District Mineral Foundation funds crucial resource for ensuring income security in mining areas post COVID-19

Brookings | Srestha Banerjee | May 06, 2020

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.[1]

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.[2]

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

StateDistrictHouseholds 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 (%)
OdishaKeonjhar90.65.24.2
Sundargarh89.85.44.8
JharkhandWest Singhbhum53.837.38.9
Chatra83.211.85.0
ChhattisgarhDantewada94.73.12.2
Korba91.34.44.3
RajasthanBhilwara82.511.85.5
Chittorgarh84.010.55.5
Madhya PradeshSingrauli86.59.93.6
Satna82.311.76.0
TelanganaKarimnagar78.817.04.2
Khammam74.621.44.0
KarnatakaBellary72.020.37.7
Gulbarga47.530.921.6
MaharashtraYavatmal74.915.99.2
Chandrapur79.710.69.7

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. [3]

Table 2: Allocation of DMF funds for skill development and livelihood in top mining states

StateTotal DMF accrual(Rs. Crore)Allocation for livelihood and skill development(Rs. Crore)
Odisha9,772196.0
Jharkhand5,3050
Chhattisgarh5,115456.3
Rajasthan3,6280
Madhya Pradesh2,938No information available
Telangana2,79080.0
Karnataka1,88562.0
Maharashtra1,79148.0

Source: Ministry of Mines, Government of India, DMF fund status up to February 2020 and State Government mining departments. [4]

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.[5] 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.[6] 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.

Tussle over utilisation of Rs 23,000 crores of district mineral foundation fund towards Covid-19 relief aid

The Economic Times | April 19, 2020

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.

Can the Executive Divert District Mineral Foundation Funds to Fight the Pandemic?

The Wire | Anandvardhan Yagnik |April 17, 2020

There was no reason to divert a special fund meant for people affected by mining unless the already existing state fiscal repositories had been exhausted and accounted for.

In wake of the unprecedented times and the COVID-19 pandemic, the Union finance minister, on March 26, while announcing several measures to combat the public health and the economic crisis in the nation, directed the states to use the District Mineral Foundation (DMF) funds to fight the pandemic.

The direction by the Centre to the states permitting the diversion of such special funds specifically meant for a targeted group of people who are affected by mining operations, again brings to fore the issues surrounding the legitimacy and propriety of such a move by the executive.

District Mineral Foundation (DMF) funds

In India, the mining industry is primarily regulated under the Mines and Minerals (Development and Regulation) Act, 1957. In the year 2015, by way of an amendment Act, the central legislation came to be amended bringing into effect far-reaching changes in the regulations governing the mining arena. One historical change was the creation of the District Mineral Foundation (DMFs). DMFs are essentially trusts to be set up in all the districts in every state affected by mining and are defined as institutions which will work ‘for the interest and benefit of persons and areas affected by mining-related operations’.

In our country, tribals, Adivasis and farmers have since long been known to bear the brunt of the adverse impacts of mining on their livelihoods which has resulted in degraded livelihoods and huge socio-economic, environmental and health hazards and costs. The realisation to contain such adversarial impact and rectify the historical injustice on these vulnerable group of people, led to the creation of DMF funds as a part of distributive justice and inclusive growth.

The DMF funds are collected at the district level and are essentially contributions from holders of mining leases. Pursuant to the 2015 amendment and creation of DMFs, the Union brought into effect the Pradhan Mantri Khanij Kshetra Kalyan Yojna (PMKKKY) in September 2015. The PMKKKY, inter alia, laid down the scheme qua the utilisation of the funds generated by the DMFs.

The DMFs generates fund by way of reserving 10% or 30%, as the case may be, of the royalty proceeds from the mining of minerals in the respective districts. From the total collections accrued under DMF, the mechanism provided envisages spending the same in the ratio of 60:40, 60% being for projects classified as high priority areas which include health care, education, sanitation, drinking water supply, women and child care, environment conservation, etc while the balance 40% being for projects classified as other priority areas which include construction of roads, railways, bridges etc.

