Odisha asks Centre to remove 30% cap on use of DMF for coronavirus fight

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April 08, 2020 3:01 AM

If the 30% norm is applied, the state DMFs can utilise only Rs 1,000 crore subject to one active coronavirus case.

Since its district DMFs have utilised Rs 2,600 crore, Odisha now has around Rs 7,000-crore balance.

The Odisha government has asked the Centre to remove the 30% cap on the use of District Mineral Fund (DMF) to fight Covid-19 in each affected district.  The move indicates the willingness of the state, which has the largest DMF corpus among all states (with unutilised balance of Rs 7,000 crore), to use this resource rather liberally to provide succour to people impacted by the pandemic. The use of DMF doesn’t entail any budgetary outgo, and so, is fiscally more prudent.

Under the Centre’s Rs 1.7-lakh-crore package announced on March 26 to fight Covid-19, the Centre suggested that part of the DMF funds be made available for the purpose. At a time when funds have dried up for states due to a big decline in growth in tax receipts and inadequate central transfers, DMF has unused funds worth Rs 23,500 crore across the country. A good part of this pool could be drawn down for building healthcare facilities and purchasing equipment such as ventilators.

A circular issued by the mines ministry on March 28 stated that expenditure related to Covid-19 should not exceed 30% of the balance fund available with each DMF. It also said the purchase of medical equipment and creation of infrastructure could happen subject to the condition that there should be at least one Covid-19 positive patient in such districts.

“With migration from cities to rural areas happening in a big way, the threat of coronavirus spreading in rural areas is very high. The purpose of allowing the use of DMF funds will be defeated if districts are not prepared in advance by creating requisite health infrastructure and equipment,” a senior Odisha government official told FE.

Since the district-level fund was created in 2015 by amending the Mines and Mineral (Development and Regulation) Act, 1957, under which miners are required to pay 30% of the royalty amount for leases granted before 2015 and 10% for leases granted after that, DMF has collected a total of Rs 35,930 crore till January 2020. From this corpus, the DMF has cumulatively utilised Rs 12,415 crore for various welfare programmes in mining-affected districts across the country. The DMF corpus is utilised under the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) under which at least 60% will be used for high priority areas like drinking water supply; environment preservation and pollution control measures; healthcare; education; etc.

Odisha has the highest DMF cumulative corpus of over Rs 9,500 crore, followed by Jharkhand at Rs 5,180 crore and Chhattisgarh at Rs 4,980 crore till January 2020.  Since its district DMFs have utilised Rs 2,600 crore, Odisha now has around Rs 7,000-crore balance. However, since the districts have also tied up another Rs 3,700 crore for various ongoing projects, the untied funds available are only Rs 3,200 crore.

If the 30% norm is applied, the state DMFs can utilise only Rs 1,000 crore subject to one active coronavirus case. Of the eight mineral-rich districts in the state, only one district qualifies for use of its 30% corpus, limiting scope for preparatory action by other district authorities.

The state was of the view that the 30% cap should be removed and also the condition of one Covid-19 positive case to invoke the DMF funds use, giving freedom to district authorities to use the corpus as the situation demands.
Due to the extant norms, Odisha has so far used only Rs 10 crore to convert two existing hospitals into Covid-19 ready hospitals with ventilators, one in Keonjhar and another in Sundergarh district.

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