Resource Rent Redistribution and Socio-Economic Development: A Composite Index Analysis of District Mineral Foundation (DMF) Expenditure in Odisha

Abstract

The mineral extraction in any region comes with a cost termed as the Resource Curse Hypothesis, and to address the issue faced due to intense mining, some countries are implementing the Resource Rent Redistribution. To understand its implementation, our study analyses the correlation between sectoral District Mineral Foundation (DMF) Fund expenditure and socio-economic growth in a resource-abundant region using a composite index based on Min-Max normalization, as used by the United Nations Development Programme (UNDP) and the Organization for Economic Co-operation and Development (OECD). The analysis utilizes annual data from 2016–17 to 2025–26, concentrating on four essential sectors—health, education, infrastructure, and water—that are pivotal to human development outcomes as supported by the existing literature[i]. The findings indicate considerable temporal variations in development performance, with the Socioeconomic Development (SED) Index reaching its peak in 2020–21, augmented by relatively equitable sectoral investment, and experiencing a steep decline in subsequent years due to disproportionate allocation and diminished expenditure in critical sectors, notably water and infrastructure. The results indicate that socio-economic development is significantly influenced by both the scale of DMF expenditure and its allocation among various sectors. The research offers empirical validation for the resource rent redistribution framework through the comparison of various development indicators and provides the scope for policy-relevant insights for optimizing the efficacy of decentralized development funds, including the District Mineral Foundation (DMF) Fund.