District Mineral Foundation (DMF)

The District Mineral Foundation is a district-level, non-profit trust body created by the Mines and Minerals (Development and Regulation) Amendment Act, 2015, in every district affected by mining operations. It is funded through a mandatory contribution paid by mining lessees, calculated as a percentage of the royalty they pay to the state government, and its purpose is to work for the interest and benefit of persons and areas directly affected by mining-related operations, correcting the structural problem that mineral royalty otherwise flows entirely into general state revenue with no automatic return to the specific district or community bearing extraction's costs. DMF spending is governed by the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY), the central scheme framework prescribing how funds must be allocated. Under guidelines revised in January 2024, DMF expenditure is split 70 per cent to 'high-priority' sectors, drinking water supply, environment, health, education, welfare of women and children, and skill development, and 30 per cent to 'other priority' sectors, up from an earlier 60:40 split, with a requirement that at least 70 per cent of funds be spent specifically in the directly affected area on these high-priority sectors. The 2024 revision also added Members of Parliament and state legislatures to the DMF Governing Council and created a State Level Monitoring Committee chaired by the Chief Secretary. In practice, DMF implementation has faced two recurring problems: utilisation has lagged accrual, leaving large unspent balances in many districts (nationally, roughly Rs 82,371 crore had accrued against about Rs 45,150 crore utilised as of 2026, a utilisation rate near 55 per cent), and expenditure has often drifted toward general district infrastructure rather than the directly affected villages the fund was designed to benefit. A 2026 draft audit by the Comptroller and Auditor General found that in Keonjhar district, Odisha, Rs 983 crore of DMF funds were spent on 976 villages with no connection to mining, while not a single project was implemented in the 488 directly affected villages, an illustration widely cited as the failure mode in its purest form.

• 1 DMF: non-profit trust in every mining-affected district, created by the MMDR Amendment Act, 2015, funded by a levy on lessees (percentage of royalty).
• 2 Governed by the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) spending framework.
• 3 2024 revised guidelines: 70:30 split between high-priority and other-priority sectors (up from 60:40); at least 70 per cent to be spent in the directly affected area.
• 4 High-priority sectors: drinking water, environment, health, education, welfare of women/children, skill development.
• 5 2024 revision added MPs/MLAs to the Governing Council and created a Chief-Secretary-chaired State Level Monitoring Committee.
• 6 National utilisation rate: roughly 55 per cent (about Rs 45,150 crore utilised against Rs 82,371 crore accrued, 2026).
• 7 A 2026 CAG draft audit found Odisha's Keonjhar district spent Rs 983 crore on 976 non-mining-affected villages, implementing nothing in 488 directly affected villages.
• 8 Designed to correct the resource curse mechanism by which mineral royalty otherwise accrues entirely to state-level general revenue.

The Keonjhar district CAG finding, Rs 983 crore of DMF money spent on villages unconnected to mining while directly affected villages received no projects at all, is cited as the clearest illustration of how a redistributive instrument can be captured by ordinary district-level political demand.