Performance Audit on Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) including District Mineral Foundation Trust (DMFT)

PMKKKY (launched September 2015) requires District Mineral Foundation Trusts (DMFTs) to collect a portion of mining royalties and use them for welfare of mining-affected communities. As of March 2023, Karnataka's DMFTs collected ₹4,003.51 crore and spent ₹1,826.46 crore — only 46% utilisation. CAG found: 671 works cancelled out of 4,191 taken up in sampled districts; no baseline surveys conducted; no Master Plan or Vision Documents prepared; no nomination of stakeholder representatives in most districts; GoK never amended DMFT Rules despite central directive to do so.

State: Karnataka
Audit period: 1 Apr 2015 — 31 Mar 2023
Presented: 17 Dec 2025

Findings

Karnataka DMFTs collected ₹4,003.51 crore but spent only 46% — ₹2,177 crore unspent; 671 works cancelled in 5 sampled districts out of 4,191 taken up.
“The District Mineral Foundation Trusts (DMFTs) have collected an amount of ₹ 4,003.51 crore and incurred expenditure to the tune of ₹ 1,826.46 crore since the scheme initiation till the end of March 2023.”Overview · p. 11
No baseline survey, Master Plan, or Vision Document in any DMFT; stakeholder nominations in only 5 of 31 districts; GoK never amended DMFT Rules despite central directive.
“No amendment to the DMFT Rules, 2016 was issued by the GoK even though Ministry of Mines, GoI directed the State Governments to incorporate certain changes in the rules.”Overview · p. 11
10,865 projects sanctioned; ₹3,902 Cr allocated as of March 2023DMFTs collected ₹4,003 Cr; spent only ₹1,826 Cr (46%) — ₹2,177 Cr sitting idle
Karnataka's District Mineral Foundation Trusts were created to ensure that mining royalty money is channelled into welfare of mining-affected communities — clean water, health, education, and livelihood restoration for communities that bear the costs of extraction. As of end-March 2023, DMFTs collected ₹4,003.51 crore in cumulative contributions. Of this, only ₹1,826.46 crore — 46% — had been spent. The remaining ₹2,177 crore in unspent funds represents mining communities waiting years for the roads, hospitals, and infrastructure that the legal framework promised them. 10,865 projects were sanctioned with ₹3,902 crore allocated — yet completion remained far below target in sampled districts.
“The District Mineral Foundation Trusts (DMFTs) have collected an amount of ₹ 4,003.51 crore and incurred expenditure to the tune of ₹ 1,826.46 crore since the scheme initiation till the end of March 2023.”Overview · p. 11
Ballari alone: 421 cancellations (₹62.36 Cr approved action plan)671 of 4,191 works cancelled in sampled districts; 575 works yet to even commence
In the five sampled districts (Ballari, Chitradurga, Gadag, Bengaluru Urban, Vijayanagara), 4,191 works were taken up for execution. Of these: 2,215 completed, 730 ongoing, 575 yet to commence, and 671 cancelled. Ballari — Karnataka's largest mining district — had 421 cancellations alone with an approved action plan amount of ₹62.36 crore. These cancelled projects represent both unspent fund allocation and communities who were promised welfare projects that never materialised. The ₹72.74 crore in cancelled works across all five districts cannot simply be reallocated without accountability for why the original projects failed.
“Works cancelled: 421 [Ballari], 9 [Chitradurga], 0 [Gadag], 22 [Bengaluru Urban], 219 [Vijayanagara], 671 [Total]”Table 1.2 · p. 19
Stakeholder nominations only in 5 of 31 districts; GoK never amended DMFT RulesNo baseline survey, no Master Plan, no Vision Document — DMFT governance absent
PMKKKY requires DMFTs to conduct baseline surveys to identify affected communities before spending — without this, projects cannot target the most vulnerable. Audit found that no baseline survey was conducted to prepare a perspective plan in any sampled district. Test-checked DMFTs prepared neither a Master Plan nor a Vision Document for planned activities, and did not prepare a list of affected persons. DMFT Rules require nomination of stakeholder representatives from affected communities, industries, lease-holders, and environmental organisations. But nominations were made in only 5 of 31 Karnataka districts. The Ministry of Mines directed state governments to amend DMFT Rules to change the governing council composition — GoK never did.
“the nominations were made only in five districts. No amendment to the DMFT Rules, 2016 was issued by the GoK even though Ministry of Mines, GoI directed the State Governments to incorporate certain changes in the rules. There was no base line survey conducted to prepare perspective plan.”Overview · p. 11

Recommendations

Mandatory baseline surveys must be completed in all mining districts within 6 months — without this, DMFT spending cannot be targeted at genuinely affected communities.
GoK must amend DMFT Rules as directed by the Ministry of Mines without further delay — the governance framework is non-compliant.
DMFT utilisation must be tracked monthly with public dashboards; ₹2,177 crore sitting idle for years is an inexcusable failure given mining communities' legitimate claims.

