What is/are the purpose/purposes of ‘District Mineral Foundations’ in India?

1. Promoting mineral exploration activities in mineral-rich districts.

2. Protecting the interests of the persons affected by mining operations.

3. Authorising State Governments to issue licences for mineral exploration.

Select the correct answer using the code given below:

The correct answer is Option 2: 2 only.

This means that among the three statements given, only Statement 2 is correct — that the purpose of District Mineral Foundations (DMFs) is to protect the interests of persons affected by mining operations.

Let us analyse each statement carefully to understand why this is the case.

Background: What are District Mineral Foundations (DMFs)?

District Mineral Foundations were established under the Mines and Minerals (Development and Regulation) Amendment Act, 2015. Section 9B of this Act mandates that in any district affected by mining operations, the holder of a mining lease must contribute a certain percentage of their royalty payments to the DMF of that district. The DMF is a non-profit body set up by the State Government for the benefit of the affected communities.

The funds collected under DMFs are primarily used through a scheme called PMKKKY (Pradhan Mantri Khanij Kshetra Kalyan Yojana), launched in 2015, which guides the utilisation of these funds for the welfare of people in mining-affected areas — covering needs such as health, education, livelihood, sanitation, water supply, and environment protection.

Now let us evaluate each statement:

Statement 1: "Promoting mineral exploration activities in mineral-rich districts."
This is INCORRECT. DMFs are not created to promote or fund mineral exploration. Mineral exploration is governed by separate provisions under the MMDR Act, the National Mineral Exploration Policy, and bodies like the Geological Survey of India (GSI) and the Mineral Exploration and Consultancy Limited (MECL). The DMF's mandate is strictly welfare-oriented — it is a fund meant for the communities displaced or affected by mining, not a body for driving further mineral exploration.

Statement 2: "Protecting the interests of the persons affected by mining operations."
This is CORRECT. This is precisely the core purpose of DMFs as defined in Section 9B of the MMDR Amendment Act, 2015. Mining operations often cause significant disruption to local communities — including displacement, environmental degradation, loss of livelihood, and health hazards. DMFs are designed to ensure that the people living in such areas receive a share of the wealth generated from mining in their region. It is a form of social justice and compensatory welfare embedded in the law.

Statement 3: "Authorising State Governments to issue licences for mineral exploration."
This is INCORRECT. DMFs have absolutely no role in issuing licences for mineral exploration. The authority to grant exploration licences, mining leases, or composite licences rests with the State Governments themselves (for minor minerals) and with the Central Government (for major minerals), as governed by the MMDR Act. DMFs are merely trust-like bodies set up to receive and deploy funds for community welfare. They are not regulatory or licensing authorities in any capacity.

Summary Table:

Therefore, only Statement 2 reflects the true legislative purpose of District Mineral Foundations, making "2 only" the correct answer.