Relief to disaster victims

Based on the previous experience, and knowledge, you might be aware that there exists an institutional provision of providing relief to disaster victims by the state. Only a few would however be aware of the amount admissible under different circumstances, and basis of this assistance.

Some of you might have also experienced that in some disaster situations, victims are not provided assistance at all.

Some of you might certainly be curious to know the intricacies of the relief provided to the disaster victims.

As has also been put forth previously,  in order to ensure equitable distribution of financial resources between Union, and the constituent states Constitution (Art. 280) provides for setting up of Finance Commission (FC). Constituted at five year interval, FC sets the ground rules for sharing of receipts to the public exchequer of the Union government so as to ensure equitable growth, and development. As for various other sectors financial resources required for various post-disaster initiatives are also made available to Union, and state governments in accordance with the recommendations of the FC.

It was agreed from the very beginning that states cannot be left on their own to manage the calamities, and have to be provided dedicated resources for dealing with emergency situations. All the FCs therefore recommended certain resources for post-disaster operations for the states, and provision of Union government’s assistance to a certain limit in case of exceptional circumstances wherein the earmarked amount is not sufficient.

Relief to disaster victims and FC recommendations

As regards relief to disaster victims, the II FC constituted under the Chairmanship of Shri Santhanam in 1956 recommended Margin Money Scheme according to which the states were to keep provision of certain financial resources for post disaster essential, and emergency operations, and in case of shortfall the balance was to be provided by the Union. This provision continued with some minor changes till IX FC.

IX Finance Commission

IX FC headed by Shri N.K.P. Salve recommended setting up of a dedicated Calamity Relief Fund (CRF) at the level of the states for various post disaster requirements. IX FC decided the size of CRF on the basis of the money spent by them on disaster relief during the previous years. The recommended magnitude of CRF for all the states was accordingly Rs. 804 crore.

The FC at the same time considered intervention of Union government essential in case of calamities of rare severity, and recommenced Union to take effective measures, and bear additional costs.

X Finance Commission

While deciding to continue CRF, the X FC constituted in June 1992 under the chairmanship of Shri K.C. Pant, based on the expenditure done by the states on disaster relief in the period 1995-2000 enhanced its size to Rs. 6304.27 crore.

The X FC for the first time made financial provision for tackling calamities of rare severity by setting up of National Fund for Calamity Relief (NFCR) to be managed by National Calamity Relief Committee headed by Union Agriculture Minister.

The X FC made provision of Rs. 700 crore for NFCR to be shared in 75:25 ratio between Union and the states in next five years.

XI Finance Commission

By the time XI FC chaired by Shri A.M. Khusro was constituted in 1998 Ministry of Home Affairs was made responsible for all disaster related affairs at the level of the Union government. After detailed deliberations with various stakeholders XI FC recommended the following:

• Size of CRF to be Rs. 11007.59 crore.

• Immediate relief admissible out of CRF to the victims of (i) cyclone, (ii) drought, (iii) earthquake, (iv) fire, (v) flood, and (vi) hailstorm. 

• CRF resources be shared in 75:25 ratio between Union, and states.

• Share of both Union and states to be provided in two installments; 1^stof May and November of every Financial Year (FY).

• The Ministry of Home Affairs (MHA), to issue guidelines for norms of expenditure out of CRF.

• Cost of reconstruction and restoration, except for emergency measures, be borne out of routine plan expenditure on priority basis and not be charged to CRF.

• In case of emergency states allowed to draw in advance 25% allocation for the subsequent FY.

• Committee of officers, and experts constituted under the chairmanship of the Chief Secretary for the management of CRF.

• Amount available under CRF to be invested through the branch of the Reserve Bank of India (RBI) located at the state capital in (i) Central Government dated securities, (ii) interest earning deposits of scheduled banks, (iii) auctioned treasury bills, and (iv) interest earning investments of cooperative banks.

• In case the CRF resources are not invested the state has to provide interest on half yearly basis, at rates applicable for overdraft.

