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District Mineral Foundation (DMF)

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District Mineral Foundation (DMF) is a trust set up as a non-profit body, in those districts affected by the mining works, to work for the interest and benefit of persons and areas affected by mining related operations. It is funded through the contributions from miners.

Its manner of operation comes under the jurisdiction of the relevant State Government.

Setting up of District Mineral Foundations (DMFs) in all districts in the country affected by mining related operations was mandated through the Mines and Minerals (Development & Regulation) Amendment Act, (MMDRA) 2015.  On 16 September 2015, Central Government issued a notification directing states to set up DMF.

In addition, the Central Government notified on 17 September 2015, the rates of contribution payable by miners to the DMFs.  In case of all mining leases executed before 12th January, 2015 (the date on which MMDR Amendment Act came into force) miners will have to contribute an amount equal to 30% of the royalty payable by them to the DMFs.  Where mining leases are granted after 12.01.2015, the rate of contribution would be 10% of the royalty payable (Subsequent to the enactment of MMDR Amendment Act, mining leases are given out after auctions; hence, a lower levy).

Thus, every holder of a mining lease or a prospecting licence-cum-mining lease shall, in addition to the royalty, pay to the District Mineral Foundation of the district in which their mining operations are carried on. If the mining area is spread across several districts, the fund is shared on a pro-rata basis by these districts. DMF contribution would not be exceeding one-third of royalty and the Central Government retains the power to prescribe the rates of contribution, though DMF’s operation is under state governments. The contributions made to DMFs are collected by the State Governments and the details in this regard are not maintained centrally at the moment. 

Under the above mentioned MMRD Amendment Act of 2015, a provision was made also to create a National Mineral Exploration Trust under the jurisdiction of central government, with 2% of royalty as levy, for boosting detailed exploration of minerals.

The contribution to DMFs has been made effective from 12 January, 2015 though DMF was notified only on 16 September 2015. At the above mentioned prescribed rates of contribution, it’s expected that, nearly Rs.6000 crore could be utilized for the development of mining areas of different States, at the current level of royalty collection.

DMF funds are treated as extra-budgetary resources for the State Plan. Efforts are made to achieve convergence with the State and the District Plans so that the activities taken up by the DMF can supplement the development and welfare activities already being carried out.

Further, using the funds generated by this contribution, the DMFs are expected to implement the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY), launched on 17 September 2015 for the welfare of mining areas and affected population. The Central Government has issued a directive to the State Governments, under Section 20A of the MMDR Act, 1957, laying down the guidelines for implementation of PMKKKY and directing the States to incorporate the same in the Rules framed by them for the DMFs.

The DMFs have also been directed to maintain utmost transparency in their functioning and provide periodic reports on the various projects and schemes taken up by them, on their website.

As per sub-section (3) of section 9B of MMDR Act, 1957, the composition and functions of the DMF are prescribed by the State Government. Therefore, the composition of DMF, including as to whether it would have representatives of the local communities etc. is a matter which is under the legislative and administrative jurisdiction of State Government.

Mining related operations largely affect less developed and very remote areas of the country, and vulnerable sections of the population, especially Scheduled Tribes. Therefore, it is especially necessary that special care and attention is devoted, in an organized and structured manner so as to ensure that these areas and affected persons are benefitted by the mineral wealth in their regions and are empowered to improve their standard of living. It is with this objective that DMF and PMKKKY were launched by the Government.

As on 10 October 2016, DMF has been set up in 263 districts across 12 mineral rich states and an amount of Rs. 3589 crores has been collected.

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