Thus, in substance, the entire idea of creating a special fund like DMF is to provide for funds for the welfare of people affected by mining. With that background in mind, one has to look at the issue of how legitimate and proper is it that a special fund meant for a targeted group of people is diverted for purposes other than what it has been constituted for? More so, when there are other funds like the Prime Minister’s National Relief Fund, Chief Minister’s Relief Fund in respective states, the Contingency Fund, etc, available at the disposal of the state to meet with the pandemic.

Diversion of DMF Funds to fight the COVID-19 pandemic

Pursuant to the finance minister’s announcement directing the states to utilise the DMF Funds to fight against the pandemic, the Ministry of Mines issued a letter specifying that districts with at least one COVID-19 positive case could put to use the funds for medical equipment and infrastructure while in other cases the same could be put to use for procuring masks, sanitisers, for distribution of food to the marginal, etc. However, the amount of funds that can be utilised has been capped at 30% of the unused funds of DMFs. As per the data available on the website of Ministry of Mines, Government of India, as on January 2020, the total amount of unspent funds for all the district is around Rs 23,511 crores.

Hence 30% of the unspent funds would approximately translate to Rs 7053 crore. Talking about the state of Gujarat, as per the data available on the website of District Mineral Foundation, Government of Gujarat, which varies from the data available on MoM, as on March 2020, the total amount collected under DMF from 2016-17 to March 20-21 is Rs 9434 crore and the total amount of unspent funds is Rs 8775 crores and hence 30% of such unspent funds roughly translates into Rs 2632 crores which can be put to use to fight the pandemic.

No doubt, that the scheme provides for utilisation of DMF funds for high priority areas like healthcare and hence these could be put to use, more so in areas affected by mining because these are mainly rural and remote areas with no healthcare facilities and infrastructure and hence the local populace are more at risk of community transmission with even one positive case of COVID-19 in the area.

However, the same still does not justify the diversion of funds and making them available for use for emergency purposes – as in the present scenario – because that wasn’t the objective with which it was formed. It is a fund targeted with a specific purpose and for a specific group of people and region. Hence, mooting the whole idea for it being diverted to meet the emergency and giving directions qua the same without any participation and consent of the people for whom the fund has been created, in itself is an anomaly and deceiving of its objective.

However, the same is not unprecedented. With our form of governance, where, welfare, inclusive growth and distributive justice are best only terms of theoretical concepts, even previously special funds have been diverted for purposes other than which they had been constituted. The best example of this is that of the CAMPA funds. Like DMF funds, CAMPA funds too have been diverted for other flagship initiatives and policies and hence the Supreme Court has time and again pulled up the state governments for diverting the funds for purposes other than what they were meant for.

The funds from the social welfare schemes are for the benefit of the targeted population and not for the benefit of the government to shirk away its responsibility from providing basic amenities that it should as a state. Such people’s funds cannot be used in substitution of, for what state ought to incur expenditure from its own pocket. Otherwise, it defeats the whole purpose behind the creation of such funds.

With DMF funds, even after five years of its introduction, it still suffers dilatory implementation and sanctioning of projects overlooking needs of those affected, would now lose its very character if the diversion of funds is permitted to be carried on.

Diversion of special funds – legal?

The underlying premise behind the diversion is that the executive has always considered it to be its own fund. This needs to be dispelled. The DMF fund is a special fund which is meant for the welfare of the people affected by mining and is a people’s funds. However, this participative approach of the affected people or the targeted population for the welfare of whom the repository has been created have not been made part of the committees which look after the utilisation and implementation of DMF funds and hence their lies the genesis of the whole problem.

Each state frames its own rules with regard to the implementation of DMFs and pursuant to rules being notified, the committees have to be constituted. DMFs comprises of two committees, the composition of which is formulated by the state government.

One is the governing council and the other is the executive council. In Gujarat, the chairperson of the governing council is the prabhari mantri, who at present is MLA Bhupendrasinh Chudasama, while the chairperson of the executive council is the district collector of the respective district. These committees will determine which areas are mining-affected and thereafter allocate the fund, approve relevant projects and monitor their implementation.

