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Disaster funding arrangements in India

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Financial assistance to meet the rescue and relief expenditure during any notified disaster event is governed by notified guidelines on State Disaster Response Fund (SDRF) and National Disaster Response Fund (NDRF). These funds have been created under the legal frame work of 48(1) (a) and section 46 of Disaster Management Act, 2005 respectively.

Calamities covered under SDRF/NDRF

Natural calamities of cyclone, drought, earthquake, fire, flood, tsunami, hailstorm, landslide, avalanche, cloud burst, pest attack and cold wave & frost considered to be of severe nature by Government of India and requiring expenditure by a State Government in excess of the balances available in its own State Disaster Response Fund (SDRF), will qualify for immediate relief assistance from NDRF. Ministry of Agriculture is responsible for handling natural calamities of Drought, hailstorm, pest Attack, Cold Wave & Frost. All other notified natural calamities are managed by Ministry of Home Affairs. Ministry of Home Affairs is nodal ministry for disaster management in the country.

There is no categorisation of calamities mentioned as National Calamity in Disaster Management Act, 2005. As per the DM Act 2005 and 14th Finance Commission (FC) recommendations, any notified calamity of a severe nature will qualify for assistance from NDRF.

The State Governments are primarily responsible for execution of relief operations in the wake of natural calamities. The Government of India supplements the efforts of the State Governments by extending additional financial assistance from NDRF. Funds from SDRF and NDRF are released to assist States to provide immediate relief. Assistance for long term reconstruction of assets is provided through overall development plans of the Centre and the States, and is not covered under the norms and guidelines of SDRF & NDRF.

Assistance provided from NDRF is on 100% central grant basis whereas in case of SDRF, states also need to contribute their share as per successive Finance Commission’s recommendations.

NDRF is maintained by Government of India in the Public Account. A limited size cess (NCCD-National Calamity Contingency Duty) backed the fund earlier. After implementation of GST, most of the cesses are subsumed in GST, hence the size of cess is narrowed down and not sufficient to fulfil the growing needs of disaster funding under NDRF. Therefore, now as per requirement, necessary budgetary support is being provided for NDRF.

Thirteenth Finance Commission (FC-XIII) 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. Fourteenth Finance Commission (FFC) has recommended an amount of Rs. 61,219 crore as aggregated corpus of State Disaster Response Fund(SDRF) for all States for award period 2015-20 with state contribution of 10% (6122 crore ) to SDRF, the remaining 90% (Rs. 55097 crore ) coming from Central Government. The Government has accepted the above recommendations of FFC with modification that the percentage share of the States will continue to be as before (i.e. during FC-XIII award period) and once GST is in place, the recommendation of FFC on disaster relief would be fully implemented. Thereafter, from the year 2018-19, the share of states in SDRF has been decided at 10% and rest 90% is being contributed by the centre.

The grant under SDRF is to be released by Ministry of Finance in two instalments in June and December in each financial year on the recommendations of Home Ministry. In case of severe calamity, there is a provision of advance release of these instalments. State-wise and Year-wise allocation of SDRF has been decided by the 14th FC for its award period 2015-16 to 2019-20. Further, in the event of a calamity of a severe nature when the SDRF is insufficient to meet the relief requirements, additional central assistance is provided from NDRF. The quantum of assistance from NDRF is subjected to an adjustment of 50% of the balance in SDRF as on 1st April the financial year.

Assessment of Relief Assistance from the NDRF

In the case of notified natural calamities, as per the established procedure, the State Government is required to submit a detailed memorandum indicating the sector-wise details of damage and requirement of funds for relief operations of immediate nature.

Upon a request made by a State not having adequate balance in its State Disaster Response Fund (SDRF), Ministry of Home Affairs or the Ministry of Agriculture, as the case may be, assess need for additional assistance from NDRF under the existing guidelines and the approved items of expenditure.

The following procedure will be adopted for making such assessment:

High Level Committee consists of Finance Minister, Agriculture Minister, Home Minister, and Planning Minister/Vice Chairman-NITI AAYOG as members. HLC is serviced by the Disaster Management Division of Ministry of Home Affairs.

Ministry of Home Affairs to supervise:- The Ministry of Home Affairs (MHA) oversee the utilisation of releases from NDRF for the purposes for which funds have been released and monitor compliance with the guidelines of NDRF. States will need to provide the required information to MHA.

Releases to States:- Upon the approval of HLC, Ministry of Finance releases assistance from NDRF to States.

Norms of assistance under NDRF

The norms of assistance to be provided under NDRF, including items and amount of assistance for each item, are decided by Expert Committee constituted by Ministry of Home Affairs and these norms are revised from time to time. Last such revision was done vide MHA’s letter dated 08.04.2015.

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