National Calamity Contingency Fund (NCCF)

The National Calamity Contingency Fund (NCCF) was a dedicated central fund established by the Government of India in 2000 to provide immediate financial assistance to states in the event of major natural disasters of severe magnitude, such as earthquakes, cyclones, floods, droughts, and other large-scale calamities.
It served as an emergency reserve to supplement the Calamity Relief Fund (CRF) of individual states when the magnitude of a disaster exceeded the state’s financial capacity.
The NCCF played a critical role in India’s disaster relief mechanism until it was replaced in 2010 by the National Disaster Response Fund (NDRF) under the Disaster Management Act, 2005.

Background and Establishment

The NCCF was set up on the recommendations of the Eleventh Finance Commission (2000–2005) to strengthen the country’s disaster response system.

Historical Context:

• Before 2000, disaster relief expenditures were primarily met from the Calamity Relief Fund (CRF), financed by both the Centre and the States.
• However, when a calamity of severe nature occurred, the financial requirement often exceeded the CRF’s capacity.
• To bridge this gap, the Eleventh Finance Commission recommended the creation of an additional fund at the national level — the National Calamity Contingency Fund (NCCF) — to assist states during such extreme events.

The NCCF came into operation on November 11, 2000, through an executive order of the Government of India.

Objectives of the NCCF

The main objectives of the NCCF were to:

1. Provide supplementary assistance to states affected by severe natural calamities, when their CRF was insufficient.
2. Ensure timely release of funds for relief, rehabilitation, and reconstruction in disaster-affected areas.
3. Strengthen the national disaster response mechanism through a centrally administered fund.
4. Facilitate the mobilisation of resources for disaster management without disrupting normal budgetary allocations.

Legal and Administrative Framework

The NCCF was established as a non-lapsable reserve fund in the Public Account of India, maintained by the Central Government.

• It was managed by the Ministry of Finance (Department of Expenditure).
• Funds were released to the affected states on the recommendation of a High-Level Committee (HLC) chaired by the Union Home Minister.

Composition of the High-Level Committee (HLC):

• Union Home Minister (Chairperson)
• Finance Minister
• Agriculture Minister
• Deputy Chairman, NITI Aayog (earlier Planning Commission)

The Ministry of Home Affairs (MHA) served as the nodal ministry for disaster management coordination, including the processing of requests for financial assistance.

Funding Sources of the NCCF

The NCCF was financed primarily through:

1. Levy of Special Excise Duties and Cesses on certain goods — termed as the National Calamity Contingent Duty (NCCD) — introduced by the Finance Act, 2001.
2. Budgetary allocations and grants-in-aid from the Consolidated Fund of India.
3. Accruals of interest on the corpus maintained in the Public Account.

Major commodities on which NCCD was levied:

• Tobacco and tobacco products
• Crude petroleum
• Motor vehicles
• Pan masala and gutkha
• Mobile phones (at certain periods)

The collected NCCD proceeds were credited to the NCCF to ensure a steady funding stream for national disaster relief.

Utilisation of Funds

The NCCF could be used only for providing immediate relief and rehabilitation to disaster-affected people, not for long-term reconstruction or mitigation.

Eligible calamities:

• Earthquake
• Cyclone
• Flood
• Drought
• Landslide
• Hailstorm
• Avalanche
• Cloudburst
• Other calamities of severe nature (as declared by the Government of India)

Expenditure from NCCF included:

• Relief for affected families (ex-gratia payments).
• Emergency food, shelter, and medical assistance.
• Repair of essential infrastructure such as roads, bridges, schools, and hospitals.
• Restoration of communication and power supply.
• Assistance for agriculture, livestock, and fisheries losses.

Procedure for Assistance from NCCF

1. Initial Assessment:The affected state government assesses the damage and submits a memorandum to the Ministry of Home Affairs (MHA) seeking additional assistance.
2. Inter-Ministerial Central Team (IMCT):MHA constitutes a team of experts to visit the affected areas and assess the extent of damage and relief needs.
3. Recommendation by HLC:Based on the IMCT report and the state’s requirements, the High-Level Committee (HLC) recommends the amount of assistance to be released from the NCCF.
4. Release of Funds:The Ministry of Finance releases funds to the concerned state government for immediate relief operations.
5. Monitoring and Audit:Utilisation certificates must be submitted to ensure accountability. The Comptroller and Auditor General of India (CAG) audits the fund’s use.

Transition to the National Disaster Response Fund (NDRF)

With the enactment of the Disaster Management Act, 2005, a new statutory framework for disaster management was introduced, leading to a major reform in funding mechanisms.

Key Developments:

• The NDRF was established under Section 46 of the Disaster Management Act, 2005.
• The NDRF replaced the NCCF as the primary central fund for disaster response and relief from 2010 onwards.
• The State Disaster Response Funds (SDRFs) replaced the earlier Calamity Relief Funds (CRFs).
• Funds from NCCF were transferred to the NDRF to ensure continuity.

Thus, the NDRF became the statutory successor to the NCCF.

Difference between NCCF and NDRF

National Calamity Contingent Duty (NCCD) — A Continuing Legacy

Even after the replacement of NCCF by NDRF, the National Calamity Contingent Duty (NCCD) continues to be levied as a special excise/customs duty on specified goods.

• The NCCD proceeds are now credited to the Consolidated Fund of India, and equivalent amounts are allocated to the NDRF through budgetary transfers.
• The duty serves as a permanent funding mechanism for national disaster relief.

Importance of the NCCF

The establishment of the NCCF marked a turning point in India’s disaster response policy by:

1. Providing a central financial buffer for managing severe natural calamities.
2. Institutionalising the principle of shared responsibility between the Centre and States.
3. Laying the groundwork for the statutory NDRF system under the Disaster Management Act.
4. Ensuring quick mobilisation of funds for relief operations.

Examples of Assistance from NCCF

Several major disasters received central assistance through the NCCF:

These interventions demonstrated the fund’s crucial role in supporting states during catastrophic events.