However, the problem is the composition of the committees is such that it includes primarily bureaucrats and MLAs. There is no participation of people from the grassroots for whom the creation of the fund has been envisaged and hence from this undemocratic set up stems the superficial idea of it being government fund thereby leading to its diversion for purposes other than those specified.

To those who may ask that why should an emergent national interest when thousands of lives are required to be saved and protected, not be enough of a reason for diversion of DMF funds to meet with the national goal of containing the pandemic, the answer would be, that it is a structurally flawed understanding of fiscal responsibility of the state on their part.

Because, firstly, most districts have at their disposal, disaster relief funds, MPLADS funds granted to the member of parliament for the respective constituency, contributions from the funds granted to MLA for respective constituencies, etc. Apart from that, to meet with such emergent situations, there is the chief ministers relief fund for respective states, the contingency fund for respective states and the prime ministers relief fund. Moreover, even as the PM CARES Fund has been created which has received donations in high numbers takes care of the emergent national interest. So the legitimate question to be asked here is without having all these funds having been exhausted, why must the DMF Funds be used for fighting the COVID-19 pandemic?

Moreover, even otherwise, a special fund could have been diverted only upon completion of all developmental activities of a district. Prior to that, even an emergent situation does not justify its diversion. The special funds are to be utilised specifically for the purpose they have been created for and that can be ensured only when there is appropriate leadership at the district level and villagers, local populace, labourers working in mines, grassroots organisations, panchayats, etc. should be consulted and their participation be called for rather than thrusting all the decision making power in the hands of the political representatives and bureaucrats, because for them such special funds become an easy way out, to be used and diverted for all and other purposes and thereby abdicate their responsibility from providing for the same from the existing fiscal repositories of the state.

It is true that in times as unprecedented as now when we are faced with a pandemic, which calls for extraordinary measures to contain the coronavirus, all that can be done would be less, but that is no reason to divert a special fund meant for people affected by mining unless the already existing state fiscal repositories have been exhausted and accounted for because had that been the objective then special funds would stop to serve any purpose and every time the executive failed to perform its obligations and provide for what it ought to, then the best way out would be to casually divert the special funds.

The state of Odisha has expressed its willingness to use the DMF funds to fight COVID -19 and has rather requested the Centre to remove the cap of 30% usage of unspent funds. In spirit, as good as it may seem that a state is going out of its way to provide for its citizens but this could ensue a dangerous trend of diverting funds meant for welfare schemes for other purposes. However, at the same time, there are officials who discourage this trend.

Moreover, without any guidelines and accountability being in place, there is a higher risk of these funds being used for purposes that have nothing to do with mining-affected people and area. One of the factors which requires consideration is that there might be several projects which have been sanctioned for a district or area on the basis of the funds collected but since they have not been commenced the expenditure to be incurred might be lying with the trust. Hence overlooking the nitty gritties and without any law or guidelines in place to divert a portion of unspent funds could risk jeopardising several projects that may be in the pipeline.

Not only is the diversion of DMF funds illegitimate, improper, unjustifiable and a very unsustainable response of ruling dispensation’s for its failed governance but it has also rather increased the trust deficit of the farmers community and affected people who now fear that the DMF funds meant for their upliftment will be diverted by the government to meet its obligation which otherwise it should have from its own funds.

In Gujarat, several farmers affected by mining in Bhavnagar district have written to the state government and to the chairperson and members of the governing council and the executive council to not divert the DMF funds for any activities other than what has been envisaged under the PMKKY scheme and shall be utilized only for the targeted population for which it has been brought into existence.

Our history is replete with examples where special funds earmarked for special purpose have been diverted thereby time and again calling for legislative and judicial intervention to curb such diversions. However, the lesson has not been learnt and hence once again the step taken by the government runs the risk of becoming a dangerous precedent allowing ill-prepared authorities with a lack of foresight to use funds for specific functions as their personal kitties in the future and steps must be taken to avoid such occurrences.

