMKKKY and a priority component of all State DMF Rules. Considering the potential of local skills and resources, employment opportunities can be improved through multiple means. For example, incentivising livelihood opportunities around local resources such as forest products can be helpful as many of the mining areas are rich in forests. In fact, the Government of India last week announced raising of minimum support price (MSP) for 49 varieties of minor forest produces, including wild honey, tamarind, mahua flowers and seeds, lac, sal leaves etc., in view of circumstances arising out of Covid-19. DMF funds can further be used to support market linkages for these produces and their products to ensure better economic value for the goods. Besides, agro and horticulture-based industries should be developed which will be relevant to the knowledge and skills of the local people. Providing support to women self-help groups (SHGs) on micro enterprises such as poultry farming, dairy, sericulture, handicrafts, handlooms, etc. will also be important to improve women participation in the workforce. At the same time creating a workforce for various occupations including health care givers through proper training will be crucial for supporting income as well as bridging resource gaps in primary healthcare.
DMFs in various states and districts cannot afford to put the issue of livelihood in the backseat anymore. Given the urgency of the economic situation the states and districts must shore-up investments towards this.
Government’s recent move to use DMF for healthcare provisioning during COVID-19 emergency must be limited to mining-affected areas and people. It must also look beyond towards building economic resilience of mining-affected communities, says CSE
New Delhi, April 27, 2020: In a new report on DMF (District Mineral Foundation), Centre for Science and Environment (CSE) has found that DMFs have a huge potential to address some of the key challenges which mining-affected communities have been burdened with for decades. In the wake of the recent government proposition to use DMF funds for healthcare measures for Covid-19 pandemic, CSE cautions that it must strictly be used for building health and economic resilience of mining-affected communities and not used as a general development fund. DMFs should continue to be used for improving the lives and livelihoods of affected communities in India’s mining districts.
Says CSE director general Sunita Narain: “We understand the need for urgency and the importance of our response to COVID-19. However, it is also clear that DMF has been designed for our mining-affected communities, who live in the poorest and most backward regions of our country. Our report suggests that DMF should continue to improve and do more to build livelihood security in these regions. We are concerned that there are efforts to merge this fund for more general purposes. This must not happen.”
DMF: Implementation status and emerging best practices (https://www.cseindia.org/dmf-implementation-status-and-emerging-best-practices-10057), as the report is titled, shows how — over the last two years — districts in India have tried to improve income levels, healthcare access, nutrition support, educational coverage etc using DMF. Says Narain: “Such investments, complimented by outcome-oriented and inclusive planning, can go a long way in ensuring equity and social dividend in India’s mining areas.”
DMFs have been set up in most mining districts of India, with the stated objective to work for the benefit of communities ‘affected’ by mining. Since it was set up, DMF has accrued over Rs 36,000 crore in its coffers. Says Narain: “We believe the fund can play a crucial role in improving lives of people who are living on the margins of survival – caught between poverty and the environmental devastation caused by mining.” The flagship scheme of the Government of India – the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) — also recognises this fact, the report points out.
CSE has been following the progress of DMFs across the country for the past five years. The Centre has consistently and regularly reported on the scheme’s implementation, administration practices, and challenges (see all our DMF reports on www.cseindia.org).
The latest report is the third in a series – CSE’s 2018 and 2017 reports had exposed the critical shortfalls in DMF administration, planning and investments which have been undermining the potential of the Foundations to benefit mining-affected communities. While many of those issues still stand, there have been efforts at course correction since then. Says Chinmayi Shalya, Environmental Governance Unit, CSE: “The 2020 report is an effort to capture some of these in the hope that more states and districts will be compelled to think and bring them into policy and practice.”
Narain says: “We strongly recommend that DMF should not be merged or used for general purposes – even when it comes to the COVID-19 emergency. Instead, it should be used in the mining districts for the benefit of mining affected communities to improve their health infrastructure and well-being. This would certainly go a long way in building more inclusive societies, which will — in turn –improve our resilience against future disasters.”
Delhi-based non-governmental organization, Prahar (public response against helplessness and action for redressal) on Sunday, urged the government to use the unutilised amount of Rs 23,510 crores from the state-owned district mineral foundation fund as part of relief aid to the ongoing Covid-19 outbreak, while Goa Foundation, an NGO based in Goa has opposed the idea.
“A corpus of Rs. 23510 crores of unutilized DMF fund is available which if liquidated can bring great relief to the people in mineral states at a time of a national crisis,” said Prahar in a statement.
On March 26, 2020, the Finance Minister Nirmala Sitharaman during an announcement, urged DMF funds to be used to supplement and augment healthcare facilities, screening and testing requirements and any other resources that might be required by the state governments.
Due to lack of clarity, after 3 weeks only negligible progress has been made with few districts making some use of these funds, the NGO said.
Yet another NGO, Goa Foundation, has however opposed the use of DMF funds and iron ore permanent fund in Goa’s fight against Coronavirus.
The NGO in the letter to the Chief Secretary, Government of Goa wrote that the central government has no right to allocate these funds for saving lives in these extremely troubled times.
Monies placed in the DMFs are, by law, only allowable to support activities that enhance the welfare and opportunities of persons directly affected by mining in mining districts…Hence, by no stretch of the imagination of the law, can the funds meant for them and their communities be used for government activity related to the Covid-19 pandemic, Goa Foundation said in a statement.
“It is not a welfare approach to let the spirit of an act be clouded under the letter of the law”, it added.
Mines and minerals development and regulation Act 1957, mandates the State Governments to establish District Mineral Foundation (DMF) in each district affected by mining related operations.The object shall be to work for the interest and benefit of persons, and areas affected by mining related operations.
DMF fund collection in some key states include Odisha with Rs. 9501 crore, Karnataka Rs. 1842 crore, Goa Rs. 188 crore, Assam Rs. 80 crore, Meghalaya Rs. 48 crore and West Bengal Rs. 43 crore till date.
“Goa collected Rs. 188.65 crore in DMF Fund and Rs. 399 crores in Goa Iron Ore Permanent Fund till March 2018 when mining was operational. Out of this only 2% or Rs. 4 crore of DMF fund has been used for the welfare of people. At a time when the state is in its worst crisis, this corpus can act as a bail-out package”, according to Prahar
Goa Foundation has called utilisation of these funds for life saving purposes as “raid on financial resources” by state and the centre and termed the decision of using DMF fund as “illegal decisions” and threatened consequences.
Commenting on this, Prahar’s, National Convenor and President, Abhay Raj Mishra said, “Heartless opposition by institutions with a mindless goal should be stopped immediately as it exposes their true intentions”.
“The Central Government does not have any power to approve diversion of such funds. Neither is there a provision in the MMDR Act which allows such approvals by the Central government,” Said Goa Foundation’s Director, Claude Alvarez.
According to the amended minerals act, 40% of the DMF fund can be used for ‘other priority areas’ whereas 60% should be reserved for the ‘priority areas’. This means that while 60% of the fund can be kept for communities directly working in mining activities, the remaining can be used for the wellbeing of the state.