Pradhan Mantri Khanij Kshetra Kalyan Yojana

Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) has been launched in September 2015 for the welfare of tribals and other affected persons in mining areas. Under this scheme, the mining companies will need to contribute 10 to 30% of royalty for welfare of people directly or indirectly affected by mining.


This scheme is a follow up to Prime Minister’s promise of Rs. 6000 Crore for the development of tribals in mining affected areas in his Independence Day speech.

However, the proposal to establish the District Mineral Foundations had come in November 2014 from Union Government side. The idea was to levy additional royalty and then use that fund on welfare of the people / infra development in mining affected areas.

For this purpose, on January 12, 2015, President Pranab Mukherjee had signed an ordinance to amend the Mines and Minerals (Development and Regulation) Act (MMDR Act), 1957. This was followed by parliamentary approval to amendment of MMDR Acr 1957 on 26 March 2015.

On August 18, 2015; Odisha became the first state in India to issue rules for the District Mineral Foundation.

MMDR Amendment Act

The debate to amend the MMDR act is not new. The debate was started almost a decade back when planning commission’s Hoda Committee Report was published in 2005. This report brought into light the irony that India’s poorest people live on India’s richest land. The UPA government had drafted the MMDR (Amendment Act) 2011 which lapsed due to its non-introduction in Lok Sabha. The January 2015 Ordinance subsequent March 2015 amendment of MMDR act was in continuance of that bill. This amendment makes provisions for establishment of District Mineral Foundations and also a National Mineral Exploration Trust.

The same amendment also empowers the state to auction vast tracts of mineral rich forests and farmlands too!

District Mineral Foundations (DMFs)

The money in this scheme would come in the form of District Mineral Foundations (DMFs). The parliament had enacted the Mines and Minerals (Development & Regulation) Amendment Act, 2015, which came into force on 12 January 2015 (On that date, President had signed the MMDR Amendment Ordinance). This amendment mandated establishment of District Mineral Foundations (DMFs) in all mining districts of the country. The rate of contribution by the miners is as follows:

  • In case of leases executed before 12th January 2015; the amount is 30% of the royalty
  • In case of leases granted after 12th January 2015, the contribution amount is 10% of the royalty.

These funds will be used by the DMFs for implementation of the scheme which includes:

  • Various developmental and welfare projects
  • Mitigation of health, environment and socio-economical impacts of mining
  • Ensure long term sustainable livelihoods for affected people

The highest priority has been given to drinking water supply, healthcare, sanitation, education, skill development, women & child care, welfare of the aged and disabled people, environment and skill development. These areas will use around 60% of the total share of the funds. Rest of the funds will be used in making roads, bridges, waterways projects, irrigation and alternative resources.

  • The DMFs will be established by the State Governments as per guidelines issued by Central Government.
  • This foundation will be headed by District Magistrate or District Collector. It will identify the people affected by mining and define what welfare measures have to be taken for them. DMFs have been asked to maintain transparency in their functioning.

Issues and Analysis

The establishment of DMFs has come as a very late response of the state to the citizens of India’s ore rich areas, who have borne the cost of mining in the form of health, environment, livelihood and sanitation challenges.  The amended act says that the DMF will be established by the State Government by notification as a trust, as a non-proft body. Its functions are also to be defined by the state governments. Thus there is no certainty on how much money will come in, and no clarity on how and where it will be used. Without any such clarity, the DMFs will fall prey to corruption and scandulous operations. Further, this body is to be dominated by the government officials, who have powers to prepare plans and budgets, sanction funds and use the funds. The funds of DMFs can be used at district level or block level development matters. From this, it appears that the law has bypassed the remote tribal areas; which are hardest hit from the mineral extraction.


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