The tabling of the 16th Finance Commission (16FC) report marks a transformative shift in India’s disaster financing architecture. Chapter 11, specifically titled “Financing of Disaster Management,” moves away from purely reactive funding toward a more sophisticated, risk-indexed, and performance-based model for the award period 2026–27 to 2030–31.
Here are the key highlights and strategic recommendations from the report are summarised below.
1. The Macro-Allocation: A ₹2.84 Lakh Crore Commitment
The Commission has recommended a massive financial envelope to address the increasing frequency of climate-induced disasters.
| Fund Category | Total Corpus (₹ Crore) | Union Share (₹) |
States’ Share (₹)
|
| State Level (SDRF + SDMF) | 2,04,401 | 1,55,916 | 48,485 |
| National Level (NDRF + NDMF) | 79,406 | — | — |
| Total Disaster Corpus | 2,83,807 | — | — |
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Sharing Pattern: The Commission has maintained the graded cost-sharing model. For the SDRF, the Union-to-State sharing remains 75:25 for general states and 90:10 for North-Eastern and Himalayan states.
2. Structural Shift: The 80:20 Split
The 16FC continues the 15th Finance Commission’s structural reform by dividing the state-level funds into two distinct functional pools:
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Response & Recovery (SDRF): 80% of the total allocation. This is further subdivided into:
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Response and Relief (40%)
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Recovery and Reconstruction (30%)
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Preparedness and Capacity Building (10%)
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Mitigation (SDMF): 20% of the total allocation. This is dedicated exclusively to long-term risk reduction projects (e.g., building embankments, seismic retrofitting).
3. New “Disaster Risk Index” (DRI) for Allocation
In a major departure from the traditional “population and area” based metrics, the 16FC has used a more scientific formula to determine how much money each state gets. The allocation is now grounded in:
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Hazard and Vulnerability: Using historical data of disaster occurrences.
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Exposure: Factoring in the value of infrastructure and population at risk.
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The GDP Proxy: For the first time, a state’s contribution to GDP has been factored in to ensure that high-economic-growth zones (which face higher financial losses during disasters) are adequately covered.
4. The “Data Mandate”: Real-Time Accountability
To address the chronic issue of under-reporting and delayed data, the 16FC has introduced strict digital conditionality:
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NDMIS Portal Integration: From the second year of the award period (2027–28), states must fully upload and validate transaction-level disaster data on the National Disaster Management Information System (NDMIS) to access grants.
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The “Unspent Balance” Cap: If a state’s unspent SDRF balance exceeds the sum of its past three years’ annual allocations, further releases from the Centre will be temporarily withheld. This prevents the “parking” of funds.
5. Expansion of “Notified Disasters”
Acknowledging the evolving nature of climate change, the Commission has recommended the inclusion of two pervasive but previously “local” hazards into the national list:
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Heatwaves: To address the severe productivity and mortality losses in the plains.
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Lightning: Currently one of the largest killers among natural disasters in India.
6. Graded Cost Sharing for NDRF
For additional assistance from the National Disaster Response Fund (NDRF) beyond the state’s corpus, the 16FC recommends a “Graded Contribution” by states based on the size of the assistance:
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10% contribution for assistance up to ₹250 crore.
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20% for assistance up to ₹500 crore.
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25% for any assistance exceeding ₹500 crore.
The tragic Joshimath subsidence and the catastrophic 2023 Himalayan floods warn us that fiscal federalism must be as dynamic as the climate it seeks to mitigate. These past events tell us that “reactive relief” is a sinking ship; only “proactive mitigation” can keep us afloat.
Our ongoing initiatives in ‘Digital Accountability’ and ‘Risk-Indexed Devolution’ prove that India is moving toward a smarter safety net, but history warns us that if we do not validate our data on the NDMIS portal today, the funding for our survival may not reach us when the mountain moves tomorrow.
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