CAG Flags Irregularities in Use of DMF Funds in Odisha

 Key Highlights & Summary

 • The Comptroller and Auditor General (CAG) has found irregularities in the utilisation of District Mineral Foundation (DMF) funds, meant to benefit people and areas affected by mining, with funds spent without adherence to rules and ineligible utilisation.

 • The report is a performance audit of the implementation of Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY), including the functioning of DMFs in Odisha, for the year ended March 2024.

 • The CAG noted that identification of directly and indirectly affected people and areas was delayed by mineral-bearing districts.

 • Under Rule 10(D) of the Odisha DMF Rules, 2015, not more than 40% of funds may be used in indirectly affected areas.

 • Keonjhar and Sundargarh showed spending of 30.67% and 22.67% under a new category called \'common affected areas\'. Once this is added, spending in indirectly affected areas rose beyond the limit to 45.68% in Keonjhar and 41.10% in Sundargarh. Jajpur spent 19.86% under the same head.

 • Projects worth ₹4,541.66 crore were sanctioned in \'common affected areas\' across three DMFs, and ₹2,578.73 crore was spent without any provision in the rules. The CAG said the new category only helped accommodate ineligible utilisation within prescribed limits. 

Essential Definitions 

• District Mineral Foundation (DMF): A non-profit trust set up in mining districts to work for the interest and benefit of persons and areas affected by mining-related operations. 

• Directly affected areas: Areas where mining operations, such as blasting, transport and dumping, cause direct impact on people and the environment. 

 • Indirectly affected areas: Areas that are not directly impacted by mining but suffer its wider social and economic effects.

 • Performance audit: An audit by the CAG assessing the economy, efficiency and effectiveness of a programme, beyond mere financial compliance.

 Legal and Constitutional Framework

 • Article 148 to 151: Constitutional provisions on the CAG\'s appointment, duties and audit reports, which are laid before Parliament and State Legislatures. 

• Article 149: Duties and powers of the CAG in relation to accounts of the Union and States.

 • Section 9B, Mines and Minerals (Development and Regulation) Act, 1957: Introduced by the 2015 Amendment, mandates establishment of DMFs in mining districts. 

• PMKKKY (2015): Scheme under which DMF funds are to be used, with high priority sectors like drinking water, health, education, women and child welfare, and environment protection.

 • Fifth and Sixth Schedules: Protect tribal areas, and are relevant as many mining districts are Scheduled Areas. 

• PESA Act, 1996: Gram Sabha consultation in Scheduled Areas.

 • Samatha v. State of Andhra Pradesh (1997): Restricted transfer of tribal land to non-tribals for mining.

 Conclusion The audit shows that good schemes fail without robust monitoring and fund discipline. Creating unauthorised spending heads defeats the objective of DMF. Transparent planning, gram sabha participation, online tracking of projects and strict adherence to priority sectors are essential to ensure that mining benefits reach the affected communities. 

UPSC Relevance

 • Prelims: DMF, PMKKKY, Section 9B of the MMDR Act, CAG\'s constitutional provisions, PESA Act. 

• Mains GS-II: Accountability of institutions, role of the CAG, transparency in governance and welfare schemes for vulnerable sections. 

• Mains GS-III: Mining sector, resource governance, inclusive growth and environmental concerns. 

• Mains GS-I: Tribal displacement, regional development issues. 

• Mains GS-IV: Public fund probity, integrity and accountability. 

• Essay and Interview: Themes like \'Resource curse versus resource blessing\' and \'Mining and community welfare\'.