Syllabus: Disaster and disaster management.
Background
- India’s inter-governmental disaster financing system reveals widening asymmetry between Union and States, highlighted recently in the Centre’s allocation to Kerala after the July 2024 Wayanad landslides.
- Against Kerala’s documented loss of ₹2,200 crore, the Union approved only ₹260 crore, signalling a shift away from cooperative federalism towards a more centralised, conditional model.
Present Disaster-Response Architecture
- Under the Disaster Management Act, 2005, funding operates through a two-tier structure:
- State Disaster Response Fund (SDRF): Cost-shared in 75:25 ratio (or 90:10 for Himalayan/north-eastern States); enables immediate relief.
- National Disaster Response Fund (NDRF): Fully Union-funded; supports States when a calamity is classified as “severe”.
- Though federal in design, the system exhibits central drift in practice.
Structural Weaknesses in India’s Disaster Financing
- Outdated Relief Norms
- Compensation rates—₹4 lakh per life lost and ₹1.2 lakh for fully damaged houses—have barely changed in a decade, covering subsistence, not reconstruction.
- Ambiguous Classification
- The Act does not define “severe disaster”, enabling wide Union discretion in determining NDRF eligibility.
- Procedural Delays
- Support is not automatic; States must navigate sequential clearances, central assessments, and high-level approvals, delaying timely relief.
- Weak Allocation Formula
- Finance Commission uses population and area, ignoring actual hazard profiles.
- Vulnerability is proxied by poverty, not a disaster-risk index, leading to misaligned allocations.
The Wayanad Case: Exposing Institutional Gaps
- Centre cited Kerala’s ₹780 crore SDRF balance and earlier ₹529 crore interest-free loan to justify reduced aid.
- However, SDRF balances often represent committed works, not surplus funds; rules restrict usage to immediate relief, not reconstruction.
- Delayed classification of the landslide as “severe” limited access to NDRF, unlike larger packages for Himachal Pradesh, Uttarakhand, Assam, etc.
- Similar mismatches occurred after Cyclone Gaja (2018) and Karnataka floods (2019), revealing a system driven by bureaucratic negotiation rather than solidarity.
Global Best Practices
- Countries use objective triggers for transparent, rapid support:
- U.S. FEMA uses per capita damage thresholds.
- Mexico’s FONDEN used rainfall/wind triggers for automatic release.
- Philippines relies on rainfall and fatality indices.
- African and Caribbean insurance pools use satellite-based loss assessment.
- Australia links aid to a state’s spending relative to revenue.
- These systems demonstrate how rule-based triggers can reduce discretion and speed up relief.
Way Forward: Rebuilding Federal Spirit
- The 16th Finance Commission can:
- Update relief norms to reflect actual costs.
- Replace population-based criteria with a comprehensive vulnerability index.
- Ensure disaster support remains grant-based, not loan-driven.
- Disaster funds should be under State operational control, with Union oversight limited to post-audit, not prior approvals.
Conclusion
- Disasters test not just physical resilience but also institutional federalism.
- When relief becomes negotiation instead of cooperation, fiscal federalism weakens.
- India must shift from procedural charity to a rules-based partnership to ensure timely, equitable, and constitutional disaster response.
- The Wayanad tragedy is a warning—before the next crisis, the fiscal foundations of disaster relief need urgent reform.