Disaster funding arrangements in India
Disaster funding arrangements in India constitute a structured mechanism for financing relief, rehabilitation, and mitigation activities in the aftermath of natural or man-made disasters. India, being one of the most disaster-prone countries in the world, has developed a comprehensive framework to ensure timely financial assistance and effective disaster management. The funding structure is guided primarily by constitutional provisions, the Disaster Management Act, 2005, and recommendations from the Finance Commissions, which together define the roles of the Union and State governments in managing disaster-related expenditure.
Historical Background and Evolution
Prior to the enactment of the Disaster Management Act, 2005, disaster relief and rehabilitation in India were largely managed under ad hoc arrangements known as the Calamity Relief Fund (CRF) and the National Fund for Calamity Relief. These funds were based on the recommendations of successive Finance Commissions, which determined the corpus for each state and the sharing ratio between the Central and State governments.
Following the 2004 Indian Ocean Tsunami, there was a significant policy shift in India’s approach towards disaster management. The emphasis moved from reactive relief and response to a holistic framework encompassing mitigation, preparedness, and capacity-building. The Disaster Management Act, 2005 institutionalised this shift by mandating the creation of dedicated disaster response funds at both national and state levels.
Institutional Framework
The disaster funding framework in India operates under a three-tiered system comprising the National Disaster Response Fund (NDRF), State Disaster Response Funds (SDRFs), and District Disaster Response Funds. These funds are administered under the overall supervision of the National Disaster Management Authority (NDMA) and the Ministry of Home Affairs (MHA).
- National Disaster Response Fund (NDRF):The NDRF is constituted under Section 46 of the Disaster Management Act, 2005. It is used to provide immediate financial assistance to states in the event of severe calamities that surpass their coping capacity. The fund is entirely financed by the Central Government, with allocations made based on the severity of the disaster and the recommendations of the Inter-Ministerial Central Team (IMCT).
- State Disaster Response Fund (SDRF):Established under Section 48 of the same Act, the SDRF serves as the primary funding mechanism at the state level. It is used to meet the expenditure for providing immediate relief to victims of notified natural disasters such as floods, droughts, earthquakes, cyclones, and landslides. The SDRF is shared between the Centre and the respective state in a pre-determined ratio — currently 75:25 for general category states and 90:10 for special category states (North-Eastern states, Himachal Pradesh, Uttarakhand, and Jammu & Kashmir).
- District Disaster Response Fund:This operates at the district level to ensure decentralised and immediate availability of resources for emergency response. It allows district administrations to act swiftly during localised calamities.
Funding Mechanisms and Allocation
The quantum of funds to be maintained under SDRF and the contribution of the Union Government are determined by the Finance Commission every five years. The 15th Finance Commission (2021–26) recommended a corpus of ₹1,60,153 crore for disaster risk management, to be divided between the Union and the States. The funds are released in two instalments each financial year, subject to the fulfilment of stipulated conditions such as submission of utilisation certificates and compliance reports.
For disasters beyond the coping capacity of the states, additional central assistance is provided from the NDRF, based on the assessment by the IMCT and approval by the High-Level Committee (HLC) chaired by the Union Home Minister.
Types of Expenditure Covered
Disaster funding in India typically covers:
- Relief and rescue operations including evacuation, provision of food, water, and temporary shelter.
- Restoration of public utilities such as roads, bridges, power, and water supply systems.
- Rehabilitation and reconstruction for damaged housing and infrastructure.
- Capacity building and mitigation projects under specific schemes like the National Disaster Mitigation Fund (NDMF), which aims to reduce long-term vulnerability.
Expenditure from these funds must adhere to the norms approved by the Government of India and are subject to audit by the Comptroller and Auditor General (CAG).
Role of Finance Commissions
Successive Finance Commissions have played a crucial role in defining India’s disaster funding framework.
- The 11th Finance Commission (2000–2005) institutionalised the Calamity Relief Fund (CRF).
- The 13th Finance Commission (2010–2015) renamed the CRF as the State Disaster Response Fund (SDRF) and created the National Disaster Response Fund (NDRF).
- The 15th Finance Commission integrated disaster risk management funds into both response and mitigation categories, thereby introducing a holistic approach encompassing pre-disaster preparedness.
These recommendations have ensured fiscal stability in disaster management and encouraged states to enhance resilience.
Mitigation and Preparedness Funding
Beyond response and relief, the Government of India promotes disaster risk reduction through the National Disaster Mitigation Fund (NDMF) and State Disaster Mitigation Funds (SDMFs). These funds support projects related to flood management, earthquake-resistant construction, early warning systems, and community-based disaster preparedness. Funding for these initiatives often comes through schemes like the National Cyclone Risk Mitigation Project (NCRMP), Integrated Coastal Zone Management Programme, and externally aided projects funded by institutions such as the World Bank and the Asian Development Bank.
Monitoring, Accountability, and Challenges
The Ministry of Home Affairs monitors utilisation through periodic reviews and audits. States are required to maintain transparency in disbursement, with digital reporting through platforms like the Disaster Management Information System (DMIS). Despite these mechanisms, challenges persist:
- Delays in fund release due to administrative bottlenecks.
- Underutilisation of funds at the state and district levels.
- Inadequate focus on mitigation compared to response and relief.
- Limited community participation and lack of capacity-building in local governance structures.
Strengthening these areas remains critical to ensuring efficient and equitable disaster funding.
Recent Developments and Innovations
Recent years have seen greater integration of technology and risk assessment tools in disaster financing. The National Disaster Risk Index, developed by the Ministry of Home Affairs and the United Nations Development Programme (UNDP), helps prioritise funding based on vulnerability mapping. India has also initiated efforts to incorporate parametric insurance models, catastrophe bonds, and public-private partnerships (PPPs) to diversify funding sources.
During the COVID-19 pandemic, the SDRF and NDRF norms were temporarily expanded to include pandemic-related expenditures such as quarantine facilities and testing infrastructure, marking a significant evolution in India’s disaster response framework.
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