In an audit report tabled in the Haryana assembly on November 26, the Comptroller and Auditor General of India (CAG) has indicted the Department of Mining and Geology of the state for its consistent failure to implement the fund for restoration of mining-affected landscape.

Citing these audit findings, the opposition has raised the demand for a judicial probe in what they term as “Rs 5000 crore mining scam”. It is pertinent to point out that CAG audit covers 95 contracts awarded between December 2013 and March 2017 in 10 mining offices and points out deficiencies such as non-collection of balance bid security, contract money, contribution to restoration fund from the contractors and royalty/ additional royalty from Brick Kiln Owners amounting to Rs 1476.21 crore.

Responding to the opposition demand for a judicial probe, the state’s home minister, Anil Vij stated that “appropriate decision” will be taken only after the Pubic Accounts Committee (PAC) makes thorough investigation of the CAG “allegations”. While Vij might be right on the procedural part, the contents of a CAG audit report are audit findings and not “allegations”. The casualness that marks the government’s response even before a PAC meeting to discuss these audit findings takes place is also worrisome, given that fact that CAG had carried out a similar performance audit on the functioning of the department of mining and geology in its report for the year 2003-04, whose recommendations are yet to be implemented!

Take, for example, this recommendation: Writing 15 years ago, CAG of India raised concerns about “the non-existence of internal audit wing in the Department”. After feeling sad that PAC of the state assembly has failed to get this recommendation implemented and “no remedial action was taken by the Department during the last 15 years”, CAG report notes, “The non-existence of internal audit wing resulted in lack of effective monitoring and accumulation of huge arrears against the contractors.”

This 46-page performance audit highlights most crucially an abysmal track record of Haryana in implementing the ecological restoration fund for mining-affected landscape in three audit paragraphs.

Before going into details of these audit findings of the fund, it would be relevant to present the evolution of this District Mineral Foundation like policy instrument.

Acting on the recommendation by the Central Empowered Committee in its report of January 2009, the Supreme Court had imposed a complete ban on mining in the eco-sensitive Aravalli range (448 square km) in Haryana on May 8, 2009. In a hearing on October 8, 2009, the apex court had directed the state government to establish Aravalli Rehabilitation Fund. Following these directions, Haryana government notified the Aravalli Rehabilitation Fund by a notification dated January 14, 2010 and submitted the Aravalli Rehabilitation Plan on March 31, 2010 to the court.

Five years later, the state government notified the Mines and Mineral Development, Restoration and Rehabilitation Fund on July 10, 2015, by extending the remit to all mining affected landscapes in order to ensure ecological restoration.

Audit calculated that in nine mining offices where mining operations commenced between May 2015 and March 2017, “48 contractors were required to deposit monthly instalments to the Mines and Mineral Development Restoration and Rehabilitation Fund (MMDRR Fund henceforth) amounting to Rs 97.72 crore in total”. However, audit scrutiny revealed that “the contractors deposited Rs 48.42 crores in the MMDRR Fund, resulting in short/non-deposit of Rs 49.30 crore”. Audit also found that the department was lax in collection of penal interest for delayed payment of contribution to the MMDRR Fund and calculated that “interest of Rs 17.44 crore upto March 2018 was also leviable”.

The department neither ensured contribution to the MMDR Fund by the contractors nor levied interest for the delayed payment or non-payment, states the CAG report.

Exposing the lack of commitment on part of the state government, audit scrutiny found that “the State Government contributed only an amount of Rs 12.55 crore to the MMDRR Fund in March 2017”, while as per the law, “the State Government was liable to contribute Rs 30.25 crore (Rs 1.40 crore for the year 2014-’15, Rs 10.76 crore for the year 2015-’16 and Rs 18.09 crore for the year 2016-’17)”.

No amount was deposited in the MMDRR Fund by the state government in 2015-16 and there was short contribution of Rs 17.70 crore, adds the CAG report.

The CAG audit also pointed out that “the State Government was required to credit interest of Rs 4.61 crore at the rate of six percent per annum on the accumulated Fund as on 31st March”. However, in the consistent tale of non-compliance, CAG auditors found that “the Government did not credit the interest in the Fund”.

There was complete disregard of the promises made in the Notification for MMDRR Fund and the monitoring mechanism had failed miserably. The CAG audit states that “the Committee was required to convene at least five meetings between July 2015 and March 2017 to review the status of the Fund etc., however, it didn’t meet even once during that period”!

The notification of District Mineral Foundation Rules in Haryana provides for internal audit of the DMF Trusts and also a subsequent audit by the office of the Principal Accountant General (Audit) Haryana. While internal audit wing remains non-existent, the performance audit report is silent on the state of DMF in Haryana. The CAG auditors could have tried to mine into the expenditure and outcomes from MMDRR Fund as well its precedent Aravalli Rehabilitation Fund.

Also, CAG auditors have an option of considering such performance audits as a rare opportunity to understand and assess the environment impact of mining and the state’s commitment (or the absence thereof) to restore the ecology of the mining affected landscape.