CAG Report on Odisha DMF Spending: Key Findings, Violations, and Figures

29 Sep 2026, 06:21 by Vinay Kakkad · KalingaTV

Bhubaneswar: An audit by the Comptroller and Auditor General of India (CAG) has uncovered extensive deviations in the deployment of District Mineral Foundation (DMF) reserves across Odisha, revealing that welfare funds mandated for displaced and pollution-hit mining communities were diverted into non-qualifying public works and commercial subsidies while hundreds of frontline villages received nothing.

Geographic Imbalance: Core Belts vs. Unaffected Localities

Statutory directives under both the national Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) and the Odisha District Mineral Foundation (ODMF) Rules require that the bulk of trust resources directly benefit communities bearing the immediate impact of extraction. The audit established that this statutory focus was routinely inverted:

584 Directly Impacted Villages Excluded: Across the audited districts, 584 villages identified as directly affected by mining activity were not granted a single project or financial allocation from their respective DMF trusts.
Rs 983 Crore Channeled Out of Area: In contrast, trust boards approved and spent Rs 983 crore on projects situated in habitations classified as entirely unaffected by mining operations.

Itemized Audit Flags and Financial Irregularities

The constitutional auditor identified several projects and expenditures that breached PMKKKY rules and ODMF guidelines:

Item / Expenditure Detail	Relevant District / Entity	Financial Value Flagged	Specific Audit Finding
Birsa Munda Hockey Stadium (Rourkela)	Sundargarh DMF Trust	Rs 136.77 crore	Disbursed for an international sports complex; classified as an inadmissible expenditure under PMKKKY and state DMF operational guidelines.
Private Hospital Bed Reservations (Covid-19)	Audited DMF Trusts	Rs 145.06 lakh (Rs 1.45 crore)	Irregular deployment of DMF reserves to book beds in commercial medical establishments.
Personal Protective Equipment (PPE Kits)	Audited DMF Trusts	Rs 59.13 lakh (Rs 0.59 crore)	Procurement costs for PPE were impermissibly charged to the mining welfare trust.
Meal Schemes for In-Patient Attendants	Keonjhar DMF Trust	Rs 7.12 crore sanctioned Rs 4.53 crore released Rs 3.19 crore spent	Sanctioned and disbursed in direct contravention of both PMKKKY guidelines and the ODMF Rules, 2015.

Procedural Violations and Statutory Mandates

The audit underscored that the DMF trusts operate under a mandatory spending ratio: at least 60 percent of annual allocations must go to high-priority sectors drinking water security, healthcare infrastructure, primary education, sanitation, and environmental mitigation with the remaining balance reserved for secondary local works.

By financing prestige municipal projects, commercial facility reservations, and operational supplies outside the scope of community relief, the managing boards violated their foundational charters.

The CAG’s report submitted to the state legislature calls for strict realignment with PMKKKY mandates, an immediate prioritization of the 584 neglected extraction villages, and administrative mechanisms to prevent the redeployment of welfare trust capital into ineligible municipal and external projects.