11 May 2020
0 Comments
Covid-19 was declared a pandemic by the World Health Organisation (WHO) after its spread across 112 countries and regions of the world. Like many other places, India is also under lockdown since 23rd of March, as part of its efforts to combat Coronavirus. Soon after, when the Finance Minister announced the fiscal stimulus package of 1.7 lakh crore for dealing with the economic fallout of the pandemic, she referred to utilisng the funds available under the District Mineral Foundation (DMF) fund by the states to supplement the facilities set up as response measures to fight the novel coronavirus disease. The DMF funds could be used to augment healthcare facilities, screening and testing and any other requirements in connection with preventing the spread of this pandemic.
In normal times, State governments are not allowed to tap into DMF collections, it is to be used to address the long term and short term needs of the affected people in districts from where minerals were mined. The rules are so strict that DMF collections from mining activities in one district could not be spent for development activities in any other district. As the states do not have adequate funds under the disaster relief fund, and are looking for avenues of funds, this is a Fund at their disposal, they must optimize. DMF has a huge potential for financing the activities for fighting the current pandemic situation, right up to the district level, given the size of the corpus. It is untied and non-lapsable fund that can be used both for addressing the immediate needs, as well as undertaking long-term improvement of health facilities.
About the DMF
The DMF came into place when the Mines and Mineral (Development and Regulation) Act, 1957 (MMDR Act, 1957) was amended to bring in the MMDR Amendment Act, 2015, that introduced section 9B enabling the state governments to set up DMFs. The DMFs are non-profit trusts set up in the districts, to work for the interest and benefit of persons affected by mining-related operations, in such a manner as may be prescribed by the State Government. Under the Act, mining lease holders are required to make their contributions to the Fund. The miners within the state are mandated under the DMF rules to contribute 10 per cent of their royalty amount for leases granted since 2015, prior to that, it was 30 per cent.
In 2015, the Pradhan Mantri Khanij Khestra Kalyan Yojana (PMKKKY) was launched to implement the projects approved by DMFs in coordination with the ongoing schemes of the Union government and state governments. The fund is collected at the district level as a royalty for extraction of major and minor minerals. There are certain high-priority areas like drinking water, sanitation , health, women and child welfare, education, livelihood and skill development identified in all states’ DMF rules, where at least 60 per cent of the fund must be used.
The DMF has several major and minor minerals contributing to the fund, with coal and lignite accounting for almost 42.6 per cent of the total accrual. Odisha has the highest collection of funds, with Jharkhand, Chhattisgarh and Telangana being the next as these are coal mining states. The contribution of minor minerals to the total DMF accrual has also increased over the years. Currently the DMF share of minor mineral mining is about 10 per cent of the total accrual. Telangana, Andhra Pradesh, Maharashtra, Rajasthan and Gujarat are the major States having a collection from minor minerals.
With the issuance of the Union government guidelines in the emerging situation, now the states can utilize their District Mineral Foundation (DMF) fund to combat the Corona situation. States should not exceed 30 per cent of the balance available in their DMF funds for expenditure related to Covid-19, this is mentioned in the directive of the Ministry of Mines.
Since set up in 2015, the DMF trusts in various mining districts across the country have a total cumulative accrual of close to ₹36,000 crore. The allocated fund under the DMFs is ₹30,651.59 crore, of which ₹12,414.38 crore has been spent. Twenty one states in India have DMF Funds, and if the allocation amount for existing projects is not disturbed, the states will be left with about ₹5,000 crore for the relief measures, as pointed by a newspaper article.
Implications for Jharkhand as a DMF State
According to a recent report by the Center for Science and Environment, District Mineral Foundation (DMF): Implementation Status and Emerging Best Practices, Jharkhand has a total DMF collection of Rs 5,000 crore so far, about 80 per cent of which comes from the coal mining districts of Dhanbad, Ramgarh, Chatra, Bokaro and the iron ore mining district of West Singhbhum.
