Local bodies to compensate mining-affected families

To ensure smooth functioning of profit sharing proposed under the new mining legislation, the government will create bodies at the district level to oversee proper disbursal of compensation to the local families affected by mining projects.

Every such body, created in each district where mining activity is undertaken, will be called the District Mineral Foundation (DMF) and will be a trust set up by the state government concerned.

“The District Mineral Foundation shall be responsible for distribution of monetary benefit to persons or families affected by mining-related operations in the district,” the finalised draft of the Mines and Minerals (Development and Regulation) Bill 2010, after Group of Ministers (GoM) discussions, states.

DMF will be a non-profit corporate body set up under the MMDR Act.

“The object of the DMF shall be to work for the interest and benefit of persons or families affected by mining operations in the district,” the Bill further adds.

The draft, finalised by the 10-member GoM headed by Finance Minister Pranab Mukherjee after discussions spanning over the past six months, has the controversial provision for 26 per cent profit sharing by miners with tribals as annual compensation. With a final meeting of the GoM likely soon to give its go-ahead to the finalized draft, the government has expedited efforts to introduce the compensation regime by introducing the Bill in the coming session of Parliament.

The Bill provides that the state governments will identify the families affected by projects before mining operations begin. As a first step, the holder of a mining lease will pay an amount equal to 26 per cent of the profit (after deduction of the tax paid) of the previous year from mining operations or a sum equivalent to the royalty paid during the previous financial year, whichever is more. This amount will be credited annually to the District Mineral Foundation.

In addition, the government will levy a cess on all major minerals and the proceeds of the cess levied will be credited to the Consolidated Fund of India. “The central government may, if Parliament by appropriation made by law in this behalf so provides, credit such proceeds to the National Mineral Fund from time to time,” the draft Bill states.

On similar lines, the state governments will create State Mineral Funds which will also be channelised for financial assistance to DMF which, in turn, will make payments of monetary benefits on a monthly or quarterly basis to all members of the affected families.

However, the new Bill also gives the state government the power to regulate the compensation payment to different categories of local populace based on the “nature and extent to which they are affected by the mining operation”.

DMF will be managed by a governing council chaired by the district magistrate and having as members, the president of the zila parishad, all mining lease holders in the district, head of local state government departments concerned, representatives of affected families and the Indian Bureau of Mines. The district mining officer will act as the secretary of the governing council. The council will approve the disbursal of the compensation amounts.

DMF will maintain a list of lease holders in a district and keep details of compensation benefit disbursals. It will maintain an annual balance sheet of the funds available. Its accounts will be audited in a manner prescribed by the state government in consultation with the Comptroller and Auditor General.

Experts, however, believe that the task before the government is to make sure that conflicting interests do not override the intent of the proposal. “The intention of creating a fund or foundation at the grass-roots level is quite noble. The challenge is to ensure long-term sustainable and equitable working of such institutions, and prevent such initiatives from tripping between bureaucratic and competing interest groups,” said Gokul Chaudhri, partner, BMR Advisors.