State Disaster Response Fund (SDRF)
The State Disaster Response Fund (SDRF) is the primary fund available with States for disaster response and is constituted under Section 48 of the Disaster Management Act, 2005 (DM Act).
The SDRF is used for meeting expenditures for providing immediate relief to the victims of cyclone, drought, earthquake, fire, flood, tsunami, hailstorm, landslide, avalanche, cloud burst, pest attack, and frost and cold wave. Besides, for providing immediate relief to the victims of State-specific disaster within the local context, which are not included in the list of the above notified natural calamities, Ministry of Home Affairs has authorized the State Governments to incur an expenditure of 10% of funds available under SDRF, subject to the procedures laid down therein. This flexibility is applicable only after the state has listed the natural disasters for inclusion and has notified clear and transparent guidelines for relief, in case such disasters occur.
Any amount spent by the state for such disasters over and above the specified ceiling would have to be borne out of its own resources and it would be subject to the same accounting norms.
If the amount available under the SDRF is not sufficient, states can request for making available assistance from a similar fund managed by the central Government - National Disaster Response Fund (NDRF).
The financial assistance from SDRF/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 SDRF (The DM Act specifies that for such activities a separate fund called Disaster Mitigation Fund has to be constituted). However, 5% of the annual allocation to SDRF can be kept for specified capacity building activities by the states in the area of disaster management.
The norms of assistance, is reviewed comprehensively after the award of successive Finance Commissions, taking into account various factors, including the price rise.
The Disaster Management Act, 2005 mandates that States shall constitute SDRF once the constitution of the State Disaster Management Authority is notified.
Source of Financing SDRF
The hitherto existing calamity relief Fund (CRF) / Disaster Relief Funds with the state Government was renamed as State Disaster Response Fund (SDRF) by the 13th Finance Commission and the balance in the former was merged with SDRF with effect from 1 April 2010.
While the DM Act clearly provides two sources of financing the NDRF, no source has been laid down for the SDRF. It is implied that the corpus of the SDRF will be the grant recommended by the Finance Commission (FC) under Article 275 (1) of the Constitution.
Thus, financing of the SDRF is based on the recommendations of the Finance Commissions, which determine the annual size of the Funds as well as the respective contributions of the Union and State Governments.
Since financial year 2010-11, the Union Government has been financing the NDRF through the levy of a cess and the SDRF as grants-in-aid. The FC-XIII (Submitted the report in 2009) had recommended differential State shares, with general category States contributing 25 per cent and special category States contributing 10 per cent, and the balance being contributed by the Union Government as grants-in-aid. Even though the FC –XIV (submitted its report in Feb 2015) had recommended 10% contribution for all state Governments, irrespective of being general or special category, the central Government continued with the existing formula of 75:25 for general category states and 90:10 for special category states.
FC- XIV also recommended that in view of the very wide responsibility cast on governments at different levels by the statute, the Union Government should expedite the development and scientific validation of the Hazard Vulnerability Risk Profiles of States based on which future allocations of SDRF could be done.
Features of SDRF
- SDRF is located in the ‘Public Account’ under ‘Reserve Fund’. (But direct expenditures are not made from Public Account.)
- State Government has to pay interest on a half yearly basis to the funds in SDRF, at the rate applicable to overdrafts.
- The aggregate size of the SDRF for each state, for each year, is as per the recommendations of the Finance Commission.
- Government of India (GoI) will contribute 75% of the SDRF of the general category states and 90% of the special category states in the form of a non-plan grant, made in two instalments - in June and December. The balance is contributed by the state government within 15 days from the receipt of central share. (If the state government delays its contribution, interest rate at the rate of bank rate will have to be paid for the number of days of delay) .
- The share of GoI to the SDRF is treated as a ‘grant in aid’.
- Ministry of Home Affairs (MHA) can recommend an earlier release of 25% of the central share due to a state in the following year, if the exigencies of the particular calamity so warrants. This advance release is adjusted against future instalments due from the center.
- The accretions to the SDRF together with the income earned on investment are to be invested in central government securities or in interest earning deposits with banks, which when needed are liquidated.
- The financing of relief measures out of SDRF are decided by the State Executive Committee (SEC) constituted under Section 20 of the DM Act. SEC is responsible for the overall administration of the SDRF. However, the administrative expenses of SEC are borne by the State Government from its normal budgetary provisions and not from the SDRF or NDRF.
- The norms regarding the amount to be incurred on each approved item of expenditure (type of disaster) are fixed by the Ministry of Home Affairs with the concurrence of Ministry of Finance. Any excess expenditure has to be borne out of the budget of the state government.
- In the wake of natural calamities, a state Government is empowered to undertake necessary relief measures from SDRF, which is readily available with them. If additional financial assistance is required from National Disaster Response Fund ((NDRF) they have to submit a memorandum for the same and in the mean time utilize contingency fund of the State, if SDRF is exhausted.
- Ministry of Home Affairs is the nodal ministry for overseeing the operation of the SDRF and monitors compliance with prescribed processes.
- State Government has to furnish to Ministry of Home Affairs twice in a year –in the months of April and October-, the details of amount credited to SDRF along with the expenditures incurred and balance available in the SDRF. Further, an Annual Report has to be submitted in September based on which the December instalment of the central government is released.
- Comptroller and Auditor General of India (CAG) audit the SDRF every year.
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. FC-VI was the first to be given a formal term of reference relating to the financing of relief expenditure. However the existing system was recommended to be continued till the 9th Finance Commission. The FC-IX (submitted its report in 1990) recommended the establishment of a Calamity Relief Fund (CRF) in each State, with 75% contribution by the Union Government and 25% 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. Similarly the funds lying with CRF were merged with State Disaster Response Funds.
CRF ceased to exist from 1 April 2010 onwards. The SDRF, which has substituted CRF was reconstituted on the basis of 14th Finance Commission's (report submitted in Feb 2015) recommendations on 30 July 2015. The revised norms for assistance from SDRF were issued on 8 April 2015.
- Calamity Relief Funds (CRF)
- National Calamity Contingency Fund (NCCF)
- National Disaster Response Fund (NDRF)
- A study by NIDM for the 13th Finance Commission - Financing Disaster Management in India , August 2009
- Chapter 11 of 13th Finance Commission Report on Disaster Relief
- Chapter 10 of 14th Finance Commission Recommendations in respect of handling disaster management funds