CAG flags ₹73.71 crore loss in Odisha PMKKKY, DMF funds misused
Synopsis
India's top auditor has found that six Odisha DMFs collected over ₹22,568 crore for mining-affected communities but spent nearly ₹983 crore in unaffected villages, left hundreds of directly impacted villages with zero projects, and caused a documented loss of ₹73.71 crore through mismanagement — exposing a systemic breakdown in one of India's flagship mining-welfare programmes.
Key Takeaways
The CAG tabled a performance audit of PMKKKY and DMF functioning in Odisha in the state Assembly on 28 September , covering 2015–16 to 2023–24 .
Six audited DMFs collected ₹22,568.17 crore but utilised only ₹10,092.53 crore (48.18%) by March 2024 .
Systemic failures in contribution assessment caused a loss of ₹73.71 crore ; imprudent investment by DMF Kendujhar alone caused an additional interest loss of ₹84.51 crore . ₹983.32 crore was spent on 976 projects in non-mining-affected villages, while 488 directly affected and 96 indirectly affected villages received no projects. ₹136.77 crore spent by Sundargarh DMF on a hockey stadium was flagged as irregular under PMKKKY guidelines.
None of the six DMFs created endowment funds or prepared mandatory long-term Perspective or Master Plans.
The Comptroller and Auditor General of India (CAG) has flagged serious irregularities in the implementation of the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) in Odisha, revealing systemic failures across six District Mineral Foundations (DMFs) that collectively received over ₹20,795.51 crore in contributions meant for mining-affected communities. The performance audit report, tabled in the Odisha Legislative Assembly on Monday, 28 September, covers the period from 2015–16 to 2023–24 and includes test checks across Jajpur, Kendujhar, Sundargarh, Mayurbhanj, Dhenkanal, and Nabarangpur districts.
Scale of Funds and Utilisation Gaps
The six audited DMFs collectively collected ₹22,568.17 crore, including interest, and sanctioned 17,435 projects worth ₹20,947.52 crore. However, only ₹10,092.53 crore — representing 48.18 per cent of sanctioned amounts — had been utilised as of March 2024. Critically, none of the six DMFs had prepared long-term Perspective or Master Plans as mandated under scheme guidelines, undermining the very strategic intent of the programme.
The CAG also noted that despite receiving ₹20,795.51 crore in contributions and ₹1,772.66 crore in interest earnings, not a single DMF had established an endowment fund to support sustainable livelihoods — a core requirement of the scheme.
Funds Diverted Away from Affected Villages
Among the most pointed findings, the audit revealed that in Kendujhar and Sundargarh, 9,739 projects worth ₹17,926.79 crore were sanctioned between 2015–16 and 2023–24. Of these, ₹983.32 crore was spent on 976 projects in villages not affected by mining activity. Meanwhile, no project was implemented in 488 directly affected villages and 96 indirectly affected villages — the very communities the scheme was designed to serve.
Additionally, implementing agencies in Jajpur, Kendujhar, and Sundargarh had not returned ₹470.25 crore in unspent funds and ₹26.51 crore in interest earned to their respective DMFs, according to the report.
Financial Losses from Mismanagement
The CAG directly attributed a loss of ₹73.71 crore to systemic failures in assessing, collecting, and monitoring DMF contributions. These included incorrect application of prescribed rates, failure to reassess contributions following final royalty assessments, and non-levy of interest on delayed payments.
'Audit findings revealed systemic shortcomings in assessment, collection and monitoring of DMF contributions. Incorrect application of prescribed rates, failure to reassess contributions after final royalty assessments and non-levy of interest on delayed payments collectively resulted in a loss of Rs 73.71 crore,' the CAG stated in its report.
In a separate instance, DMF Kendujhar reportedly failed to invest idle funds in fixed deposits. According to the CAG, 'DMF Kendujhar did not invest funds in fixed deposits. Owing to imprudent investment decisions, DMF Kendujhar bore a loss of interest amounting to Rs 84.51 crore.'
Irregular Administrative and Capital Expenditure
The audit also flagged that ₹25.01 crore — or 25.06 per cent of the ₹99.81 crore spent on administrative expenses — was used for non-administrative purposes. These included police patrol vehicles, renovation of a municipality office, a reading room at the Collector's residence, and charges for inaugurations and school functions in Sundargarh.
Furthermore, an expenditure of ₹136.77 crore by Sundargarh DMF on the construction of a hockey stadium was termed irregular, as the project does not fall within permissible activities under PMKKKY guidelines. This comes amid growing scrutiny of DMF governance across mineral-rich states, where large fund pools have historically attracted concerns about diversion and weak accountability.
What Happens Next
The tabling of the CAG report in the Assembly is expected to trigger political debate in Odisha and could prompt the state government to order corrective action or departmental inquiries. The findings also raise questions about Centre-state oversight mechanisms for DMF funds, which are sourced from mining royalties and are intended exclusively for the welfare of communities bearing the social and environmental costs of extraction. Whether the Odisha government will issue a formal response or initiate recovery proceedings against errant agencies remains to be seen.
Point of View
Displacement, degraded land — are the ones least likely to see the royalty money ring-fenced for them. Spending ₹983 crore in non-affected villages while 488 directly affected villages received nothing is not a clerical error; it is a governance failure with identifiable victims. The absence of endowment funds and Master Plans across all six DMFs suggests this was not an implementation glitch but a near-complete abdication of planning. With DMF pools now running into tens of thousands of crore across India's mineral belt, Odisha's audit should serve as a stress test for every state — and a prompt for the Centre to mandate independent, real-time DMF expenditure disclosures.
NationPress
29 Sept 2026
Frequently Asked Questions
What is PMKKKY and what is it meant to do?
The Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) is a Central government welfare scheme implemented through District Mineral Foundations (DMFs) to benefit communities in mining-affected areas. It is funded by contributions from mining lease holders and is intended to address the social, economic, and environmental impacts of mining on local populations.
What did the CAG find wrong with Odisha's PMKKKY implementation?
The CAG found that none of the six audited DMFs had prepared mandatory long-term plans, funds were spent in non-mining-affected villages, no endowment funds were created, and systemic failures in contribution assessment caused a loss of ₹73.71 crore. An additional ₹84.51 crore was lost by DMF Kendujhar due to imprudent investment decisions.
How much money was collected by the six DMFs and how much was actually spent?
The six DMFs collected ₹22,568.17 crore including interest and sanctioned 17,435 projects worth ₹20,947.52 crore. However, only ₹10,092.53 crore — about 48.18 per cent of the sanctioned amount — had been utilised by March 2024.
Which districts were covered in the CAG audit?
The CAG conducted test checks across six districts: Jajpur, Kendujhar, Sundargarh, Mayurbhanj, Dhenkanal, and Nabarangpur. The audit period spanned 2015–16 to 2023–24.
Why was the Sundargarh DMF's hockey stadium expenditure flagged?
The CAG termed the ₹136.77 crore spent by Sundargarh DMF on constructing a hockey stadium as irregular because the project does not fall within the permissible activities defined under PMKKKY guidelines, which are meant exclusively for welfare of mining-affected communities.