• States free to use the unspent balance at the end of the five years period as a resource for its plan budget.

XI FC at the same time recommended discontinuing NFCR. It at the same time recommended provision of suo moto cognizance of calamities of rare severity so that the affected states are provided assistance immediately out of National Calamity Contingency Fund (NCCF) that it recommended setting up along with the following:

• Setting up of National Centre for Calamity Management (NCCM) for regular monitoring of cyclone, drought, earthquake, fire, flood, and hailstorm as also assessment of the capability of the states to face these so as to identify calamities of rare severity, and recommend assistance out of NCCF.

• Provided initial provision of Rs. 500 for NCCF.

• Provision of special cesson central taxes; National Calamity Contingent Duty (NCCD) for replenishing NCCF.

• Union government free to use the unspent NCCF balance at the end of FY 2004-05 as a resource for its plan budget.

Based on the recommendations of Special Committee of Finance Commission 10% of the annual CRF allocation was allowed for the procurement of search and rescue equipment as also for the training of search and rescue personnel by MHA during the implementation of the recommendations of the XI FC.

XII Finance Commission

The XII FC constituted in 2002 under the chairmanship of Dr. C. Rangarajan recommended the following:

• CRF to be shared in 75:25 ratio between Union and states.

• Size of CRF enhanced to Rs. 21333.33 crore.

• Landslide, avalanche, cloudburst, and pestattack added to the list of notified calamities for which relief is admissible out of CRF.

• Recommended undertaking pre-disaster preparedness, and mitigation out of state resources.

• Committee of experts constituted to study, and map risk of disasters affecting many states.

• Continued NCCF with initial grant of Rs. 500 with provision of NCCD for replenishing it.

• Recommended bringing transparency in foodgrain assistance provided to the states under relief measures.

XIII Finance Commission

The XIII FC was constituted in 2007 under the chairmanship of Shri Vijay Kelkar. At that time Disaster Management Authorities (Ss. 3, 14, and 25) had come into being at various levels as provided by the Disaster Management Act, 2005.

The XIII FC specifically commented that the definition of disaster as provided in the DM Act lacks objectivity, and it would not be feasible to undertake any relief measure according to that.

After consultation with various stakeholders XIII FC recommended the following:

• In accordance with the provisions of the Disaster Management Act, 2005(Ss. 46, 48) NCCF be reconstituted as National Disaster Response Fund (NDRF), and CRF as State Disaster Response Fund (SDRF) from April 1, 2010.

• SDRF to be shared in 75:25 ratio between Union and states, except for special category states for which 90:10 share was determined.

• Mitigation measures be funded by plan budget of the Union ministries, and the states.

• In view of the spending out of CRF during the previous years size of SDRF enhanced to Rs. 33581 crore.

• Recognizing man-made, and other incidences being covered by the definition of disaster as provided by the Disaster Management Act, 2005 the FC opined that the Act needs to have definitive list of such occurrences together with financial resources for the same.

• Tsunami added to the list of notified natural calamities.

• Recognized the need of disaster management related capacity building, and provided Rs. 525 crore for the same.

• Recommended having a central repository of essential resources to be required on the aftermath of a disaster. Provided Rs. 250 crore for this to National Disaster Response Force (NDRF), and recommended that the expenditure out of this be replenished from the relief measures undertaken by the states.

During the award period of XIII FC cold wave/frost was notified as a natural calamity by MHA. For cold wave minimum experienced minimum temperature was defined as 7^o C or less for the areas having normal minimum temperature 10^o C or above, and 5^o C or less for the areas having normal minimum temperature less than 10^o C. For frost temperature dropping below 0^o C, and the situation being unusual for the cropping season were put forth as the condition.

XIV Finance Commission

XIV FC was constituted in 2013 under the chairmanship of Dr. Y.V. Reddy. Before making recommendations pertaining to NDRF the FC took cognizance of the spending out of it during the previous years, and compared these to the revenue received from NCCD.

