District Mineral Foundations (DMFs) In India, 2026: Can Mining Revenues Deliver Development To Mining-Affected Communities?

Policy Update
Arya Gupta

Background

Mining imposes lasting social and environmental costs on the districts where it occurs including land acquisition, displacement, pollution, and depletion of forest and water resources yet for decades the revenue generated from mining flowed almost entirely to state and central exchequers, with no earmarked mechanism to compensate the communities bearing these costs. This mismatch was particularly significant because mining activity occurs in several states that also contain notified Fifth and Sixth Schedule Areas, including Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha and Assam. These areas include communities covered by special constitutional provisions for the administration of Scheduled Areas and tribal areas.(Press Information Bureau (2025, April 2)).

The Mines and Minerals (Development and Regulation) Amendment Act, 2015 addressed this gap by inserting Section 9B into the MMDR Act, 1957, empowering State Governments to establish a District Mineral Foundation (DMF), a non-profit trust in every district affected by mining-related operations. In September 2015, the Ministry of Mines issued guidelines for the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) to direct how DMF funds should be used, and States were required, under Section 20A of the MMDR Act, to incorporate these guidelines into their own DMF Rules. Unlike ordinary budgetary allocations, DMF funds do not lapse at the end of a financial year, allowing them to accumulate for longer-term, locally planned development work in mining-affected areas.

Functioning

DMFs are funded through a mandatory contribution from mining leaseholders, paid in addition to the

royalty they already pay to the State Government: 10% of royalty for mining leases granted or auctioned on or after 12 January 2015, and 30% of royalty for leases granted before that date. This is distinct from the National Mineral Exploration and Development Trust (NMEDT), formerly the National Mineral Exploration Trust (NMET), which was renamed with effect from 1 September 2025. The lessee contribution to NMEDT was increased from 2% to 3% of royalty under the 2025 amendment.

Each DMF is governed according to rules prescribed by the respective State Government under Section 9B of the MMDR Act, 1957. In Odisha, the Odisha District Mineral Foundation Rules, 2015 provide for a Board of Trustees and an Executive Committee, both headed by the District Collector, who serves as Chairperson-cum-Managing Trustee. The Board provides overall oversight of the Trust, while the Executive Committee handles its operational functions. The State Government constitutes the district-level Trust through notification, while the Board approves the DMF’s plans and budget and the Executive Committee oversees implementation of approved activities.(Department of Steel & Mines, Government of Odisha 2015).

The Central Government revised the PMKKKY guidelines in January 2024, increasing the minimum share of DMF funds to be spent on High Priority Sectors from 60% to 70%. Separately, at least 70% of DMF funds must be spent in directly affected areas, while up to 30% may be utilised for Other Priority Sectors such as physical infrastructure, irrigation, energy and watershed development.

The revised guidelines also strengthened local participation by allowing Gram Sabhas and local bodies to aid in preparing need-assessment reports for district perspective plans; in Scheduled Areas, Gram Sabha approval is required for PMKKKY plans, programmes and projects and explicitly required that fund utilisation in Scheduled Areas follow the protections under Article 244, the Fifth and Sixth Schedules, the Panchayats (Extension to the Scheduled Areas) Act, 1996 (PESA) and the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006.

Performance

DMF collections have grown substantially since the scheme’s inception: from ₹3,589 crore collected across 263 districts in 12 mineral-rich states as of October 2016, to a cumulative ₹1,22,909 crore collected nationally by December 2025. During this period, ₹1,02,317.66 crore was allocated across 4,32,914 projects, while ₹65,321.55 crore was spent. According to a Ministry of Mines/PIB backgrounder published in August 2026, 656 District Mineral Foundations (DMFs) had been established, including 106 in aspirational districts.

Indicator	Early Years (Oct 2016)	Latest Official Data (by indicator)
Districts covered	263 districts, 12 states	656 districts, incl. 106 aspirational districts (2026)
Cumulative funds collected	₹3,589 crore	₹1,22,909 crore (Dec 2025)
Projects allocated	Not applicable (scheme newly launched)	4,32,914 projects, worth ₹1,02,317.66 crore (Dec 2025)
Funds spent	Not applicable	₹65,321.55 crore spent (Dec 2025)
Minimum spend on High Priority Sectors	60% (original PMKKKY, 2015)	70%, plus mandatory focus on directly affected areas (Revised Guidelines, Jan 2024)
DMF’s status under mineral fiscal reform	Newly created, 2015	Explicitly preserved and ring-fenced under the MMDR Amendment Act, 2026

Source: Ministry of Mines, Government of India, Annual Report 2025–26. Compiled by the author.

The gap between funds collected and funds spent remains substantial: ₹57,587.45 crore, or approximately 46.9% of cumulative collections, remained unspent as of December 2025. The cumulative figures demonstrate significant financial under-utilisation, although they do not by themselves establish the reasons for the gap. The Mines and Minerals (Development and Regulation) Amendment Act, 2026, passed by Parliament in August 2026, changes the broader fiscal framework governing mineral rights and mineral-bearing lands. Government communications state that DMF collections continue unchanged under the amended framework. However, the utilisation of DMF funds remains subject to the PMKKKY guidelines and the rules framed by State Governments.

