42 District Mineral Foundation (DMF) Funds and Socio- economic Development of Districts in Karnataka State Shashwat N Doshetti 1 and Pushpa M Savadatti 2 Abstract Government of India launched the District Mineral Fund under the Benefit-Sharing Principle in 2015 to mitigate the negative impact of mining activities on the socio-economic conditions of the mining- affected communities. This paper builds upon the District Mineral Fund Utilization Index and extends to a more localized level (districts). Despite Karnataka’s district’s significant fund collection, a weak positive correlation between the financial metrics and effective Fund utilization highlights the inefficiencies and need for improved Fund management practices. JEL Classification Codes: Q32, Q38, R58, H76, O13, O22 1. Introduction The mining sector plays a vital role in the nation’s industrial and economic landscape by providing raw materials for numerous industries, from steel and cement to electronics and energy. India’s mining sector includes coal, iron ore, bauxite, and various precious metals. Mining contributes 2.5 percent of India’s Gross Domestic Product (GDP) (Abraham, 2022). However, the mining sector’s expansion has come with challenges. Historically, mining activities have led to the displacement of local and indigenous communities, resulting in socio-economic disruptions and environmental degradation (Narasimham & Subbarao, 2018). The Benefit Sharing Principle (BSP) aimed to ensure the just distribution of the mining sectors’ dividends, active participation, and upliftment of the affected communities, ensuring they receive a fair share of their rights (Dupuy, 2016). Doing so solves the historical inequalities and paves the way for sustainable and harmonious growth in the mining sector. Under this BSP, the government can 1 Research Scholar, Central University of Karnataka, Kalaburagi-585367. E-mail: shashwatcuk@gmail.com 2 Senior Professor, Central University of Karnataka, Kalaburagi-585367. E-mail: pmsavadatti@cuk.ac.in share the benefits for several reasons, like claims by local communities over natural resources, compensating for environmental degradation, contributing to socio-economic development, and avoiding civil conflict in these regions (Ghose, 2018, p. 9). Government of India adopted this BSP to guarantee the socio-economic welfare of mining-affected regions and communities and set up the District Mineral Foundation (DMF) Funds. Through the DMF, a portion of the revenues from the mining activities is directly spent to support for development projects and initiatives in the mining districts of India. Figure 1 shows that the combined collection of DMF funds by all States is about Rs. 87,049.02 crores (Coal & Lignite, Major Minerals, and Minor Minerals) as of 31-12-2023. Odisha leads in DMF collection (Rs.25,426.39 crores), followed by Chhattisgarh (12,396.51 crores), Jharkhand (11,960.27 crores), Rajasthan (8,897.64 crores), Madhya Pradesh (6,829.98 crores), Maharashtra (4,940.51 crores), and Karnataka (4,587.16 crores). Aarthika Charche - Vol 9 No.1, 2024