Scope for duplication of work with other departments
Community participation in decision making given a miss
Lack of clarity on transparency and accountability mechanism of DMF
Beneficiary areas and communities poorly defined
NEW DELHI, January 18: The Directorate of Mines and Geology, Government of Goa, last Friday put out their District Mineral Foundation (DMF) Rules, 2016. The Rules were notified following provisions of the Mines and Minerals (Development and Regulation) Act, 1957, as amended in 2015. It was brought out without any public consultation. The draft Rules were kept in the public domain for exactly four days before being finalized.
A review by CSE shows that the Rules remain problematic in key aspects that are critical for effective functioning of DMF. “The Rules will not only fall short of realizing the objectives with which DMF has been instituted, but can also be counterproductive,” said CSE Deputy Director General, Chandra Bhushan. “Several provisions remain in contravention of the schemes and guidelines put forth by the Central Government,” he added.
Some of the key problems CSE analysis has highlighted are:
The Rules fail to make DMF relevant to ‘people’ with ‘misplaced focus’ on fund utilization
The Functions are poorly conceptualized and outlined, often diverging from the core intent with which DMF has been institutionalized under the law
The Rules create an ill-defined institutional structure with no representation of communities in decision-making
Areas and people entitled to benefit from DMF money (being affected by mining) are poorly defined
Provisions for fund utilization lack clarity – there is scope for misuse
The Rules deal weakly with the issue of transparency and accountability
CSE’s Analysis
1. Misplaced focus and preoccupation with fund utilization
“The Goa DMF Rules are chiefly focused on the ‘utilization’ of DMF funds, pushing many crucial issues to the backseat,” said Bhushan. With such preoccupation with fund utilization, it has even missed out on providing a broad objective within which DMF should function in the state. The MMDR Amendment Act 2015 (Section 9B) has clearly mentioned the objective for creating DMFs- to “work for the interest and benefit of persons, and areas affected by mining related operations”.
The Goa Rules barely provide any certainty about fulfillment of such objective. “The Rules lack a people’s focus, create scope for fund misuse and show lackadaisical treatment of this important institution,” said Bhushan.
2. Stated functions diverge from the core objective of DMF
A major frustration with the Goa DMF Rules is the stated functions (Rule 4). It includes a number of things for which DMF money should not be used. For instance, consider functions such as "restoring the ecology damaged by mining” in affected areas, or “installing pollution control devices, sewage treatment plants”. CSE analysis points out that the DMF money should not be used for any of these. Putting in place pollution control measures, restoring ecology, etc., are responsibilities of the company or individuals undertaking mining activities. Using DMF money for such purposes will actually help the companies externalise the environmental costs of mining, which communities will be required to absorb by reduction of their share from DMF.
Further, measures like “afforestation” actually fall under the ambit of other schemes of the government such as Compensatory Afforestation Fund Management and Planning Authority (CAMPA). CSE analysis says the state should make the best use of CAMPA funds in a transparent manner. Some of the functions – such as ‘building roads’ or ‘bridge network’ – are the responsibility of other state departments for which funds should be available from the state coffer. Further, there is no justification “constructing a dedicated mining corridor in the respective districts” using DMF money.
“For the Rules to be effective, the Government should have clearly outlined the activities for which DMF money should be used, strictly adhering to the “objective” of the MMDR Amendment Act,” said Bhushan.
3. Ill-defined institutional structure – communities left out
The institutional structure lacks detail (Rule 3). The only elaboration is of the “power, duties and responsibilities” of a “Member Secretary” for every DMF (Rule 10). “This shows how the Government has failed to recognize DMF as an institution of the people, making it a top-down one,” said Bhushan.
Even where the Rules broadly mention who should be made members of DMF, only people with ‘specialized’ knowledge have been listed, which completely leaves out the members of mining-affected communities in the decision-making bodies or processes.
The composition of DMF also lacks checks and balances. This was a primary reason why the Centre in a Model DMF Trust Deed had suggested a two-tier institutional structure consisting of a Governing Council and a Managing Committee. The Goa DMF Rules undermine such a possibility.
“The DMF should have been made a professionally organized and democratically functioning institution. “There should have been a multi stakeholder representation, with adequate involvement of people from mining-affected communities,” said Bhushan.
4. Gap in definition of areas and people who are entitled to benefit from DMF
The Rules also give very limited definitions of “affected areas” and “affected persons”. “Affected areas” have been defined as the “areas which are affected by mining-related operations” while “affected persons” have been defined as those “residing in affected areas”.
“These should have further been spelled out as they are crucial for ensuring that the DMF funds are used effectively and serve intended beneficiaries,” said Bhushan. The Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY), the guideline that the Centre had issued to the state governments in September 2015, gave very clear definitions of these. It emphasized on some critical aspects which Government of Goa has left out.
5. Utilization of funds
The Rules outline (Rule 5) how DMF money should be used, particularly for present and future use. However there is little clarity or certainty that the most crucial needs of the mining-affected communities will be addressed. The Rules have not identified “priority areas” where a major share of DMF money must be used, and are of prime importance for uplifting the socio-economic status of people in the mining areas,” said Bhushan. These can include provisions for clean drinking water supply, health care, education, welfare of women and children and aged people, skill development, etc. Some of these have been clearly outlined in the PMKKKY that the state government is supposed to follow,” adds Bhushan.
6. Provisions to ensure transparency and accountability of DMF very weakly spelt out
The Rules (Rule 16) make a cursory mention of “maintenance and audit of accounts” of the DMF. What is evident is that it is to be decided by the State Government. However, this is very important considering the amount of money that a mining-rich state like Goa can derive. It is also critical given the past controversies related to mining in the state. “The state government therefore must clearly outline mechanisms for ensuring transparency and accountability. It should be open to government as well as social audit. Since DMF is an institution for the people, all information related to its functioning, including information on accounts and audits should be in public domain,” emphasized Bhushan.
Lastly, there is clarity required between DMF and the Goa Mineral Ore Permanent Fund Trust Scheme. Presently, the state government has largely duplicated the “object and functions” of both schemes.
Please find related documents on the issue here:
• Model District Mineral Foundation (Trust) Rules, 2015, please visit
• Factsheet: Pradhan Mantri Khanij Kshetra Kalyan Yojana and District Mineral Foundation
For further information, please contact Anupam Srivastava, asrivastava@cseindia.org, 9910093893
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