Anandvardhan Yagnik is a practising lawyer at the Gujarat high court.

Utilising District Mineral Foundation funds to fight the COVID-19 crisis in India: Current and future opportunities

Brookings | April 06, 2020

In wake the of the growing COVID-19 crisis and the strain on healthcare resources, India’s finance minister Nirmala Sitharaman on March 26 announced that District Mineral Foundation (DMF) funds can be used by state governments to augment healthcare. This includes supplementing healthcare facilities, screening and testing requirements, and any other support that might be required.

The announcement that DMF funds will be a component of the government’s coronavirus relief package has generated a lot of discussion. In the light of this discussion, it is important to look at what the DMF funds were meant for and how they can be used effectively.

DMF was instituted exactly five years ago, in March 2015, through an amendment to India’s central mining law, the Mines and Minerals (Development and Regulation) Act (MMDR 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. It was also aligned with the important the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) scheme, that was launched in September 2015 to implement various developmental projects and welfare programmes in mining-affected areas with DMF funds.

The funds of DMF trust come through a contribution from mining companies operating in the district. Companies are required to pay 30% equivalent of the royalty amount for leases granted before 2015, and 10% for leases granted after that through auction mechanism. This must be paid for the lifetime of their operation. In just a five-year period, the cumulative accrual in DMF trusts is nearly Rs. 35,925 crores, as per available information with the Ministry of Mines. Government estimates suggest that about Rs. 6,000 crores are likely to be collected by DMFs annually. The DMF fund, therefore, is the largest non-tagged, non-plan money available for the benefit of some of India’s poorest and marginalised populations living in mining areas. The money is to be spent on improving human development indicators through investments in sectors such as healthcare, education, women and child development, improving sustainable livelihood and income opportunities in these areas and ensuring long-term security of the mining-affected communities. These have been identified as ‘high priority’ issues for DMF spending by the centre as well as state governments under the law.

Despite opportunities, the utilisation of funds in most states has been low. As per the Ministry of Mines, only Rs. 12,414 crores have been spent as of January 2020, which is only about 35% of the total amount.

On March 28, the Ministry of Mines issued directives on the proportion of DMF funds that can be used by state governments to fight the COVID-19 crisis. The amount has been capped at 30% of funds left unused with DMFs. Given the unspent amount is Rs 23,511 crore for all DMFs in the country, the maximum amount for COVID-19 roughly translates to more than Rs.7,000 crores. For top mining states like Odisha, the collective amount available is more than Rs. 2,000 crores (Table 1).

Table 1: Potential DMF funds to fight COVID-19 in some top mining states as per central government directives

State nameTotal DMF collection (Rs. cr)Unspent DMF fund(Rs. cr)Amount can be utilised for COVID-19(Rs. cr)
Odisha9,5016,7072,012
Jharkhand5,1812,772832
Chhattisgarh4,9801,622487
Rajasthan3,5142,766830
Madhya Pradesh2,8642,012604
Telangana2,7742,282685
Karnataka1,8421,522457
Maharashtra1,7281,120336

Source: Ministry of Mines, Government of India, DMF fund status up to January 2020.

While DMF administration comes under the aegis of districts and states, the Ministry of Mines has issued these directions under Section 20 of the MMDR Amendment Act. The letter issued by the Ministry of Mines to all state Chief Secretaries clarifies that such power has been exercised by the government in line with the emergent national interest to combat the COVID-19 pandemic.

The logistics of the DMF fund use are still being figured out by most states and districts as the situation is still unfolding. The centre’s directions broadly specify that DMF funds should be used for COVID-19 in those districts where at least one COVID-19 positive patient has been detected. As per official sources from states such as Chhattisgarh and Tamil Nadu, the state governments may issue some directions to districts in the coming days depending on the local situation.

Opportunities to use DMF funds effectively

DMF funds can be utilised to scale up healthcare intervention across states, particularly at the local level. While the disease clusters are still concentrated in the cities and major town centres, the reverse migration of labourers to rural areas gives reason for concern of community transmission. Given the poor status of healthcare resources in most of rural and remote areas, taking early measures is critical.

