Now, Centre seeks to control district mineral funds

Financial Express | Surya Sarathi Ray | March 18, 2021

While the guidelines say that 60% of the DMF funds have to be utilised for ‘high priority sectors’ such as drinking water supply and education, 40% is earmarked for ‘other priority sectors’ such as physical infrastructure, energy and cowshed development.

The Centre has inserted a new clause into the Mines and Minerals (Development and Regulation) Amendment Bill, 2021, to take control of the district mineral funds from the state governments. The amendment, part of many changes to the relevant Act cleared by the Cabinet last week and introduced in Parliament on Monday, could spark a political storm. Many would likely see it as yet another bid by the Narendra Modi government to usurp the states’ fiscal powers and undermine their constitutionally defined role in governance.

As per the MMDR (Amendment) Act, 2015, state governments must establish district mineral foundations (DMFs) in all districts affected by mining-related operations; lease holders are required to contribute to these not-for-profit foundations as a defined percentage of royalty, in addition to the royalty paid to state governments. The DMFs are needed to use these funds, total collections stood at over Rs 45,000 crore in September 2020, for the welfare of persons and areas affected by mining-related operations, the tribal population being the principal intended beneficiaries.
The scheme is called Pradhan Mantri Khanij Kshetra Kalyan Yojana.

While the sub-section 3 of Section 9(B) of the MMDR Act brought in through the 2015 amendment, says, “The composition and functions of the District Mineral Foundation shall be such as may be prescribed by the State Government”, the Centre’s new Bill seeks to add a proviso to the sub-section that, “provided that the Central Government may give directions regarding composition and utilisation of fund by (the DMF). Clearly, the idea is to deprive the states of discretion in the utilisation of DMF funds.

The Centre’s unhappiness with the way the states use the DMF kitty or the states being the custodian of these funds came to the fore in March 2020, as finance minister Nirmala Sitharaman suggested, as part of the first tranche of the Atmanirbhar package, that, “We will request the state governments to utilise the funds which are available at the DMF at the district level so that medical testing, medical screening and also providing of health attention will not suffer”.

Sitharaman also cited some “Rs 25,000 crore lying unutilised” with DMFs; however, data gathered by FE show that of Rs 45,096 crore collected by DMFs so far, Rs 42,141 crore has already been sanctioned for over 2 lakh projects. Of course, the amount released so far is Rs 20,337 crore, but that doesn’t show a wider gap between the sanctioned and released amounts than under the government’s other welfare schemes.

The Centre is also apparently worried about reports that states are diverting the DMF funds for other purposes. An mining industry official told FE on condition of anonymity: “Instances of diversion of DMF funds by states have been noticed in the past. By adding this provisio (in the Bill), the Centre may be trying to regulate such practices.”

While the guidelines say that 60% of the DMF funds have to be utilised for ‘high priority sectors’ such as drinking water supply and education, 40% is earmarked for ‘other priority sectors’ such as physical infrastructure, energy and cowshed development.

According to the MMDR Rules 2015, “every holder of a mining lease or a prospecting licence-cum-mining lease shall, in addition to the royalty, pay to the DMF of the district in which mining operations are carried on, an amount at the rate of 10% of the royalty in respect of mining leases or prospecting licence cum-mining lease granted on or after January 12, 2015 and 30% of the royalty in respect of mining leases granted before January 12, 2015”.

The DMF funds collections have been the highest in mineral-rich Odisha (Rs 11,099 crore), followed by Jharkhand (Rs 5,921 crore), Chhattisgarh (Rs 5,830 crore), Rajasthan (Rs 4,121 crore) and Telangana (Rs 2,902 crore).

In recent years, the Centre has come under fire for allegedly showing a tendency to centralise fiscal powers and policymaking – this was reflected in the terms of reference given to the 15th Finance Commission and the increased use of the cess route, which hit the divisible tax pool, to the detriment of states. As the pandemic dented the goods and services tax (GST) revenue and compensation kitty, the states had to put up a fight to make the Centre agree to honour the commitment to compensate them fully, despite a law mandating such succour being in place.

