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District Mineral Fund (DMF)
The District Mineral Fund (DMF) is a fund established by the Indian government to utilize a portion of mining revenue for the welfare of local communities affected by mining activities. It aims to mitigate the adverse impacts of mining on the environment and local populations. In Odisha, for instance, the DMF has been used to construct over 1,000 schools and provide healthcare facilities to mining-affected areas.
District Mineral Fund (DMF) is a statutory pool of revenue earmarked by the Indian government for the development and rehabilitation of communities living in mining‑affected districts. Instituted through a 2015 amendment to the Mines and Minerals (Development and Regulation) Act, the DMF uniquely ties a fixed share of mining proceeds—principally royalty, transport cess and other levies—to a dedicated fund that must be spent on health, education, infrastructure and livelihood programmes within the very districts where extraction takes place. By channeling a minimum of ten per cent of gross mining receipts directly to local welfare, the DMF attempts to internalise the social cost of mineral exploitation. ## Historical Background The concept of a dedicated mining‑impact fund emerged from a series of judicial pronouncements in the 1990s, notably the Supreme Court’s M.C. Mehta v. Union of India (1997), which underscored the need for compensatory measures for environmental degradation. Responding to these pressures, Parliament inserted Section 28A into the MMDR Act in 2015, thereby formalising the DMF. The first tranche of DMF allocations was released in the fiscal year 2015‑16, amounting to ₹1.2 billion from coal and iron‑ore operations in Jharkhand and Odisha. Subsequent amendments in 2017 refined the definition of “gross revenue” and introduced a three‑year utilisation window for each district’s share. ## Legal Framework and Key Provisions Section 28A of the Mines and Minerals (Development and Regulation) Act, 1957, mandates that ten per cent of the gross revenue generated from mining in a district be deposited into the DMF. The accompanying Mineral Conservation and Development Rules, 2017 (Rule 13) prescribe that the district collector act as the custodian of the fund, while the state government must approve a three‑year utilisation plan vetted by the Ministry of Mines. The rules also require quarterly reporting to the central authority and stipulate that unspent balances be transferred to the next fiscal year, subject to a ceiling of 30 % of the original allocation. Non‑compliance can trigger a penalty of up to 2 % of the unutilised amount per month, as per Clause 28A(5). ## Mechanism of Allocation and Utilisation Once a mining lease generates royalty or cess, the state’s mining department transfers the stipulated 10 % to the district collector’s account within 30 days of receipt. The collector, in consultation with local bodies and NGOs, prepares a detailed project list covering schools, primary health centres, drinking‑water schemes, road upgrades and skill‑development programmes. Each project must be cost‑ed, time‑bound and aligned with the district’s “Persons Affected by Mining” (PAM) register. Expenditure is disbursed in tranches, contingent on periodic audits conducted by the Comptroller and Auditor General (CAG). As of March 2023, the DMF had financed 1,274 schools, 87 health‑care centres and 212 kilometres of rural roads across eight mineral‑rich states. ## Implementation Across States – The Odisha Experience Odisha, home to 65 % of India’s iron‑ore output, has become the DMF’s largest beneficiary. Between 2015 and 2022, the state accrued roughly ₹2,500 crore in DMF receipts, of which 70 % was allocated to education and health. The state’s “Odisha Mining Rehabilitation Programme” (OMRP), launched in 2018, leveraged DMF resources to construct 1,032 primary schools, upgrade 45 government hospitals and launch a mobile health‑unit network serving 3.2 million PAMs. In the 2022‑23 budget, the Odisha government earmarked ₹1,200 crore for DMF‑driven projects, with a reported 85 % utilisation rate—well above the national average of 60 %. The success is attributed to a dedicated DMF cell within the Department of Mines and a transparent online dashboard introduced in 2021. ## Current Status and Challenges Nationwide, the DMF has amassed approximately ₹5,000 crore since inception, yet only about 58 % of the corpus has been expended as of FY 2023‑24. Delays stem from bureaucratic bottlenecks, inadequate PAM data and occasional misallocation of funds to non‑mining districts. To address these gaps, the Ministry of Mines rolled out the “DMF Utilisation Monitoring System” (DUMS) in 2022, an integrated GIS‑based platform that tracks fund flow from receipt to project completion. Internationally, the DMF is comparable to Australia’s “Minerals Resource Rent Tax” community‑benefit provisions, but remains distinctive for its explicit statutory link to district‑level welfare. Ongoing legislative discussions in 2025 aim to raise the contribution ceiling from 10 % to 12 %