District Mineral Foundations, currently being set up by states, are an opportunity as well as a challenge, says CSE

Expresses ‘alarm’ at the people-unfriendly way Rajasthan has gone about drafting its recently released DMF rules

• CSE organizes a media briefing in Ranchi on the subject; meet is attended by 40 journalists from three mining states of Jharkhand, Chhattisgarh and Odisha

• Attempts to demystify DMFs, which have been created by the government to ensure mining benefits accrue also to communities affected by mining 

• States are required to set rules to operationalise DMFs. Some states have begun doing it – Rajasthan, for instance, has drafted rules, but these are non-inclusive and do not meet the objective of setting up DMFs

• CSE recommends clarity and transparency in developing guidelines on identifying beneficiaries, allocating responsibilities and  managing funds 

RANCHI, July 3, 2015: Centre for Science and Environment (CSE) has said that while the District Mineral Foundations (DMFs), created recently by the Government of India for the benefit of communities impacted by mining, were a huge opportunity, it was  concerned over the way DMF rules were being framed by states. CSE director general Sunita Narain said: “There were many challenges with DMF, but we must also remain positive about the prospects. We need to make sure that DMF is developed.”

These views were expressed in a Regional Media Briefing Workshop organized here by CSE, which saw participation of journalists from Jharkhand, Chhattisgarh and Odisha, three states where mining is a key activity. States are required to frame rules for operationalising the DMFs. Rajasthan has recently put out its draft rules on DMFs and has sought comments from the public.

“The DMF is a benefit sharing mechanism with the people. It should be a people-centric institution where mining affected people must be made a part of the decision-making of how and where the money coming to DMF should be used. But the way the states are envisioning DMF is alarming,” said CSE deputy director general Chandra Bhushan.

Creation of DMFs

Mining is known to benefit governments, companies and individuals -- but not the people who live around the mined land. This was acknowledged by the Union ministry of mines in its Sustainable Development Framework (SDF) report. The country’s most mineral-rich states and districts have the poorest people. According to poverty estimates by the Planning Commission for 2011-2012, in the three top mining states of Chhattisgarh, Jharkhand and Odisha, the proportion of population below the poverty line is nearly 40 per cent, much higher than the national average of 21.9 per cent.

The Mine and Minerals Development and Regulation (Amendment) Act, 2015, has created provisions for sharing the mineral wealth with communities in the mining areas. The Act (Section 9B) now provides for the establishment of DMFs. As specified, the DMF is a trust that would function as a non-profit body to “work for the interest and benefit of persons, and areas affected by mining related operations”. The Act broadly outlines an amount that lease holders are required to pay to the DMF annually with regard to major minerals.

Rajasthan’s draft DMF rules

With reference to Rajasthan’s recently released draft DMF rules, Narain said they (the rules) failed to make the DMF an institution “of the people and for the people.”

She added: “This is evident in the mining-affected communities being kept out from every aspect of decision-making. The institutional design is deficient as it lacks multi stakeholder representation. It completely leaves out how the beneficiaries will be identified. There is little clarity and justification on how and where the money will be spent, rather some functions as such as spent on organizing melas, inter-school sports events which is completely meaningless. It largely renders DMF as another source of revenue to be used as ‘general development fund’.” 

Narain said that if states began to follow the Rajasthan model, the core idea of having a DMF would be defeated.

CSE recommendations to the mining states

CSE has released a set of recommendations aimed at the governments in the mining states. Its key recommendations include:

• Setting clear guidelines for identifying beneficiaries: CSE has recommended that directly and indirectly-affected areas should be identified. Directly affected areas should include villages and gram sabhas where waste material generated out of mining is dumped, areas where mining is taking place or areas where people from mining-affected areas are resettled. Indirectly affected areas should include villages which face negative economic, social and environmental consequences due to mining-related operations. The major negative impacts of mining could be deterioration of water and air quality, congestion and pollution due to transportation of minerals, increased burden on existing infrastructure due to influx of people and transportation equipment, etc.

• Specifying how and where the money should be spent: DMF money is strictly for persons and areas affected by mining and for their social and economic upliftment. Of the total funds that DMF would receive in a year, no less than 20 per cent should be deposited in an account for future use (when mining operations are closed) as well as for emergency situations, such as natural calamities. Every directly affected family should be entitled to equal monetary benefit, which could either be paid monthly or annually. 

• Specify who should administer the funds: CSE recommends the DMF should function like a professional organization, with both the Members of the DMF and the Governing Council involved in managing its functioning. The DMF should comprise a male and a female representative from each of the affected village and 10 per cent of mining companies contributing to DMF, while the Governing Council would include the District Magistrate, community representatives, District Mining Officer, among others.

• Ensure effectiveness, transparency and accountability of DMF: CSE recommends the DMF should function like a professional organization, with both the Members of the DMF and the Governing Council involved in managing its functioning.  It should be open to the government as well as public audit. The DMF should maintain a register giving details such as the list of lease holders in the district and the annual payments made by them to the DMF, the disbursal of benefits to the affected persons, annual audited accounts, among others.

In conclusion, Narain said, “The right to minerals lies with the people, so people must benefit. DMF is as much about the present generation as it is about the generations that will come in future.” Bhushan added, “We must understand that DMF is not a charity but the right of people.”

For further information, please contact

Anupam Srivastava,
Email: asrivastava@cseindia.org
Mobile:  99100 93893

To access CSE’s policy brief and complete set of recommendations on DMFs, please visit:https://cdn.cseindia.org/userfiles/District_Mineral_Foundation_policy_brief.pdf