Rs 43 billion collected by District Mineral Foundations in Odisha till April 2018, only 11% (Rs 4.8 billion) utilized 


Bhubaneswar: -TERI’s Resource Efficiency and Governance division has been working on an important emerging issue of equitable sharing of mining benefits with communities in mineral-rich states. With a multi-disciplinary team of experts, the division has been instrumental in providing research-based innovative solutions for the socio-economic development of communities affected by mining operations as well as policy inputs to assist the goals of the government.
The Energy and Resources Institute (TERI), India’s leading think tank, has done a critical review of District Mineral Foundations (DMFs) which are local institutions established in mining regions across the country for the socio-economic development of communities affected by mining operations. The title of the discussion paper is, “Benefit sharing in the mining sector: An analysis of the role of District Mineral Foundations.”
“DMFs present an opportunity to improve developmental outcomes in historically marginalized mineral rich regions. However, to prevent pilferage and to ensure that high impact projects are identified, it is important to improve district-level planning processes and include members of the local community in decision making. In addition, transparency and accountability mechanisms through social audits should be strengthened and enforced. Finally, it is important to think of long-term benefits through mining revenues through operationalizing endowment funds which can allow for financial returns from investments even after mining activities end in the region,” said the report’s author Joyita Ghose, Associate Fellow, TERI.
The discussion paper examines the regulatory framework within which DMFs operate, identifies key gaps, and makes recommendations to address these gaps in order to enable effective benefit-sharing on mining revenues through these recently established institutions. Also, the paper aims to provide policymakers, practitioners, civil society organizations, and mining companies with a specific set of actions which can be taken to improve the functioning of DMFs, within the broader context of benefit sharing in the mining sector.
Focusing on the financial performance of DMF funds, the Ministry of Mines established a web portal with state-wise data on fund collection and utilization. An overview of the amount collected and utilized by DMFs in 12 key mineral-producing states till April 2018 has been analysed stating that the fund collection has been the highest in Odisha, Chhattisgarh, Jharkhand, Rajasthan, Telangana, and Madhya Pradesh. In total, approximately 20% of the total funds collected in the 12 key mineral-producing states had been utilized till April 2018.
• In Odisha, Rs 43 billion had been collected by DMFs till April 2018. However, only 11% (Rs 4.8 billion) was utilized in the same time period. • The districts which collected the most DMF funds are Keonjhar, Angul, Sundergarh, Jajpur, and Jharsuguda• A case study of the DMF established in Keonjhar shows that the largest number of projects were in the education sector, while the largest amount allocated was for physical infrastructure, specifically road construction. • The different sectors in which major types of activities were funded through the DMF in 2015-2018 were: physical infrastructure, education, drinking water, health, irrigation, skill development, welfare of women and children, energy, and watershed. • The largest number of projects was in the education sector (241 projects) and the largest amount was allocated for road construction (69%).
Other key issues highlighted are:• While Andhra Pradesh, Chhattisgarh, and Karnataka specify the inclusion of affected community members in either the governing council or the managing committee, other states (like Odisha) do not specifically require their inclusion, opening the possibility of no representation of affected communities in the decision-making bodies in these states, unless they are added at the discretion of the chairperson• An analysis of the revenue received from the auction of 41 mineral blocks across the country shows that DMFs revenues specifically earmarked for the affected communities and regions are only 2%–3% of the total revenue from the sale of these 41 mineral blocks
The discussion paper argues that the successful management of DMFs requires: (i) increased participation by local community members and elected representatives, (ii) district level expenditure frameworks to ensure that spending is aligned with context-specific requirements of local communities, (iii) instituting and implementing transparency mechanisms which can be accessed by local communities, (iv) developing monitoring and accountability mechanisms through social audits, and (v) investing a part of DMF revenues in endowment funds to ensure some inflow of funds even after mining stops in the region.