Disaster relief funding in India is becoming increasingly uneven, with a widening gap between assessed needs and actual funds released. E.g. In Kerala after Wayanad landslides.
- This raises the question of whether India’s fiscal federalism is shifting from cooperation to a more centralised and conditional system of disaster finance.
India's Disaster Response Financing Framework:
- Established under Disaster Management (DM) Act, 2005, operates on a two-tier structure.
- State Disaster Response Fund (SDRF): Jointly financed by Centre and States, typically in a 75:25 ratio, though it is 90:10 for Himalayan and north-eastern States.
- National Disaster Response Fund (NDRF): Fully financed by Union government, intended to supplement SDRF when a calamity is officially classified as "severe".
Key institutional issues in Framework:
- Outdated Relief Norms: Compensation ceilings e.g. ₹4 lakh for each life lost have remained largely unchanged for a decade.
- Ambiguity in Classification: DM Act, 2005, does not define what constitutes a ‘severe’ disaster, allowing discretion in deciding eligibility for NDRF aid.
- Procedural and Slow Aid Release: Process relies on sequential clearances, including a State memorandum, central assessment, and high-level approval.
- Weak Finance Commission Allocation Criteria: Criteria for allocation use population and total geographical area to measure exposure, neglecting actual hazard patterns.
- Furthermore, disaster vulnerability is approximated by poverty instead of a robust disaster-risk index.
Way Forward for better disaster response financing:
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