By Our Correspondent
BHUBANESWAR: The Comptroller and Auditor General (CAG) of India has conducted multiple audits related to the District Mineral Foundation (DMF) / District Mineral Foundation Trust (DMFT) in Odisha. These primarily fall under the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) framework, introduced in 2015 to use mining royalty contributions (typically 10–30% depending on lease date) for the welfare of mining-affected people and areas. Odisha is the largest contributor to DMF funds nationally due to its extensive mining operations (especially iron ore in districts like Keonjhar and Sundargarh).
The two most relevant CAG reports/audits are:
Recent Performance Audit (Draft Report, submitted to Odisha government in January 2026): This is a performance audit of DMF funds under PMKKKY, covering the period 2015-16 to 2023-24. It examined six sample districts: Dhenkanal, Jajpur, Keonjhar, Mayurbhanj, Nabarangapur, and Sundargarh. The draft has been widely reported in March 2026 and highlights serious irregularities in identification of affected areas and utilisation of funds.
Audit on Collection/Revenue from Minor Minerals (Report No. 12 of 2024): This focuses on short/non-realisation of DMF contributions (along with royalty, EMF, etc.) from minor mineral operations and public projects. It covers 2015-22 and points to revenue losses, including DMF dues.
An earlier specific audit on DMFT collection (part of Report No. 1 of 2019 – Revenue Sector) noted delays in framing DMF rules leading to non-collection in the initial years.
Key Findings from the 2026 Draft Performance Audit on DMF Utilisation (PMKKKY)
This is the most prominent recent audit on DMF in Odisha. Odisha collected the highest DMF corpus in the country (part of national ₹62,242 crore collected, with ₹19,350 crore spent nationally by the audit period).
Key irregularities include:
Major diversion/misallocation to unaffected areas:
In Keonjhar and Sundargarh (major mining districts), ₹983.32 crore was spent on projects in 976 villages that were neither directly nor indirectly affected by mining.
Zero projects were implemented in 488 directly affected villages and 96 indirectly affected villages.
In these two districts alone, 9,739 projects worth ₹17,926 crore were sanctioned (2015–2024), but affected villages were completely ignored.
Uneven distribution in other districts:
Jajpur: Only 36.60% of utilised funds reached directly affected areas; 43.54% (exceeding the 40% ceiling) went to indirectly affected areas.
“Common affected areas” category absorbed 30.67% (Keonjhar) and 22.67% (Sundargarh) of funds.
Examples of irregular/unpermitted expenditure (violating Odisha DMF Rules and PMKKKY guidelines, which mandate ≥60% for high-priority sectors like drinking water, health, education, environment, skill development, etc.):
Birsa Munda Hockey Stadium in Rourkela: ₹136.77 crore (not classifiable as infrastructure for mining-affected communities).
Police patrolling vehicles, municipality office renovation, reading room at Collector’s residence, inauguration charges, school functions: ₹25.01 crore (Sundargarh & Keonjhar).
25 police patrolling vehicles in Sundargarh: ₹4.63 crore.
Foreign education (Master’s in Mining Engineering at Curtin University, Australia) for 5 students in Keonjhar: ₹6.06 crore (without Trust Board approval; rules bar foreign higher education).
School furniture (Keonjhar, Jajpur, Mayurbhanj): ₹168 crore (not permitted under rules/guidelines).
Scholarships (up to Class XII) and free textbooks/uniforms in Keonjhar: ₹67.76 crore + ₹10.32 crore.
Diversion to MGNREGS wage payments: ₹171.79 crore (explicitly barred).
8 Adarsha Vidyalaya hostels in Keonjhar: ₹9.17 crore (plus ₹2.09 crore unused equipment; many incomplete).
8 community halls in Koira block (Sundargarh): ₹4.50 crore (4 abandoned/useless).
Wholesale market complex + Mission Shakti Cafe in Jajpur: ₹6.39 crore (defunct).
PPP healthcare for Covid patients (Jajpur, Keonjhar, Sundargarh): ₹145.06 crore (including ₹98.85 crore to one private hospital).
Other issues:
DMF levied at only 10% of royalty in some cases (instead of mandated 30%).
Short realisation due to excess mineral extraction.
Overpriced engagement of project management consultants (e.g., KIIT University and Ernst & Young quotes without negotiation).
No formal government response is mentioned in the draft (queries to the Development Commissioner and collectors of Keonjhar/Sundargarh went unanswered at the time of reporting).
Key Findings from the Minor Minerals Revenue Audit (2024 Report)
This audit highlighted non/short collection of DMF contributions (treated as part of mineral revenue):
₹864.45 crore total mineral revenue loss (2015-22), including DMF & Environment Management Fund (EMF) on royalty from minor minerals used in public projects (without valid transit passes).
Only ₹21.25 crore realised out of ₹399.91 crore due in 14 districts; zero collection in the remaining 16 districts against ₹485.79 crore due.
Short realisation of DMF (10–30% of royalty) from lessees/permit holders due to wrong rates, excess extraction, illegal mining, and failure to raise demands (specific shortfalls of ₹47.30 lakh in sampled tahasils, plus larger state-wide leakage).
A separate national CAG Performance Audit Report No. 7/2025 on PMKKKY including DMFT was tabled in December 2025. It evaluates DMFT creation, corpus, utilisation, and compliance across states (including Odisha). Odisha-specific details in the draft audit above appear to feed into or align with this broader review.
These audits underscore issues with proper identification of mining-affected villages/panchayats, adherence to priority sectors, and robust monitoring to ensure DMF funds actually benefit affected communities in Odisha.
