Problematic quest for tangible assets

The Indian Express | September 21, 2021

Proposal to use District Mineral Foundation funds for creating infrastructure goes against the purpose of such funds – they need to be used for welfare of mining-affected communities.

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-19 pandemic. 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), it seems, wants to direct a large corpus of funds meant for mining-affected communities towards only creating infrastructure.

The proposal undermines the very law under which DMFs have been instituted. It also opens the floor for massive 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.

Currently, DMFs have been set-up in 572 districts of the country, with a cumulative accrual of more than Rs 40,000 crore so far as per MoM data. The corpus is only growing. To give a broad estimate, the big coal districts like Dhanbad, Ramgarh and Chatra in Jharkhand are likely to accrue Rs 250 crore each annually in DMF. So will many key coal and iron ore mining districts of Chhattisgarh and Odisha, with estimates ranging from Rs 100-400 crore annually for each.

The functioning of the DMF trusts and the fund use governed by states’ DMF Rules incorporate the mandates of a central guideline, Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) that specifies high priority areas of investments.

Why shouldn’t the DMF fund use be tied to tangible assets?
First, 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. The law also underscores this.

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.

Second, 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. Parse through the investments in healthcare, nutrition, education and you will find largely construction works.

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.

This is not to say that infrastructure isn’t needed. But most districts have departmental funds for this. Also, there is existing infrastructure which lies under-resourced. Often, “creating infrastructure” is the easiest and quickest way to show spending but making the infrastructure useful to people is the biggest challenge. Similarly, investing in local livelihoods is more challenging because it requires planning and shows results only after a few years. This is where DMF must step in to address the gaps, invest in human resources and local livelihoods, make existing schemes better, and innovate to build socio-economic equity and resilience. The fact that it is untied and non-lapsable allows for time to think and plan wisely.

Third, by tying DMFs to tangible assets the MoM would undo some small but meaningful strides made by states and districts to improve investments. Over the last couple of years, there has been growing evidence from districts that proves that DMF funds can be used to improve critical human development indicators and improve incomes and livelihood of mining-affected communities through better ways than just creating infrastructure.

Here are some examples. In June, the iron-ore rich Keonjhar district in Odisha topped up the wages paid under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) to match the state minimum wages. The district is using DMF funds to fill the gap and ensure more cash to the workers during the COVID-19 pandemic. Parity of minimum wages with MGNREGA wages has been a long-pending demand nationally.

The district recently also used the fund to integrate locally and agronomically produced millets into the Integrated Child Development Scheme (ICDS), a move to improve dietary diversity, nutrition indicators and also incomes of local self-health groups involved in food preparation.
The remote tribal and forested district of Bijapur in Chhattisgarh, set-up a fully functional district hospital by converging DMF funds with health department and other available funds. From a dilapidated building with a doctor or two, the district now has a hospital compliant with most Indian Public Health Standards (IPHS) norms.

DMF funds were particularly used to incentivise doctors and pay them competitive salaries. This had a cascading effect, with districts in Jharkhand and Odisha also improving local health access by hiring doctors and even paramedics. Kabirdham (Chhattisgarh) used it to train local Baiga tribe youth to teach in primary schools, creating local livelihood and addressing teaching shortage in one move. There are many such examples of convergence of funds, new and innovative initiatives, or just simply topping up the existing government schemes for better reach or impacts.

State governments are also gradually showing more inclination towards better investments. Chhattisgarh amended state DMF rules in September 2019 and gave representation to mining-affected people in the DMF decision-making body, asking for better focus on livelihoods, particularly forest-based livelihoods; Odisha amended its DMF rules in 2018 to improve focus on local livelihoods. The MoM itself put out a recommendation in 2019, calling for a focus on soft resources, long-term planning and better accountability of DMFs. The new reform measure focusing on creating tangible infrastructure would mean that these gains, which can be consolidated further, will be offset.

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.

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.

Construction workers concerned over move to repeal welfare act

The Hindu | July 17, 2020

Kerala was the first State to set up a welfare board for construction workers in 1989, becoming a model for the Central Act in 1996

The Central Government’s proposed move to repeal 15 existing laws on social security, including the Building and Other Construction Workers Act 1996 (BOCW), and replace them with a single Labour Code on Social Security and Welfare, has led to much concern among construction workers.

Kerala was the first State to set up a welfare board for construction workers in 1989, becoming a model for the Central Act in 1996. It is also one state where the system has wide reach, with 20 lakh construction workers as members, and regular disbursal of various benefits. Across the country, around 3.5 crore workers are registered under such state-level boards for construction workers.

The funds for the running of the welfare board is raised from the 1% building cess levied during construction of buildings. The benefits provided included pension, accident insurance of ₹4 lakhs, medical aid, scholarship for children and around 15 other benefits. In Kerala, the board even runs an old age home for ‘retired’ construction workers in Thiruvananthapuram, perhaps the only such initiative in the country.

During the COVID-19 pandemic, an amount of ₹1,000 was released to all the 20 lakh registered members in Kerala, in addition to monthly pension of ₹1,300 to 3.5 lakh members.

“Once the board stops to have an independent existence, and is merged with other welfare funds, the construction workers stand to lose out, because it is one of the better managed compared to other funds. The Central Government will also get complete control over the fund, and steps like investment of these funds in the stock market, as it happened with PF fund could happen. The welfare fund is one of the biggest sources of support for existing as well as retired workers. We should only strengthen it, not weaken it,” said V.Sasikumar, Secretary of the Construction Workers’ Federation of India.

On Monday, the Centre of Indian Trade Unions(CITU) organised nationwide protests with five workers in each centre, against the move.

CPI(M) Rajya Sabha MP Elamaram Kareem, a member of the Parliamentary Standing Committee on Labour, says that the Central Act was enacted in 1996 after more than a decade of struggle by workers, and hence the repealing is unjust.

“This is part of the BJP Government’s plans to repeal all existing labour laws and merge them into four separate codes. One of the codes has already been passed in the Parliament without referring to the labour standing committee. The remaining three are in front of the standing committee. Due to the pandemic, the discussions have been held up. Now, under the centre’s pressure the meeting has been fixed on July 17, but many of us would be unable to make it to Delhi. The Speaker has also denied permission for an online meeting,” said Mr.Kareem.

Mineral fund with Rs 23,800 cr can cushion Covid havoc in Odisha, Jharkhand, Chhattisgarh

The Print | May 28, 2020

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

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.

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