An Analysis of Resource Curse of Mining Revenue, DMF Institutions and Human Development in Odisha

This study examines whether the 2015 District Mineral Foundation (DMF) fiscal transfers successfully broke the local ‘resource curse’ across 30 districts from 2001 to 2023. It looks into the aspects of whether the revenue improves human development in Odisha and its local institutions. Using a Difference-in-Differences (DiD) framework and an instrumental variable approach, the paper reveals that mining districts experienced a 0.021-point lower HDI growth post-2015 compared to non-mining areas. This drop is heavily driven by declines in health (-0.029) and education (-0.024), despite modest wage and income gains (+0.014). The paper identifies three critical transmission channels for this persistent resource curse namely, 1. Poor Fund Utilisation: Districts spent only 54% of available DMF funds, with a heavy skew toward physical infrastructure over social sectors. 2. Environmental Degradation: High PM10 dust pollution offsets 0.012 HDI points per 100 µg/m³ increase. 3. Institutional Constraints: Vacancies exceeding 25% in administrative posts reduced HDI conversion rates by 0.011 points. Ultimately, decentralising revenue without building local administrative capacity reproduces the curse. The study advocates for mandatory 40% social spending floors and contractual planner backfills.