News Analysis

States can dip into ₹23,397-cr unused district mineral fund

Satya Sontanam BL Research Bureau | Updated on March 28, 2020 Published on March 28, 2020

Top five States hit by the virus have only ₹3,552 crore of unutilised District Mineral Foundations Fund


Finance Minister Nirmala Sitharaman has asked State governments to utilise the funds available with the District Mineral Fund (DMF) for supporting and augmenting medical testing, screening and other activities to fight Covid-19, while announcing the ₹1.7-lakh-crore economic relief package.

This is in addition to the Centre’s ₹15,000-crore aid, which was announced by Prime Minister Narendra Modi to strengthen the country's health infrastructure to tackle coronavirus.

The unutilised DMF funds — which are collected from miners for the welfare of areas and people affected by mining-related operations — as on December 2019/January 2020 was ₹ 23,397 crore.

It was stated in Lok Sabha that the accumulated funds collected since 2015 was about ₹35,789 crore, out of which only ₹12,391 crore was utilised. On a closer look, the DMF balances available with top five corona virus-affected States is only ₹3,552 crore.


Statutory payment

District Mineral Foundations have been constituted in 574 districts (out of 585 districts) in 21 mineral-rich States.

DMF is a statutory payment to be made by the miners to the respective States at the rate of 10 per cent or 30 per cent of the royalty paid for their mining activities.

The amount collected under DMF funds depends on the number of mining leases granted and the quantum of operations in the State.

Thus, the highest DMF contributions have been reported from Odisha (₹9,501 crore – cumulative since 2015), Jharkhand (₹5,060 crore) and Chhattisgarh (₹4,980 crore).

There have been always concerns of slow pace of utilisation of DMF funds. As per the Lok Sabha answer, cumulative DMF funds are utilised only to an extent of 35 per cent. Chhattisgarh, Jharkhand, Tamil Nadu, Gujarat and Maharashtra top the list with utilisation rates of 67.4 per cent, 47.5 per cent, 37.5 per cent, 35.4 per cent and 35.2 per cent respectively. States such as Kerala, Meghalaya, Himachal Pradesh, Bihar and Uttarakhand have poor utilisation rates of less than one per cent.

Now, the Centre has asked State governments to make use of unutilised DMF funds to aid Covid-19 related cases.

Highly-affected States such as Kerala (129 patients), Maharashtra (127), Karnataka (55), Gujarat (42) and Uttar Pradesh (40) have unutilised DMF balances of ₹22.52 crore, ₹1,119 crore, ₹1,522 crore, ₹431 crore and ₹456 crore, respectively.

Other affected States/Union Territories — Delhi (35), Punjab (33 patients), Haryana (16) and Ladakh (13) — do not have any DMF fund due to almost nil mining activities.

States with low DMF balances include Bihar (6 patients), West Bengal (10) and Jammu & Kashmir (13).

Published on March 28, 2020

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