Goa Spent Bulk of Money for Mining-Affected People on COVID-19 Relief

Science The Wire | March 18, 2021

On April 28, 2018, Devidas Nayak of Molem, a mining-affected village in south Goa, wrote to the authorities managing the District Mineral Foundation (DMF) funds, explaining that his agricultural land has lost its water holding capacity because the drainage adjacent to the land is full of mining silt resulting in flash floods during the monsoon, making it easy for wild boar and bison to destroy the land.

He sought financial assistance to desilt the nalha, and help in infrastructure for irrigation of his fields. Nayak, who was formerly working with barge transportation (of minerals), had lost his job since the mining industry shut down and needed financial help in protecting his fields. Nearly three years later, on January 6, 2021, his letter was forwarded to Goa’s water resources department for scrutiny.

Nayak’s plea is among nearly 200 such letters since 2018 that are with bodies controlling Goa’s DMF funds. These letters are from individuals, panchayat members, doctors, legislators, and non-profits representing mining-affected villages, requesting financial assistance for basic needs such as drinking water, water for irrigation, restoration of agricultural land, desilting of agricultural land, education, providing transportation for children, and creating health infrastructure – fundamentals of a functioning village. Three years later, while some of these requests have been approved, most are pending or have been deferred indefinitely.

In June 2015, through an amendment in India’s central mining law – the Mines and Minerals (Development and Regulation) Act 2015 – DMFs were introduced in all districts in the country that are affected by mining-related operations, including Goa’s two districts, north and south. These district mineral foundations were tasked with managing and utilising the funds for the interest and benefit of people and areas affected by mining.

DMF funds diverted for COVID-19

According to documents accessed by Mongabay-India, about Rs 202.5 crore was collected under DMF, and of that approximately Rs 42 crore has been spent thus far. However, of this, merely Rs 4 crore has been utilised directly for the mining-affected villages, while the rest of the Rs 38 crore has been diverted towards COVID-19 relief. In March 2020, when the pandemic struck, the central government came out with an order that said that up to 30% of the DMF funds can be diverted towards coronavirus relief work.

But the central government’s move had come under severe criticism from several quarters including from the organisations working with mining-affected communities.

An analysis of the documents reviewed by Mongabay-India reveals that the DMF funds utilised for COVID-19 have gone into purchasing thermal imaging cameras, quattro machines, test kits, personal protective equipment, micro PCR systems – most of the equipment meant to be utilised in COVID-19 hospitals in major cities of Goa: Panjim, Vasco, Ponda and Margao.

Goa has two districts – north, which covers the mining belt, the coastal belt as well as the major cities of Panjim and Mapusa; and south, which also covers the mining belt, the coastal belt and the major cities of Margao, Vasco and Ponda.

The remaining Rs 4 crore went into providing water to mining-affected villages, providing transportation facilities for school children, pumping water out of the mining pits in a few villages, and desilting agricultural land for the village of Sirigao in north Goa. This utilisation, lawyers and activists say, has come only after being slapped by court orders.

“The DMF authorities have done no work for the benefit of the mining-affected villages of their own accord,” Anamika Gode, an environmental lawyer working for Goa Foundation, a non-profit based in Goa, told Mongabay-India. “If you notice, you will see that only water and transportation facilities have been provided thus far, and only one village has had its agricultural land desilted. Work under the DMF has started only after the repeated intervention of the High Court of Bombay at Goa.”

“It took them two years to even consider these applications. And if you notice in the minutes of the meetings, all COVID-related purchase approvals are post-facto,” she added.

In August 2020, two residents of mining-affected villages filed a petition against the Goa government, stating that the DMF funds have been misused by the state government, questioning the legal basis of the diversion of funds, and stated that the mining-affected areas have been completely neglected.

Hanumant Parab, a mining activist from Pissurlem, a mining-affected village in north Goa, said that the DMF had provided their village with 117 water tanks of 500 litres capacity each.

“We are yet to get the water though. They gave us the tankers two years ago but not a drop of water had come from them yet. They need to provide more tankers also,” Parab told Mongabay-India. The village currently depends on an erratic piped water supply from the government, and mining companies are mandated to provide water to some of the wards every day.

