Mining's promise, communities' plight: Unearthing the truth about India's District Mineral Foundations

Imagine a world where the immense wealth dug from the earth directly benefits the very communities whose lives are upended by mining. In 2015, India dared to dream this dream. With a groundbreaking amendment to the Mines and Minerals Act (Development and Regulation) Act, 1957 (MMDR Act), District Mineral Foundations (DMFs) were born as a pioneering step to channel mining royalties back to the mining-affected people. Parallelly, the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) was launched to guide investments for the welfare of mining-affected communities.

A decade on, these DMFs now hold a staggering Rs. 1,03,000 crores accrued by March 2025, which is a colossal yet largely untapped reservoir of funds for public welfare. But this grand vision, as a recent detailed decadal assessment by the International Forum for Environment, Sustainability and Technology (iFOREST) reveals, is far from fully realised. Instead, it's a story tangled in red tape, underutilization of funds, and missed opportunities to build lasting socio-economic resilience.

The genesis of a game-changer

The DMF was envisioned as a benefit-sharing mechanism, grounded in constitutional provisions relating to tribal areas and laws such as the Panchayats (Extension to Scheduled Areas) Act (PESA) and the Forest Rights Act (FRA). Mining leaseholders were mandated to contribute a share of royalties of 30% for leases granted before January 2015 and 10% thereafter directly to DMF Trusts at the district level. The PMKKKY guidelines provided a framework that funds should prioritise drinking water, education, health, sanitation, skill development, and environmental protection. In 2024, revised PMKKKY guidelines strengthened focus areas, mandating that 70% of DMF funds be used for high-priority sectors and emphasising planning through five-year perspective plans​. Despite these directions, ground realities reveal a mixed picture.

Who's really in charge? A system adrift?

Although DMFs were intended to be community-centric, in reality, bureaucratic dominance prevails. District Collectors chair both the Governing Council (GC) and Managing Committee (MC), with little or no representation of mining-affected communities. Five states like Assam, Goa, Kerala, Haryana, and Madhya Pradesh, have mining-affected people in their DMF bodies​. Shockingly, none of the top 21 mining districts, which control over 65% of DMF funds, have properly identified mining-affected beneficiaries, despite it being a mandatory requirement under PMKKKY. This failure undermines the very essence of DMFs to directly benefit those who have lost land, livelihoods, and access to natural resources because of mining​.

Billions in the bank, scarcity on the ground

The DMFs have collected an impressive Rs. 1,03,242 crores so far​. Odisha, Chhattisgarh, and Jharkhand alone account for over 56% of the total. However, only about 40% of the total accruals have been utilised—a worrying sign given the acute developmental needs in mining-affected districts. Top districts like Kendujhar (Rs. 12,401 crore) and Sundargarh (Rs. 8,257 crore) have significant accruals but also high rates of poverty and tribal populations​. Ironically, many top DMF districts overlap with India's aspirational districts, needing urgent developmental interventions. Underutilisation stems from administrative inertia, lack of professional project management, and a tendency to undertake capital-heavy projects (such as road construction) instead of sustainable livelihood initiatives.

Sectoral allocations: A tilt towards infrastructure

While PMKKKY mandates a 70% focus on high-priority sectors, the DMF fund allocation trends reveal a problematic tilt towards physical infrastructure, especially roads and bridges. About 30% of DMF allocations nationally have gone into physical infrastructure​, often exceeding the 30% cap recently mandated under the 2024 guidelines. States like Telangana (61%), Meghalaya (59%), and Andhra Pradesh (53%) have massively overshot this limit​.

Transparency and accountability: Improving, yet incomplete

Transparency has modestly improved: 19 out of 21 top DMF districts have dedicated websites​. However, crucial gaps remain:

• None of the districts have published lists of actual DMF beneficiaries.

• Only half regularly upload minutes of GC and MC meetings.

• Annual reports and audit reports are available publicly only till FY 2021-22.

• Grievance redressal mechanisms exist in theory, but real tracking of complaints and redress actions remains absent.

Thus, while basic reporting structures are being built, genuine accountability through citizen participation and feedback remains a distant goal.

Way ahead: Transforming DMFs for the next decade

As India’s mining sector expands to fuel infrastructure and renewable energy needs, DMF accruals are projected to rise to a staggering Rs. 2,50,000 to Rs. 3,00,000 crore over the next decade​. This offers an unprecedented opportunity to transform mining-affected regions. However, without deep reforms, DMFs risk becoming a lost opportunity.

Key recommendations

• Redesign DMFs as independent public welfare institutions: DMFs should be de-linked from pure bureaucratic control. A professional CEO should lead DMFs (where collections exceed Rs. 50 crore/year), supported by independent boards with community representation.

• Institutionalise bottom-up planning: Mining-affected communities must drive DMF priorities through mandatory Gram Sabha consultations. Perspective plans must be mandatory and public.

• Realign fund allocations: States must shift from heavy infrastructure investments to human development sectors like education quality improvement, health services, skill training, and livelihoods.

• Create endowment funds for mine closure districts: Districts like Dhanbad and Bokaro facing mine closures must build endowment funds to sustain livelihood and welfare investments even after mining ends.

• Mandate social audits and impact assessments: Independent third-party audits and participatory social audits must be institutionalised to measure DMF’s impact on the ground.

• Strengthen transparency and public engagement: Websites must regularly publish beneficiary lists, grievances registered and resolved, and project impact reports in accessible formats.

• Integrate DMF strategy with just transition planning: In districts moving towards mine closure, DMF must support just transition strategies to build resilient local economies based on renewable energy, agro-processing, and eco-tourism.

Failing to act boldly now risks squandering one of India's most innovative ideas for inclusive growth. “With a total fund accrual of over Rs. 1 lakh crore, DMFs have a pivotal role in addressing developmental challenges in India’s mining districts, which are some of the most underdeveloped regions of the country. However, sub-optimal institutional design, inefficient fund utilisation, lack of systematic and long-term planning, and lack of people’s engagement in identifying and designing intervention measures are hindering their full potential. DMFs need to be redesigned as an independent public welfare fund to fulfil their mandate,” said Shri Chandra Bhushan, CEO, iFOREST. The DMF experiment deserves not just to survive but to succeed—and to inspire similar models across other sectors where communities bear the burden of development.