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Now, Centre seeks to manage district mineral funds

The scheme is named Pradhan Mantri Khanij Kshetra Kalyan Yojana.

The Centre has inserted a brand new clause into the Mines and Minerals (Development and Regulation) Amendment Bill, 2021, to take management of the district mineral funds from the state governments. The modification, a part of many modifications to the related Act cleared by the Cabinet final week and launched in Parliament on Monday, may spark a political storm. Many would doubtless see it as one more bid by the Narendra Modi authorities to usurp the states’ fiscal powers and undermine their constitutionally outlined position in governance.

As per the MMDR (Amendment) Act, 2015, state governments should set up district mineral foundations (DMFs) in all districts affected by mining-related operations; lease holders are required to contribute to those not-for-profit foundations as an outlined proportion of royalty, along with the royalty paid to state governments. The DMFs are wanted to make use of these funds, whole collections stood at over Rs 45,000 crore in September 2020, for the welfare of individuals and areas affected by mining-related operations, the tribal inhabitants being the principal supposed beneficiaries.
The scheme is named Pradhan Mantri Khanij Kshetra Kalyan Yojana.

While the sub-section three of Section 9(B) of the MMDR Act introduced in via the 2015 modification, says, “The composition and functions of the District Mineral Foundation shall be such as may be prescribed by the State Government”, the Centre’s new Bill seeks so as to add a proviso to the sub-section that, “supplied that the Central Government might give instructions concerning composition and utilisation of fund by (the DMF). Clearly, the concept is to deprive the states of discretion within the utilisation of DMF funds.

The Centre’s unhappiness with the way in which the states use the DMF kitty or the states being the custodian of those funds got here to the fore in March 2020, as finance minister Nirmala Sitharaman prompt, as a part of the primary tranche of the Atmanirbhar package deal, that, “We will request the state governments to utilise the funds which can be found on the DMF on the district stage in order that medical testing, medical screening and likewise offering of well being consideration won’t endure”.

Sitharaman additionally cited some “Rs 25,000 crore lying unutilised” with DMFs; nonetheless, information gathered by FE present that of Rs 45,096 crore collected by DMFs to this point, Rs 42,141 crore has already been sanctioned for over 2 lakh tasks. Of course, the quantity launched to this point is Rs 20,337 crore, however that doesn’t present a wider hole between the sanctioned and launched quantities than below the federal government’s different welfare schemes.

The Centre can be apparently apprehensive about stories that states are diverting the DMF funds for different functions. An mining business official informed FE on situation of anonymity: “Instances of diversion of DMF funds by states have been noticed in the past. By adding this provisio (in the Bill), the Centre may be trying to regulate such practices.”

While the rules say that 60% of the DMF funds must be utilised for ‘high priority sectors’ reminiscent of consuming water provide and schooling, 40% is earmarked for ‘other priority sectors’ reminiscent of bodily infrastructure, vitality and cowshed improvement.

According to the MMDR Rules 2015, “every holder of a mining lease or a prospecting licence-cum-mining lease shall, in addition to the royalty, pay to the DMF of the district in which mining operations are carried on, an amount at the rate of 10% of the royalty in respect of mining leases or prospecting licence cum-mining lease granted on or after January 12, 2015 and 30% of the royalty in respect of mining leases granted before January 12, 2015”.

The DMF funds collections have been the best in mineral-rich Odisha (Rs 11,099 crore), adopted by Jharkhand (Rs 5,921 crore), Chhattisgarh (Rs 5,830 crore), Rajasthan (Rs 4,121 crore) and Telangana (Rs 2,902 crore).

In latest years, the Centre has come below hearth for allegedly exhibiting a bent to centralise fiscal powers and policymaking – this was mirrored within the phrases of reference given to the 15th Finance Commission and the elevated use of the cess route, which hit the divisible tax pool, to the detriment of states. As the pandemic dented the products and companies tax (GST) income and compensation kitty, the states needed to put up a battle to make the Centre comply with honour the dedication to compensate them totally, regardless of a regulation mandating such succour being in place.

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