National Disaster Response Fund (NDRF)
National Disaster Response Fund is defined in Section 46 of the Disaster Management Act, 2005 (DM Act) as a fund managed by the Central Government for meeting the expenses for emergency response, relief and rehabilitation due to any threatening disaster situation or disaster. NDRF is constituted to supplement the funds of the State Disaster Response Funds (SDRF) of the states to facilitate immediate relief in case of calamities of a severe nature.
The DM Act defines "disaster" to mean ‘a catastrophe, mishap, calamity or grave occurrence in any area, arising from natural or man-made causes, or by accident or negligence which results in substantial loss of life or human suffering or damage to, and destruction of, property, or damage to, or degradation of, environment, and is of such a nature or magnitude as to be beyond the coping capacity of the community of the affected area.'
The July 2015 guidelines states that natural calamities of cyclone, drought, earthquake, fire, flood, tsunami, hailstorm, landslide, avalanche, cloud burst, pest attack and cold wave and frost considered to be of severe nature by Government of India (GoI) and requiring expenditures by a state government in excess of the balances available in its own SDRF will qualify for immediate relief assistance from NDRF.
In the event of a disaster of 'a severe nature', in which the funds needed for relief operations exceeded the balances in the SDRF account, additional assistance would be provided from the NDRF after following prescribed procedures.
The financial assistance from SDRF/NDRF is for providing immediate relief and is not compensation for loss/damage to properties /crops. In other words, NDRF amount can be spent only towards meeting the expenses for emergency response, relief and rehabilitation. For projects exclusively for the purpose of mitigation, i.e, measures aimed at reducing the risk, impact or effect of a disaster or threatening disaster situation a separate fund called National Disaster Mitigation Fund has to be constituted.
In fact, the hitherto existing National Calamity Contingency Fund (NCCF) was renamed as National Disaster Response Fund (NDRF) on 28 September 2010 with the enactment of the Disaster Management Act in 2005 and consequent changes in the design and structure of disaster management in India.
The National Executive Committee (NEC) of the National Disaster Management Authority takes decisions on the expenses from National Disaster Response Fund, in accordance with the guidelines laid down by the Central Government in consultation with the National Authority. The revised norms for assistance from NDRF were issued on 8 April 2015.
Sources of Financing NDRF
Like its predecessor, NCCF, the NDRF is financed through the levy of a cess on certain items, chargeable to excise and customs duty, and approved annually through the Finance Bill. The requirement for funds beyond what is available under the NDRF is met through general budgetary resources.
Currently, a National Calamity Contingency Duty (NCCD) is levied to finance the NDRF and additional budgetary support is provided as and when necessary. A provision also exists in the DM Act to encourage any person or institution to make a contribution to the NDRF. However, this source has not yet been tapped.
The financing of the NDRF has so far been almost wholly through the levy of cess on selected items, but if the cesses are discontinued or when they are subsumed under the goods and services tax (GST) in future, 14th Finance Commission (FC-XIV) recommended that the Union Government should consider ensuring an assured source of funding for the NDRF.
Currently, funds contributed to the Prime Minister's Relief Fund or the State Chief Minister's Relief Fund are exempt from income tax. The Ministry of Home Affairs has informed 14th FC that modalities are being explored for the extension of tax exemptions to private contributions to the NDRF as well, which was supported by the FC.
The Union Government was also asked to explore the possibility of incorporating in these rules on financing of the NDRF, expenditures that are categorised under the head of corporate social responsibility (CSR) under Section 135 of the Companies Act of 2013. Schedule VII of the Companies (Corporate Social Responsibility Policy) Rules 2014 relating to CSR states that companies may provide funds for the Prime Minister's Relief Fund or 'any other fund set up by the Central Government or the State Governments for socio-economic development and relief'. FC recommended that the Union Government should consider invoking the use of this as an enabling provision for financing the NDRF.
Features of NDRF
- The primary purpose of NDRF is to supplement the SDRF, in case there is a calamity of “severe nature” which requires assistance over and above the funds available under SDRF.
