Budget 2020: Leveraging DMFs for achieving development goals in rural India

Updated: Jan 30, 2020 1:15 PM

Union Budget 2020-21: With the DMF fund corpus having grown by 44% in the past year, a well-planned and effectively monitored decentralized DMF is a boon for achieving impactful socio-economic development across rural mining districts.

 Budget 2020, Budget India 2020-21, India Union budget 2020, Rural Development, nirmala sitharamanIndia Budget: DMFs are funded by mining firms through statutory contributions ranging from 10% and 30% of the royalty amount payable by them. DMF funds are collected and spent at the district level pursuant to the Pradhan Mantri Khanij Khsetra Kalyana Yojna.

By Ashok Varmma

Budget India 2020-21: The introduction of District Mineral Foundations (DMFs) in 2015 across all mining districts in India has been a positive step towards mitigating the social and environmental externalities of mining. Till date, out of 583 mining districts in India, DMFs in 95% of these districts have been set up and operationalized.

DMFs are funded by mining firms through statutory contributions ranging from 10% and 30% of the royalty amount payable by them. DMF funds are collected and spent at the district level pursuant to the Pradhan Mantri Khanij Khsetra Kalyana Yojna. 60% of the funds under the scheme are mandated to be utilized for high priority social development issues such as health, education, women empowerment, drinking water, etc., and the remaining for infrastructure and environmental development.

As on November 2019, a total of INR 34,099 Crs. were collected by DMFs, of which about one-third has been utilized till date. The mineral-rich eastern and central belt states contribute to 65% of the overall DMF collection in India.

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Odisha clocked the highest outlay of INR 8,981 Crs. in 2019. However, utilization remains limited to 27%, making Odisha part of the top ten poor spenders of the fund. To put this in perspective, DMF fund collection in Odisha is almost 45% of the state’s rural development budget allocated for FY20.

With the DMF fund corpus having grown by 44% in the past year, a well-planned and effectively monitored decentralized DMF is a boon for achieving impactful socio-economic development across rural mining districts. Further, with the ongoing economically challenging year with lower receivables, readily available funds should be effectively utilized towards socio-economic empowerment of rural populations.

Sources: DMF Funds and Project Status, November 2019, Ministry of Mines, Government of India. National Workshop on DMF-PMKKKY, January 201

(The author is Leader Social Sector at PwC India. Views expressed are personal.)

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