For example, most of these districts have a severe shortfall of primary healthcare services such as the primary healthcare centres (PHCs) or community health centres (CHCs). As per district health officials, in most areas, these facilities already operate at twice their capacities [i]. Additionally, there is a serious issue with access to these healthcare facilities. For example, according to the Brookings India Health Monitor (2018 estimates), in Odisha’s Keonjhar district, only 4% villages have a PHC within 5 kilometer (km) radius, and only 3% villages have access to a CHC within 10 km radius. Similarly, in Jharkhand’s West Singhbhum district, only about 14% of villages have PHCs within a 5 km radius.

Given this, there have been clear concerns about how DMF funds were being spent in the mining areas. Between 2016-2018, the trends were problematic. Barring few, in most states and districts, a primary focus of expenditure has been on physical infrastructure, including major roads. Expenditure in ‘high priority’ sectors such as healthcare, women and child development, livelihood support, has been grossly sub-optimal as compared to the need. For example, in Jharkhand, until 2018, healthcare sector accounted for only 0.22% of the total spending, in Chhattisgarh 7.8% and in Odisha about 15% (largely owing to one major hospital in Keonjhar) [ii].

However, over the past year there has been some revised focus on healthcare resources. As per information from officials, media sources and advertisements, some districts are trying to bridge the gap in healthcare staff and service delivery. These include districts like Keonjhar, Sundargarh, West Singhbhum, Chatra, Bijapur, Dantewada etc. A primary measure has been hiring doctors as well as trying to reach out to remote areas through mobile health service delivery systems such as mobile medical units, motorbike ambulances etc.

The DMF funds now can be crucial for these districts. The money can be used to procure testing equipment, personal protective equipment (PPE) for healthcare workers, train frontline workers and increase capacity of ASHA (accredited social health activists) workers in these areas, engage paramedical staff on contractual basis, pay volunteers from local non-profits and village groups to improve community outreach on COVID-19 do’s and don’ts.

Keonjhar district has just sanctioned Rs. 7.5 crores towards such efforts. As per district sources, this will be used for upgradation of primary healthcare facilities in the district, establishment of isolation facilities, procure PPEs, train healthcare staff to combat COVID-19 and hire additional resources as required [iii].

The districts and states also should take this as a lesson to improve the healthcare situation, particularly in the rural areas. While the preparedness for emergencies is important, the overall strengthening of rural healthcare is critical to provide sustained care to the country’s poorest and most marginalised citizens. Healthcare must be a major component of DMF plan in the coming years.

In the coming days, the districts may also consider providing direct cash transfers to poor families in these areas, particularly to labourers whose livelihood has been affected by the measures to contain the disease. The overall DMF fund available with states and districts provides substantial scope. However, a proper system to do this needs some consideration. There are emerging concerns about direct benefit transfer (DBT), as it depends on the Jan Dhan-Aadhaar-Mobile (JAM) architecture, which allows direct transfer of government-sanctioned welfare funds to bank accounts of the beneficiaries. However, many people in rural areas, particularly migrant laborers, do not have bank accounts.

As the COVID-19 situation keeps evolving, proper mechanisms of utilisation of relief funds to tackle the health crisis, as well as to provide economic support to some of the poorest will be critical. The fight, as many experts are predicting, is a long haul.

COVID-19 outbreak: Should states, districts use DMF funds?

Down to Earth | Chinmayi Shalya | March 27, 2020
District officials said they had other fund sources to deal with the pandemic

Union finance minister Nirmala Sitharaman said state governments should use district mineral foundation (DMF) funds for response and preparedness to fight the novel coronavirus disease (COVID-19) pandemic.

The finance minister on March 26, 2020, unveiled measures in the wake of a nation-wide lockdown called for by the Union government to combat the pandemic.

Sitharaman said DMF funds should be used to supplement and augment healthcare facilities, screening and testing requirements and any other resources that might be required.