South Goa DMF had Rs 97.43 crore in its coffers, and, of that, it used Rs 14.95 crore. And of that, Rs 14.10 crore went towards COVID-19 relief work while the remaining Rs 85 lakh was utilised for providing drinking water to the mining-affected villages in south Goa, and transportation facilities to school-going children.

Indefinite delays and lack of access

Apart from the lack of priority and initiative towards the mining-affected villages, the DMF funds have also been criticised for tardy administration.

According to the minutes of the meeting that took place for North Goa DMF in June 2020, it was decided that all applications will be routed via the concerned departments: water queries to the water resource department, education-related queries to the education department.

However, no information was given about this change, so the individuals would continue to send their applications to the DMF authorities, who would then send them to the department concerned for scrutiny who would then respond if it was worthy of funding or not and a final decision would be taken by the governing council at meetings that are supposed to be held once every three months. Another problem that cropped up was the lack of ease of obtaining information from the website.

“There is no dedicated website for DMF,” said Gode. “Some sporadic information has been provided in PDF documents on the mines department website. How is anyone ever going to update themselves on the status of the application? How will they ever know what happened to their application?” she asked.

“Goa could have been a model state for DMF activity,” she said. “Mining came to a halt, the government had a real opportunity to rehabilitate the villages and we could have really shone because we know that it is possible to bring the fields and water sources alive again and resolve issues, but sadly, the reality is quite different.”

DMF funds projects execution slow in mining dists

The Pioneer | March 16, 2021

There has been tardy progress in the implementation of projects under the District Mineral Foundation (DMF) funds in the State.According to the Government of Odisha’s Rural Development Department Annual Activity Report (2020-21) tabled in the State Assembly on Saturday, four important DMF active districts, such as Keonjhar, Sundargarh, Jajpur and Koraput, have made some progress even though they are lagging behind on the project implementation front. Assessments were done on three important infrastructure, road, bridge and building.

It is revealed that out of 222 approved road projects, 94 projects are completed and work is under progress in 91 projects. While out of Rs 56,196 .96 lakh sanctioned, utilisation certificates (UCs) have been given in respect of only Rs 18,817.57 lakh though the spending is to the tune of Rs 23,763 lakh.

Similarly, out of 312 building projects, 233 projects have been completed and work is under progress in 63 projects. By the end of January 2021, out of total Rs 17,817.92 lakh sanctioned for these projects, Rs 10,596.59 lakh was spent and UCs were given only for Rs 9,425.91 lakh.

And out of 39 bridge projects, 17 have been completed and work is under progress in respect of 13. Though Rs 5,867.48 lakh was sanctioned for these projects, UCs were given for Rs 2,866 lakh, while the actual spending was Rs 3,070 lakh.

Data available for these districts reveal that Keonjhar and Jajpur have done significant progress in building road projects. Out of total Rs 13,271.64 lakh sanctioned for Keonjhar, the actual spending was of Rs 5,369.00 lakh but UCs were given for only Rs 3,900.57 lakh.

Of the bridge projects, out of 38 approved projects for Sundargarh, 17 projects were completed within the stipulated time and work was under progress in 12 more projects, but UCs were given for Rs 2,823 lakh whereas actual spending made was of Rs 3,027 lakh.

The total sanctioned amount was Rs 5,789.48 lakh. In Koraput out of 39 approved projects, 17 have been completed and work is under progress in 13 projects. Out of the total Rs 5,867.48 lakh approved cost, only Rs 3,070 lakh was spent and UCs were given only for Rs 2,866 lakh.

The building projects were done in a fairly better way as far as completion of the projects is concerned. Out of 312 sanctioned projects, 233 were completed and work was under progress in 63 projects in the leading DMF active districts like Angul,Jajpur,Keonjhar,Sundargarh and Jharsuguda. While Angul, Jajpur, Keonjhar and Jharsuguda did better in project completion, Sundargarh lagged behind. In utilisation of money Angul,Keonjhar and Jharsuguda did better whereas Jajpur and Sundargarh did perform poorly.

