E-Paper
DMF fund use in Odisha: CAG draft audit says ₹983 cr for villages untouched by mining
A CAG report reveals ₹983 crore was spent on projects in unaffected villages, while none were implemented in 584 directly affected villages.
A draft report of CAG to check on the performance of funds collected under the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) framework through District Mineral Foundations found that ₹983.32 crore was spent implementing projects in 976 villages that were neither directly nor indirectly affected by mining operations in Keonjhar and Sundargarh districts between 2015-16 and 2023-24 while not a single project was executed in 488 directly affected villages and 96 indirectly affected villages across the same period.
The Comptroller and Auditor General of India (CAG) conducted a performance audit of six sample districts — Dhenkanal, Jajpur, Keonjhar, Mayurbhanj, Nabarangapur and Sundargarh — covering the period from 2015-16 to 2023-24 and submitted its draft report to the state government in January. HT has reviewed the draft report which may change after different departments and district collectors give their comments.
The PMKKKY framework aims to serve the interests and benefit of people and areas affected by mining operations. The fund recognises local communities as equal partners in natural resource-led development and environmental protection. It is a special fund, not tied to any specific scheme or area of work, and it does not lapse at the end of each financial year. At least 60% of the DMF funds must be utilized for high-priority areas, including drinking water supply, environmental preservation and pollution control measures, healthcare, education, welfare of women and children, skill development and sanitation.
But the audit found that in Sundergarh and Keonjhar districts alone, 9,739 projects worth ₹17,926 crore were sanctioned between 2015 and 2024. Yet not a single project was implemented in 488 directly affected villages and 96 indirectly affected villages. Instead, ₹ 983 crore was spent on 976 villages that were neither directly nor indirectly affected by mining.
In mining-affected Jajpur, only 36.60% of utilised funds reached directly affected areas, while 43.54%, exceeding the 40% ceiling went to indirectly affected areas while in Keonjhar and Sundargarh, a new category called “Common affected areas” that is not defined in Odisha DMF Rules or PMKKKY guidelines was invented accounting for 30.67% and 22.67% of utilised funds respectively. But directly-affected panchayats like Hemgiri GP in Sundargarh, did not get any developmental projects as the CAG auditors did not find any trace of DMF work in villages like Ostali and Biswanathpur even as the government claimed projects worth ₹579.47 crore had been sanctioned for the block.
Pointing to the some of the most egregious diversions of DMF funds, the audit said ₹136.77 crore of the DMF funds were used for the construction of a Birsa Munda hockey stadium in Rourkela, world’s largest hockey stadium in terms of seating capacity, for hosting the Hockey World Cup in 2023. The CAG observed that a hockey stadium used for international matches cannot be categorised as common infrastructure for mining-affected communities.
In Sundargarh and Keonjhar districts during 2017-18 to 2023-24, ₹ 25.01 crore was spent from DMF towards engagement of vehicle for police patrolling, renovation of municipality office, renovation of reading room at Collector’s residence, inauguration charges and organization of school function etc. in violation of ODMF Rules. In Sundargarh district, ₹4.63 crore was spent for procurement of 25 patrolling vehicles.
In Keonjhar, the district collector authorised ₹ 6.06 crore from DMF funds to send five students to pursue a Master of Professional Engineering (Mining) at Curtin University in Australia — without the approval of the Trust Board or Executive Committee, and in contravention of rules that do not permit DMF money to be used for foreign higher education. The same district spent ₹ 138.77 crore on school furniture, ₹ 67.76 crore on scholarships for students up to Class XII and ₹10.32 crore on free textbooks and uniforms, all of which the audit found to be impermissible under the Odisha DMF Rules and PMKKKY guidelines.
Three DMF trusts also diverted ₹ 171.79 crore to the state’s MGNREGS wage payments — a use explicitly barred under PMKKKY guidelines.
For what was actually constructed in the name of mining communities, the audit found a graveyard of idle assets. Eight hostel buildings for Odisha Adarsha Vidyalayas in Keonjhar were completed at ₹9.17 crore and equipped with ₹ 2.09 crore worth of beds, cots and almirahs that was found dumped in school buildings. None of the hostels had been made functional. In Sundargarh’s Koira block, four of eight community halls built for ₹ 4.50 crore were found abandoned, repurposed as an ITI college hostel, or built so far from habitation without electricity or water as to be useless. A wholesale market complex and Mission Shakti Cafe in Jajpur, completed for ₹6.39 crore and handed over to the Kalinga Nagar Development Authority in late 2023, lay entirely defunct when auditors visited.
The audit found ₹ 168 crore of expenditure from DMF by district administrations of Keonjhar, Jajpur and Mayurbhanj for purchase of school furniture despite the PMKKKY guidelines and ODMF Rules having no such provision.
In Jajpur, Keonjhar and Sundargarh districts, private hospitals were hired through PPP mode to provide health care services for Covid-affected patients and paid ₹ 145.06 crore between August 2020 to March 2022. In Sundargarh district, ₹98.85 crore was paid to a private hospiTal named Jai Prakash Hospital and Research Centre Private Limited, Rourkela though there was no instructions from Centre as well as state government for hiring of beds in private hospitals in PPP mode against permanently reserved beds.
The audit found that DMF contributions in certain cases were levied at 10% instead of the legally mandated 30% of royalty while there was short realization due to excess mineral extraction. Three districts also diverted ₹ 171.79 crore to the state’s MGNREGS wage payments, a use explicitly barred under PMKKKY guidelines.
The audit also raised questions about the engagement of project management consultants. KIIT University, Bhubaneswar quoted a professional fee of ₹ 7.65 lakh per month for 12 persons plus 39.61% as general management service fee. Ernst and Young quoted the same base fee but demanded 100% of it as additional service charges and was engaged without any price negotiation despite the substantially higher cost.
As of now, Odisha’s DMF funds have collected ₹ 62,242 crore nationally, the highest among all states, with Chhattisgarh a distant second. Of this, ₹19,350 crore has been spent. Development Commissioner DK Singh, who also heads the state steel and mines department, along with the district collectors of Keonjhar and Sundargarh, did not respond to queries.
