CAG Flags Deficiencies in Mining Rehabilitation in Gujarat, Welfare Funds Diverted to Non-Public Projects

The ‘Report of the CAG on Performance Audit of Implementation of Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) including District Mineral Foundation (DMF) Trusts in Gujarat’ was tabled in the state assembly on September 11, the last day of the three-day long monsoon session of the legislature.

CAG Flags Major Lapses

Under the PMKKKY scheme, funds collected from mining firms are used to improve the environment, health, socio-economics and livelihood of the mining-affected people with a focus on education, healthcare, drinking water and environment preservation.

The CAG outlined several “deficiencies” such as selecting agencies without inviting tenders which led to “undue benefit”, non-completion of blood bank in Chhotaudepur district despite spending over ₹39 lakh, excess payment of ₹63 lakh for implementing a project in 42 schools in Devbhumi Dwarka district.

The CAG also pointed out that the Gujarat District Mineral Foundation (GDMF) Rules formulated by the state government were not followed in some instances.

“The Executive Committee and the Governing Council meetings of the DMFs were not conducted as per the frequency prescribed in the GDMD rules. The DMF Surat did not obtain the approval of the Gram Sabha prior to taking up projects and did not provide any report on implementation of projects in the Scheduled Areas in Surat district which was not as per GDMF Rules,” said the report.

The audit also noticed that there were significant delays in preparation and finalisation of annual accounts and annual reports of DMFs at district level, while the four DMFs did not maintained prescribed registers. A total of 32 annual accounts and 30 annual reports were not prepared as of November 2024.

The CAG recommended that DMFs should establish a system to identify projects that address the needs of the broader public in mining-affected areas, ensuring timely and effective utilisation of DMF contributions.

DMFs should also ensure timely collection of all outstanding contributions with interest as per the rules, it said.

As part of the performance audit, the CAG reviewed the records of the projects implemented by five DMFs in Bhavnagar, Devbhumi Dwarka, Mehsana, Porbandar and Surat districts, and also conducted inspections of 149 completed projects.

"Audit observed deficiencies in tender process and selection of implementing agencies, non-completion of works, implementation of works outside affected areas, instances of projects implemented for private benefit rather than public benefit, instances of undue benefit to agency and instances of excess payment for works," said the report.

Welfare Funds Diverted Elsewhere

Audit reports from other states show Gujarat’s issues are part of a larger issue. According to an August 12 report, the state government initiated a probe into DMF funds allegedly diverted to major urban projects and non-welfare work in Odisha.

Similarly, the 2018 Centre for Science and Environment report stated that even in high-need minerals districts such as Keonjhar and Sundargarh (Odisha), West Singhbhum (Jharkhand), Singrauli (Madhya Pradesh) etc., none of the districts sanctioned anything to address this. The report further underscored that DMF spending often ignores critical issues like child nutrition.

(With inputs from PTI.)