- NDRF is located in the "Public Accounts" of Government of India under "Reserve Funds not bearing interest"
- Department of Agriculture and Cooperation under Ministry of Agriculture (MoA) monitors relief activities for calamities associated with drought, hailstorms, pest attacks and cold wave /frost while rest of the natural calamities are monitored by Ministry of Home Affairs (MHA).
- The memorandum of the state government for additional assistance from NDRF is examined by the MHA/MoA as the case may be, and in case there is any shortage, a central team is deputed for making an on the spot assessment. The recommendations of the central team are examined and the extent of assistance and expenditures which can be funded from the NDRF is recommended by the National Executive Committee (NEC) constituted for this purpose under the DM Act. Based on these recommendations, a high level committee (HLC) approves the quantum of immediate relief to be released from NDRF. The HLC is constituted with Home Minister, Finance Minister, Agriculture Minister and Planning Minister / Vice Chairman of NITI Aayog as members. HLC is serviced by the Disaster Management Division of MHA. Upon approval of HLC, the Ministry of Finance releases the assistance from NDRF to states.
- The State Executive Committee constituted by the State Government under Section 20 of the DM Act, 2005 will be responsible for ensuring that NDRF expenditures are as per specifications.
- The financial assistance from NDRF is for providing immediate relief and is not compensation for loss/damage to properties /crops. Further, the provision for disaster preparedness, restoration, reconstruction and mitigation are not a part of NDRF (The DM Act specifies that for such activities a separate fund called Disaster Mitigation Fund has to be constituted). In the absence of a Disaster Mitigation Fund, such activities have to be borne out of the budget of the government concerned.
- Comptroller and Auditor General of India (CAG) audits the accounts of NDRF
A dedicated fund for calamity relief was first recommended by the 9th Finance Commission (FC-IX; submitted its report in 1990). Prior to this, the Commissions set apart specific amounts under the 'margin money' scheme (which envisaged setting apart specific amounts by states in order to meet the expenditure on relief measures), recommended by the FC-II (submitted its report in 1957) to meet expenditures on relief measures. The FC-IX recommended the establishment of a Calamity Relief Fund (CRF) in each State, with 75 per cent contribution by the Union Government and 25 per cent by the State. For calamities of rare severity, the Union Government was asked to render assistance and support beyond that envisaged in the CRF.
The FC-X (submitted its report in 1995) put in place a formal mechanism and recommended the setting up of a National Fund for Calamity Relief (NFCR) to assist a State affected by a `calamity of rare severity' through contributions from the Union and State Governments. The fund was to be managed by a National Calamity Relief Committee with representation from both the Union and State Governments. The FC-XI modified this and recommended the setting up of a National Calamity Contingency Fund (NCCF) with an initial corpus of Rs. 500 crore. The funds were to be recouped by levying a special surcharge on Central taxes. The FC-XII (submitted its report in 2004) continued with this arrangement.
With the enactment of the Disaster Management Act in 2005 and consequent changes in the design and structure of disaster management, the FC-XIII (submitted its report in 2009) recommended the merger and transfer of NCCF balances, as on 31 March 2010, to the NDRF which was accepted and notified by the Union Government. Thus, based on the recommendations of the FC-XIII, the available balances in the NCCF on 1 April 2010 were merged with the NDRF. In the event of a disaster of 'a severe nature', in which the funds needed for relief operations exceeded the balances in the SDRF account, additional assistance would be provided from the NDRF after following prescribed procedures.
- Calamity Relief Fund (CRF)
- State Disaster Response Fund (SDRF)
- National Calamity Contingency Fund (NCCF)
- A study by NIDM for the 13th Finance Commission - Financing Disaster Management in India , August 2009
- Chapter 11 of 13th Finance Commission Report
- Chapter 10 of 14th Finance Commission Recommendations in respect of handling disaster management funds
- Various Finance Commission Reports