Augmenting healthcare services and delivery is already a high priority area with respect to DMF investments, according to DMF rules of all states.

Healthcare access in most mining districts that have high tribal populations, is an ongoing crisis.

An unprecedented pandemic, however, called for a response beyond the usual.

Questions remain as to how the states should use DMF funds and if the funds — meant for vulnerable mining-affected communities — should be used at all for emergency responses such as this.

No definitive call by states

A state-specific strategy over the usage of DMF funds is yet to be shaped, despite the announcement by Sitharaman.

Officials from most mining states Down To Earth spoke to are yet to figure out how and where to use the funds, if at all needed.

An official from the Chhattisgarh government said no discussions had happened yet on using DMF funds.

Odisha, which announced setting up quarantine hospitals in capital Bhubaneswar through corporate social responsibility support, is considering similar dedicated facilities to deal with the pandemic in districts as well.

“So far, we are trying use corporate social responsibility and other available funds. For mining districts, we might consider using DMF,” said Suresh Mahapatra, development commissioner in Odisha’s planning and convergence department.

Prioritising long-term and investments through DMF

At the district level, DMF has already been used by some to augment facilities.

Most district officials DTE spoke to said DMF funds should be used sparingly and only for facilities and resources that can be counted as long-term assets to the district.

Officials felt they had other fund sources ready to get medical equipment to deal with the pandemic.

Most districts received disaster relief funds, contribution from Members of Parliament and Members of Legislative Assemblies and health department funds. These funds are sufficient for procuring screening kits, ventilators and other equipment, according to officials.

Nikhil Pavan Kalyan, district collector in Odisha’s Sundargarh said officials were using DMF funds to upgrade healthcare facilities over the last one year.

“We have hired doctors, paramedics, got ambulances with ventilators etc, through DMF already,” he said.

The challenge would be to have bigger facilities and man power to deal with a potential crisis situation.

Another issue is with delivery and sourcing of equipment and materials.

“We need ventilators, testing kits and have the money for it, but delivery is stuck on the state border,” said Aditya Ranjan, deputy development commissioner, in Jharkhand’s West Singhbhum district.

The challenge will also be delivery of services as districts face shortage of manpower. A district official said in remote areas, there were ambulances, but no drivers and that there were doctors and nurses but they weren’t enough for a crisis situation.

Should DMF funds be used?

Healthcare is already a high-priority investment area for DMFs. Experts feel if the funds were used properly after a need analysis to target delivery of services, districts would have been better prepared.

Investments through DMF, however, have been largely ad hoc.

Most experts advocate an emergency fund set aside for calamities.

The Centre for Science and Environment had earlier proposed setting aside 10 per cent of the fund for “future use”, in times of calamities or disasters.

There are, however, no such provisions in the law.

“In such situations, support has to go beyond healthcare. There are issues of food and economic security, additional support to vulnerable groups, daily wagers, the aged, children and women,” said Sulakshana Nandi, from Public Health Resource Network (PHRN), Chhattisgarh.

There is also a consensus that funds like DMF that have a targeted function, should be used only after other existing fund sources and state support is accounted for.

“There is a risk that it becomes an easy go-to fund, even when other resources are available. It also helps the state abdicate responsibility in handling the situation and providing safety nets,” said an official on condition of anonymity.

DMFs are a non-profit trust set up in the country’s mining districts to “work for the interest and benefit of people and areas affected by mining-related operations”. The trusts were set up after an amendment in the Mines and Minerals (Development and Regulation) Amendment Act, 2015.

The fund is collected at the district level. There are certain high-priority areas identified in all states’ DMF rules, where at least 60 per cent of the fund must be used. These include vital and pressing concerns, including healthcare.

Approximately Rs 36,000 crore is collected in DMFs across the country. Close to Rs 30,000 crore was sanctioned across the country for various projects and works so far.

Mining states, including Odisha, Chhattisgarh, Jharkhand, Rajasthan and Madhya Pradesh account for about 73 per cent of the total collection.

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