Bhubaneswar: The Comptroller and Auditor General of India (CAG) on Monday flagged several financial and administrative irregularities in the implementation of the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) and the functioning of District Mineral Foundations (DMFs) in Odisha, including a Rs 73.71-crore shortfall in DMF collections and the sanctioning of projects worth Rs 679.14 crore in violation of prescribed norms.
The findings are contained in the CAG’s Performance Audit Report No. 7 of 2026, covering the period from 2015-16 to 2023-24.
The audit covered six selected DMFs and examined the collection of DMF contributions, planning and institutional arrangements, fund management, implementation of projects, and monitoring and evaluation.
The report said the selected DMFs collected Rs 22,568.17 crore in DMF contributions, including interest, and sanctioned 17,435 projects worth Rs 20,947.52 crore during the period under review.
The audit found that the incorrect application of prescribed DMF contribution rates, failure to reassess contributions after final royalty assessments, and non-levy of interest on delayed payments resulted in a shortfall of Rs 73.71 crore.
It also pointed to discrepancies between DMF collections recorded by Mining Offices and those reflected in the audited accounts of the DMFs, indicating weak reconciliation and internal controls.
None of the six DMFs had prepared Perspective Plans or Master Plans despite sanctioning thousands of projects, the report said.
The DMFs had also not created endowment funds for providing sustainable livelihood support to mining-affected people, despite receiving Rs 20,795.51 crore in contributions and Rs 1,772.66 crore in interest during 2015-16 to 2023-24.
In Keonjhar and Sundargarh, 9,739 projects worth Rs 17,926.79 crore were sanctioned. Of these, Rs 983.32 crore was spent on projects in 976 non-affected villages, while no project was implemented in 488 directly affected and 96 indirectly affected villages, according to the report.
The audit also found that in Keonjhar, 757 of the 3,269 sanctioned projects were implemented without the approval of the Executive Committee or Board of Trust. In Sundargarh, five projects worth Rs 102.71 crore were sanctioned without the required approval.
The CAG flagged losses arising from poor management of surplus funds. The Mayurbhanj, Dhenkanal and Nabarangpur DMFs did not opt for flexi-deposit or auto-sweep facilities, resulting in an interest loss of Rs 9.49 crore. The Keonjhar DMF incurred an interest loss of Rs 84.51 crore due to what the audit described as imprudent investment decisions.
In Sundargarh, Rs 25.01 crore out of Rs 99.81 crore shown as administrative expenditure was utilised for activities other than administration, including police patrolling vehicles, renovation of a municipality office and a reading room at the Collector’s residence.
Implementing agencies in Jajpur, Keonjhar and Sundargarh had not returned unspent funds of Rs 470.25 crore and interest of Rs 26.51 crore to the respective DMFs after completion of projects, the report said.
Of the 17,435 projects sanctioned by the six DMFs, 9,690 had been completed by March 2024, while 6,551 were ongoing, 1,151 had not started and 43 had been cancelled. Expenditure on the projects stood at Rs 10,092.53 crore, or 48.18 per cent of the sanctioned amount.
The audit found that 317 projects worth Rs 679.14 crore were sanctioned in Jajpur, Dhenkanal, Keonjhar, Nabarangpur and Sundargarh in violation of PMKKKY guidelines.
An expenditure of Rs 136.77 crore on the construction of a hockey stadium in Sundargarh was termed irregular, as the activity was not covered under the permissible activities listed in the PMKKKY guidelines.
The report also flagged Rs 59.13 crore spent on supplying PPE kits to 44,120 workers and labourers engaged in mines and industries in Sundargarh, saying the project was in deviation of the Odisha DMF Rules.
In Jajpur and Keonjhar, expenditure of Rs 51.71 crore on 126 projects involving model rural parks, Gram Udayan parks, Van Vatikas and eco-retreat centres remained incomplete or defunct, the audit said.
The CAG also found irregularities in health-related expenditure. Three DMFs paid Rs 145.06 crore to private hospitals for providing healthcare services to Covid-19 patients, although there were no provisions for hiring beds in private hospitals under the PPP mode.
In Sundargarh, Rs 109.45 crore was paid to Jai Prakash Hospital and Research Centre Pvt Ltd against a requisite payment of Rs 98.85 crore, resulting in an excess payment of Rs 10.60 crore, it said.
The audit further found that only six of the 437 students selected for medical coaching qualified for admission to medical colleges, despite an expenditure of Rs 4.30 crore on coaching provided by private institutes.
Several projects were found to be incomplete, non-functional or unfruitful. Four of the six rural piped water supply projects in Jajpur, involving Rs 1.36 crore, were found to be defunct. In Keonjhar, the construction of eight hostels and the purchase of furniture involving Rs 11.26 crore resulted in idle expenditure due to the non-deployment of the required manpower and infrastructure.
A honey production programme in Sundargarh remained unfruitful despite an expenditure of Rs 11.18 crore, while a housing project for Mankedia tribes in Jajpur, costing Rs 2.81 crore, remained incomplete and abandoned for six years.
The CAG also flagged weak monitoring and transparency mechanisms. An integrated State and District Programme Management Unit structure had not been established, while the linking of DMF portals with WAMIS was not fully operational.
The audit said annual audited reports and annual reports were not prepared and hosted in the public domain in a timely manner. It also found that the sampled DMF portals did not provide details such as descriptions of works, estimated costs, implementing agencies, and commencement and completion dates, affecting transparency in the utilisation of DMF funds.