Top Five Districts of Jharkhand- DMF Accrual and Sanction
| District | Accrual (in Rs. crore) | Sanction (in Rs. crore) |
| Dhanbad | 1,335 | 1,909 |
| West Singhbhum | 1,084 | 857.5 |
| Ramgarh | 656.7 | 902 |
| Chatra | 679.5 | 369.3 |
| Bokaro | 492.3 | 445.3 |
Source: CSE report, ‘Implementation Status and Emerging Best Practices’
Until now, the potential of DMFs, in most districts, was undermined, the reasons being lack of vision, inadequate planning, and ad-hoc nature of investments. Like in many other states, Jharkhand too has a greater focus on creating physical infrastructure, including roads and bridges, with little emphasis on improving the economic and human development indicators of the mining-affected communities and areas. Many of the mining districts face a healthcare access problem. Though healthcare has recently started gaining attention, had the DMF funds been used more efficiently to fill some of the big gaps in the districts, the latter would have been better prepared to deal with the crisis.
As all the 24 districts in Jharkhand have DMFT, this makes an avenue of fund available to the state to respond to the health system problem when it is staring in the face. The Central guidelines clearly state that DMF funds can be used only for areas in the Red and Orange zones, affected with Corona. Out of the 24 districts in Jharkhand, one is in Red Zone, nine in Orange Zone, and fourteen in Green Zone at present. No state specific guidelines with regard to spending of DMFT have been formulated as of now; the decision on how to utilize the DMF fund will be made by the District Collector (DC).
In the absence of a proper unit for better planning, and implementation of DMF funds in the State, this must also be seen as an opportunity of course-correction and a re-look into the scope of DMF fund use in future. It is hoped that the State, and also the district administration would swiftly initiate planning strategies for effective utilization of the State DMFT Funds.
Making DMF effective
States can incur spending from the DMF not only to curb the spread of Corona by focusing on the healthcare facilities, screening and testing requirements amongst others, but also for prioritising livelihood generation and creating local jobs. A few ideas which can be considered to get some positive results by channeling funds under the DMF are:
-Creating a State level cell which will plan the broader activities under DMF: It can then be circulated among the districts. This cell will also collect plans from the districts for combating Covid-19 situations in the mining affected areas. State level PMUs can provide necessary support in planning.
-Creating a planning cell at district level: This unit will coordinate with the district level cell created to look after the pandemic situation and assess the ground level situation in the district. The cell will then plan the activities based on the need of the area.
-Assessing the DMF funds available in the district: District and block wise planning should be done according to the requirement. Based on the fund requirement and urgency of situation, these funds can be channelized from one district /block to more priority districts/blocks. Plans are to be made in close coordination with the health department in terms of planning and budgeting.
-Formation of a sub-committee at the district level: There should be a sub- committee at the district level to ensure timely delivery of the purchased item (with the DMF funds) to the respective place/people/hospital/sub-center.
What can be done with the DMFT Funds in Districts and States?
This untied fund in the form of DMF can be used to make quarantine centers for Corona patients with all the health and infrastructural facilities. This can be done by utilizing government buildings/abandoned buildings. Purchasing/manufacturing of masks, sanitizers and ventilators can be done using this fund. Process can be smoothened by giving freedom to district administration to choose the contractors for purchasing the required raw materials. However, in order to enhance the transparency and accountability of the fund utilization, a committee should be set up under the leadership of the Deputy Commissioner (DC), District Mining Officer (DMO) and District Planning Officer (DPO) to monitor the entire purchase process. These funds can be utilized for providing proper safety equipment’s to corona warriors i.e. doctors, medical staffs, police personnel, frontline workers etc. This will ensure the smooth functioning of the service delivery to all. Further, these funds can be used for providing honorarium to the additional doctors and medical staff. More test kits can be procured using these funds for testing patients. Identification and check-up of high risk group like elderly, HIV patients etc. within the blocks is very important in the current scenario.
A state-specific strategy spelling out a methodical functioning of the fund can help address the newfound challenges arising in the health sector. Funds thus utilized can benefit the state to boost its health facilities and overcome the current pandemic situation.
The views expressed in this piece are those of the author, and don’t necessarily reflect the position of CBGA. You can reach Shweta Tiwari at shweta@cbgaindia.org.