Impact

Measured against its founding rationale of ensuring that mining-affected communities receive an earmarked share of mineral revenues, DMF represents a significant institutional change from the pre-2015 framework, when mining revenues did not have a dedicated district-level benefit-sharing mechanism. The scale of the mechanism is substantial, with cumulative collections exceeding ₹1.2 lakh crore as of December 2025 and DMFs established in 656 districts. However, the extent to which this financial resource base has translated into effective development outcomes cannot be determined from aggregate collection and expenditure figures alone.

Emerging Issues

A persistent gap between funds collected and funds actually spent (~46% of cumulative collections remained unspent according to the latest official figures) indicates significant financial under-utilisation. The available aggregate data, however, do not by themselves establish whether implementation capacity, project preparation, administrative processes or other factors are responsible for the gap.
The non-lapsing design allows unspent balances to remain available for subsequent periods, which may reduce pressure to utilise funds within a single financial year; whether this contributes to under-utilisation cannot be established from national aggregate data alone.
DMF Trusts are headed by District Magistrates/Deputy Commissioners/Collectors, who also have substantial district-level administrative responsibilities. The 2024 guidelines provide for Project Management Units in DMFs with annual collections exceeding ₹50 crore, but the extent to which these PMUs are operational and adequately staffed is not established by the national-level data used here.
The January 2024 revised guidelines raising the High Priority Sector spending floor to 70% have not yet been separately assessed in the available national cumulative data, making it difficult to isolate their effect on utilisation patterns.
No consolidated, publicly available breakdown specifically for aspirational districts or Fifth/Sixth Schedule Scheduled Areas was located, making it difficult to verify whether the populations DMF was most explicitly designed to reach particularly the tribals and forest-dependent communities; are receiving priority treatment in practice.

Way Forward

Closing the gap between funds collected and funds spent should be the immediate priority, since the scale of unspent funds is now large enough that further collection growth alone will not address community welfare outcomes. Strengthening DMF Trusts with dedicated technical and project-management capacity rather than relying solely on already-stretched District Collector-led governance would help convert allocated funds into functioning infrastructure and services more quickly.

A disaggregated, publicly available breakdown of DMF collection, sanction and completion figures specifically for aspirational districts and Fifth/Sixth Schedule Scheduled Areas would let policymakers and researchers verify whether the communities DMF was designed to prioritise are, in practice, receiving that priority. Finally, as sufficient post-revision data accumulates from FY 2026-27 onward, the Ministry of Mines should publish a formal assessment of the January 2024 guideline revisions’ effect on both the High Priority Sector spending share and the overall collection-to-expenditure conversion rate, so that the next round of guideline revisions can be calibrated on evidence of what has and has not improved implementation.

References

Ministry of Mines. (2024, January 15). Revised Guidelines of Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) [File No. 16/53/2022-M.IV]. Government of India. https://mines.gov.in/admin/storage/ckeditor/12_1751363460.pdf

Indian Economic Service. (n.d.). District Mineral Foundation (DMF) [Arthapedia]. Government of India. https://ies.gov.in/arthapedia/concept/district-mineral-foundation-dmf

Press Information Bureau. (2026, August). Mines and Minerals (Development and Regulation) Amendment Act, 2026 [Factsheet: DMF preservation, 656 DMFs incl. 106 aspirational districts]. Government of India. https://www.pib.gov.in/FactsheetDetails.aspx?id=150952&NoteId=150952&ModuleId=16&reg=48&lang=2

District Mineral Foundation, Odisha. (n.d.). About Us [Odisha DMF Rules, 2015]. Government of Odisha. https://dmf.odisha.gov.in/about_us

Press Information Bureau. (2025, April 2). Mining Leases Issued in 5th and 6th Schedule Areas. Ministry of Mines, Government of India.www.pib.gov.in/PressReleasePage.aspx?PRID=2117705&lang=2&reg=48

Press Information Bureau. (2026, March 25). Union Minister Shri G. Kishan Reddy Calls for Accelerated Exploration of Critical Minerals at NMEDT Governing Body Meeting. Ministry of Mines, Government of India. www.pib.gov.in/PressReleasePage.aspx?PRID=2245301&lang=2&reg=48⁠

Ministry of Mines. (2026). Annual Report 2025–26. Government of India. https://mines.gov.in/admin/download/69945dabea1821771330987.pdf

About the Contributor

Arya is a Research and Editorial Intern at IMPRI Impact and Policy Research Institute, New Delhi. A Master’s student pursuing Economics at Delhi School of Economics and Economics graduate from Shri Ram College of Commerce (SRCC), University of Delhi, and originally from Jharkhand, Arya’s research interests include Indian political economy, labour markets and development policy.