India’s disaster response, a slippery slope for federalism, Pg6

Key Highlights:

• The Union government approved only ₹260 crore against Kerala’s requested ₹2,200 crore for losses from the Wayanad landslides in July 2024, highlighting a growing asymmetry in disaster-response financing.
• India's disaster-response financing framework, under the Disaster Management Act, 2005, includes the State Disaster Response Fund (SDRF) and the National Disaster Response Fund (NDRF).
• Relief norms are outdated, with compensation ceilings at ₹4 lakh for each life lost and ₹1.2 lakh for a fully damaged house, unchanged for a decade.
• The Sixteenth Finance Commission has the opportunity to reframe the disaster-financing architecture by updating relief norms, revising allocation criteria, and ensuring grant-based assistance.

Detailed Insights:

• The mismatch between assessed needs and actual disbursements signals an erosion of cooperative federalism, with disasters acting as fiscal stress tests for States.
• The SDRF is financed jointly by the Centre and States in a 75:25 ratio (90:10 for Himalayan and north-eastern States), while the NDRF is fully funded by the Union government.
• Ambiguity in classifying a disaster as ‘severe’ allows discretion in deciding eligibility for NDRF aid, and aid releases depend on sequential clearances, causing delays.
• Finance Commission allocation criteria use population and total geographical area, ignoring actual hazard patterns and using poverty as a proxy for disaster vulnerability.
• Global practices, such as those in the U.S. (FEMA), Mexico (FONDEN), and the Philippines, use data-driven, transparent disaster financing with objective triggers.
• The Centre cited Kerala’s unspent SDRF balance and an earlier interest-free loan to justify cutting aid, but these balances often reflect committed works, not idle funds.
• States must have operational control over their disaster funds, with the Union’s role confined to post-audit verification instead of prior approval.

Key Concepts Involved:

• Fiscal Federalism: Division of financial powers and responsibilities between the central and state governments in a country.
• Disaster Management Act, 2005: Indian law that provides the legal and institutional framework for disaster management in India.
• State Disaster Response Fund (SDRF): Primary fund available with State Governments for providing immediate relief to victims of notified disasters.
• National Disaster Response Fund (NDRF): Fund constituted to meet the expenses for emergency response, relief and rehabilitation.