Performance Audit on Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) including District Mineral Foundation Trust (DMFT)

Findings

Karnataka DMFTs collected ₹4,003.51 crore but spent only 46% — ₹2,177 crore unspent; 671 works cancelled in 5 sampled districts out of 4,191 taken up.

“The District Mineral Foundation Trusts (DMFTs) have collected an amount of ₹ 4,003.51 crore and incurred expenditure to the tune of ₹ 1,826.46 crore since the scheme initiation till the end of March 2023.”Overview · p. 11

No baseline survey, Master Plan, or Vision Document in any DMFT; stakeholder nominations in only 5 of 31 districts; GoK never amended DMFT Rules despite central directive.

“No amendment to the DMFT Rules, 2016 was issued by the GoK even though Ministry of Mines, GoI directed the State Governments to incorporate certain changes in the rules.”Overview · p. 11

10,865 projects sanctioned; ₹3,902 Cr allocated as of March 2023DMFTs collected ₹4,003 Cr; spent only ₹1,826 Cr (46%) — ₹2,177 Cr sitting idle

Karnataka's District Mineral Foundation Trusts were created to ensure that mining royalty money is channelled into welfare of mining-affected communities — clean water, health, education, and livelihood restoration for communities that bear the costs of extraction. As of end-March 2023, DMFTs collected ₹4,003.51 crore in cumulative contributions. Of this, only ₹1,826.46 crore — 46% — had been spent. The remaining ₹2,177 crore in unspent funds represents mining communities waiting years for the roads, hospitals, and infrastructure that the legal framework promised them. 10,865 projects were sanctioned with ₹3,902 crore allocated — yet completion remained far below target in sampled districts.

“The District Mineral Foundation Trusts (DMFTs) have collected an amount of ₹ 4,003.51 crore and incurred expenditure to the tune of ₹ 1,826.46 crore since the scheme initiation till the end of March 2023.”Overview · p. 11

Ballari alone: 421 cancellations (₹62.36 Cr approved action plan)671 of 4,191 works cancelled in sampled districts; 575 works yet to even commence

In the five sampled districts (Ballari, Chitradurga, Gadag, Bengaluru Urban, Vijayanagara), 4,191 works were taken up for execution. Of these: 2,215 completed, 730 ongoing, 575 yet to commence, and 671 cancelled. Ballari — Karnataka's largest mining district — had 421 cancellations alone with an approved action plan amount of ₹62.36 crore. These cancelled projects represent both unspent fund allocation and communities who were promised welfare projects that never materialised. The ₹72.74 crore in cancelled works across all five districts cannot simply be reallocated without accountability for why the original projects failed.

“Works cancelled: 421 [Ballari], 9 [Chitradurga], 0 [Gadag], 22 [Bengaluru Urban], 219 [Vijayanagara], 671 [Total]”Table 1.2 · p. 19

Stakeholder nominations only in 5 of 31 districts; GoK never amended DMFT RulesNo baseline survey, no Master Plan, no Vision Document — DMFT governance absent

PMKKKY requires DMFTs to conduct baseline surveys to identify affected communities before spending — without this, projects cannot target the most vulnerable. Audit found that no baseline survey was conducted to prepare a perspective plan in any sampled district. Test-checked DMFTs prepared neither a Master Plan nor a Vision Document for planned activities, and did not prepare a list of affected persons. DMFT Rules require nomination of stakeholder representatives from affected communities, industries, lease-holders, and environmental organisations. But nominations were made in only 5 of 31 Karnataka districts. The Ministry of Mines directed state governments to amend DMFT Rules to change the governing council composition — GoK never did.

“the nominations were made only in five districts. No amendment to the DMFT Rules, 2016 was issued by the GoK even though Ministry of Mines, GoI directed the State Governments to incorporate certain changes in the rules. There was no base line survey conducted to prepare perspective plan.”Overview · p. 11

Recommendations

Mandatory baseline surveys must be completed in all mining districts within 6 months — without this, DMFT spending cannot be targeted at genuinely affected communities.

GoK must amend DMFT Rules as directed by the Ministry of Mines without further delay — the governance framework is non-compliant.

DMFT utilisation must be tracked monthly with public dashboards; ₹2,177 crore sitting idle for years is an inexcusable failure given mining communities' legitimate claims.