Billions invested yet India’s mining villages stay in poverty

When N H Malliswamy first heard about a fund to improve the lives of people affected by mining, he wondered why his village in an iron-ore extraction hub in Karnataka had never benefited.

For the past year, the ex-employee of a mining firm, which was shut down for illegal operations, has tried to trace the millions of rupees paid by companies annually into this kitty, known as a district mineral fund.

"The soles of my slippers have frayed trying to get details on the spending of these funds," Malliswamy, 45, told the Thomson Reuters Foundation, sitting outside the primary school near his home in Deogiri village in Sandur.

"Slowly I have begun to understand the reason why these funds were created and how they are either being misused or not used at all. All this money can turn our lives around."

In 2015, the Indian government made it mandatory for mining lease holders to contribute 10-30% of their royalties to funds set up in areas affected by mining-related operations - from iron ore to coal, quartz, mica and granite.

India has the world's fourth largest coal reserves and is its fourth-biggest producer of iron ore, the key material in steel-making.

Growth in infrastructure development and rising demand for electric power is expected to boost mining in India after the COVID-19 pandemic, with more mines likely to be licensed.

The District Mineral Foundations (DMFs), which have been set up in 600 districts across 21 Indian states, contained more than 500 billion Indian rupees ($6.8 billion) as of July, according to mining ministry data.

The law requires the money to be spent on "high priority" social goals like healthcare, education, child development and improving sustainable livelihoods in places impacted by mining.

But data shows that only half the funds have been spent and about half the planned projects completed so far.

Human rights campaigners said the 2015 law recognised the right of local people to benefit from natural resources for the first time in a country where many mineral-rich regions are also among the poorest and most under-developed.

"(The) DMF (model) is India's tool for just transition," said Bhanumati Kalluri of the Dhaatri Resource Centre, which works with women in mining areas and advocates more spending on their health and nutrition.

"However, there is a huge discrepancy in the aim of setting up these funds and how they are spent. The spending is ad hoc and often not in core mining areas. The beneficiaries are not always those who are affected and need change the most."

There have been frequent protests in mining districts over the past year, with rights campaigners and elected representatives calling out what they say is rampant misuse of the funds.

Laxman Munda, a lawmaker in the eastern mining state of Odisha, has raised in the state assembly "diversion of funds" for building a sports stadium two hours from an iron-ore hub.

The lawmaker from Bonai said "so much money" is being made from mining in his state but that has not translated into progress for residents.