Centre takes control of District Mineral Funds from states

Centre undertook complete control of district mineral foundation (DMF) funds from state.

Key points

  • It negating right of states to sanction or approve any expenditure out of the funds that have been accrued from mandatory contribution from mining lease holders.
  • Since 2015-16, when DMF funds came into effect, over Rs 49,400 crore have flown into the fund.

Why centre undertook control?

According to Ministry of mines, this move was necessitated because there are instances where funds of DMF are being transferred to treasury or consolidated fund of state or state level funds or Chief Minister’s Relief Fund. This in turn was defeating the purpose of creation of DMF.

District Mineral Funds

According to MMDR (Amendment) Act, 2015, state governments are mandated to establish DMFs in all districts for interest and benefits of persons affected by mining-related operations.  Lease holders are mandated to contribute to these not-for-profit foundations a defined percentage of royalty apart from paying royalty to state governments.

Under what provision DMFs are created?

Sub-section 3 of Section 9(B) of MMDR Act, 2015 provides for composition and functions of DMF as may be prescribed by state government. Earlier, with an amendment to this Act, a proviso was added that provided that central government may give directions with respect to composition and utilisation of fund. However, recent order of July 12 provides that, no sanction or approval of any expenditure will be done at state level by the state government or any state level agency.

How funds are utilized?

DMFs are required to use these funds for welfare of persons and areas affected by mining-related operations. Thus, tribal population are principal beneficiaries. The scheme is also called as “Pradhan Mantri Khanij Kshetra Kalyan Yojana”.


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