Though Rs 996.94 lakh was spent in Jajpur, the administration submitted UCs for only Rs 467.14 lakh. Similarly, Sundargarh produced UCs for Rs 1,785.65 lakh out of sanctioned amount of Rs 2,206.65 lakh. The report of RD Department states that since implementation of the scheme in 2016-17, in total 423 road works, 312 buildings and 89 bridge works (total 824 projects) have been sanctioned by the district level DMF headed by the Collectors in these districts.

The main objective behind the setting up the DMF was to implement various development and welfare schemes and projects in mining affected areas to minimise the adverse impact caused by mining to socio-economic, environment and health of the people and the area.

Odisha’s District Mineral Foundation fund collection highest in country

The Times of India | March 11, 2021
BHUBANESWAR: Odisha has collected the highest amount of Rs 11,984 crore among all the states under the District Mineral Foundation (DMF) fund since it was created in 2015, Union mines minister Pralhad Joshi told Lok Sabha on Wednesday.

Till January, a total of Rs 45,095.86 crore in DMF fund was generated in the country. Odisha got more than one-fourth of the share, the minister’s written reply revealed. Neighbouring Jharkhand (Rs 6,533.04 crore) and Chhattisgarh (Rs 6,329.78 crore) managed to collect the second and third highest amounts under DMF. Rajasthan is fourth, having collected Rs 4,496 crore.

The funds are contribution from mining companies operating in the respective districts, which has been mandated under the Mines and Minerals (Development and Regulation) Amendment Act, 2015. The mining companies pay 30% equivalent of the royalty amount for leases given before 2015 and 10% for leases granted after that when auction of mines and mineral blocks started.

A government officer said Odisha being a mine-bearing state, it is natural for it to garner the maximum amount, the bulk coming from coal, iron ore and bauxite.

Against an available amount of Rs 11,984 crore, the state has spent Rs 5,364 crore by January this year. The amount spent is also the highest in the country, though in percentage terms the state’s spending at 44.76% is marginally less than the national average of 45.10%. Countrywide, Rs 20,337.35 crore has been spent from DMF fund. Chhattisgarh has spent the highest 69.04% (Rs 4,370 crore) followed by Tamil Nadu at 54% (Rs 413.29 crore).

The ministry of mines had circulated guidelines for implementation of Pradhan Mantri Khanij Kshetra Kalyan Yojna (PMKKKY) in September 2015 on the use of DMF fund.

Though DMF has been constituted in all districts in Odisha, the seven districts of Keonjhar, Sundargarh, Jajpur, Angul, Jharsuguda, Koraput and Rayagada account for 90% of the funds. Some of the districts such as Sundargarh and Keonjhar used DMF fund for enhancing Covid care infrastructure. Many districts have used the funds to strengthen primary health centres besides livelihood and nutrition support programmes, among others.

No plan to increase coal royalty for Odisha: Union minister Pralhad Joshi

The New Indian Express | Feb 11, 2021
The Centre has made it clear that there is no plan to increase royalty on coal and non-coal minerals for states like Odisha.

BHUBANESWAR: The Centre has made it clear that there is no plan to increase royalty on coal and non-coal minerals for states like Odisha. Replying to a question from Sasmit Patra (BJD), Union Minister for Coal and Mines Pralhad Joshi told Rajya Sabha that at present, states concerned are collecting royalty at 14 per cent (pc) ad-valorem on price of coal.

In addition, contribution towards District Mineral Foundation (DMF) at 30 pc of the royalty in respect of mining leases granted before January 12, 2015 and 10 pc on or after January 12, 2015 is also being collected by the states.

The Minister said due to ad-valorem nature of rates of royalty, there is increase in revenue to the coal producing states as and when price of coal increases. The decision has been taken basing the report of a study group constituted on July 21, 2014 for examining the issue of revision of royalty rates on coal and lignite.

The study group had submitted its report suggesting no change in the rates of royalty which the Centre accepted, he said. Chief Minister Naveen Patnaik during a virtual meeting with Joshi and Union Minister Dharmendra Pradhan in December 2020 had made a strong plea for revision of royalty for coal and non-coal minerals.

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