• FY 2002-03; Receipt Rs. 1648.45 crore, Expenditure Rs. 1600.00 crore

• FY 2003-04; Receipt Rs. 1740.13 crore, Expenditure Rs. 1587.42 crore

• FY 2004-05; Receipt Rs. 1484.44 crore, Expenditure Rs. 2583.12 crore

• FY 2005-06; Receipt Rs. 1274.67 crore, Expenditure Rs. 3061.44 crore

• FY 2006-07; Receipt Rs. 1787.88 crore, Expenditure Rs. 1962.05 crore

• FY 2007-08; Receipt Rs. 2268.36 crore, Expenditure Rs. 373.38 crore

• FY 2008-09; Receipt Rs. 2319.73 crore, Expenditure Rs. 2279.92 crore

• FY 2009-10; Receipt Rs. 2619.56 crore, Expenditure Rs. 3261.52 crore

• FY 2010-11; Receipt Rs. 2966.51 crore, Expenditure Rs. 4179.25 crore

• FY 2011-12; Receipt Rs. 3246.16 crore, Expenditure Rs. 2458.12 crore

Though satisfied with the functioning of NDRF the FC was apprehensive of the situation wherein NCCD is discontinued, or is subsumed under the GST in future. The FC therefore suggested having an assured source of funding for the NDRF.

The FC suggested exploring possibility of NDRF being financed by contributions from the public, and institutions, and recommended tax exemption for private contributions to the NDRF besides invoking use of Schedule VII of the Companies (Corporate Social Responsibility Policy) Rules 2014 as an enabling provision for financing the NDRF.

As regards other aspects of disaster financing XIV FC made the following recommendations:

• Development, and scientific validation of the hazard, vulnerability and risk profiles of states in view of the usefulness of a scientifically validated risk, and vulnerability indicators for quantifying type, frequency, and intensity of disasters.

• Adopting the practice of the previous FCs, expenditure on disaster relief for the period 2006-07 to 2012-13 considered for determining the SDRF corpus for the states, and the SDRF allocation enhanced to Rs. 61219 crore.


• Union, and state share of SDRF to be in the 90:10 ratio for all states.

• Like XIII FC the decision of constituting District Disaster Response Fund (DDRF) left to the wisdom of the state governments, and no separate grant provided for the financing these.

• Allowed use of up to 10% of SFDR funds for natural disasters that the state governments consider to be ‘disaster’ in the local context, and which are not included in the notified list of disasters of the MHA.

It was really surprising that the XIV FC did not spell out anything regarding the capacity building grant provided by the XIII FC. This was a severe blow for various activities so enthusiastically initiated by the states. Even though there existed provision of using certain proportion of SDRF / CRF resources for capacity building related initiatives due to lack of dedicated grants for this purpose only a small amount could be utilized for capacity building.

It was on the instance of the state governments that the MHA once again allowed a proportion of the SDRF resources for capacity building purposes. Impact of not having dedicated resources for capacity building is thus an area to be studied, and analysed,

Even though the XIV FC recommended 90:10 contribution to SDRF for all states the same was not implemented as the Union government decided to continue with the pattern of 75:25 for general states and 90:10 for North-East, and Himalayan states which was recommended by the XIII FC.

XV Finance Commission

Constituted under the Chairmanship of Shri N.K. Singh the XV FC  brought SDRF/NDRF under larger umbrella of State/National Disaster Risk Management Fund (SDRMF/NDRMF), and constituted both National, and State Disaster Mitigation Fund (NDMF/SDMF) as provided by Disaster Management Act, 2005.

It is for the first time after the recommendations of the XV FC that are applicable for the period 2020-25 that dedicated funds are available for various pre-disaster initiatives.

Even though the disaster managers had long been talking of paradigm shift in disaster management from response to pre-disaster prevention, mitigation, and capacity building dedicated resources were never available for carrying forward these activities. It can therefore rightly be said that the XV FC has brought forth the paradigm shift, and it is hoped that this brings results is reduced risk of disasters in the country.

It is therefore necessary for all concerned with DRR to go through the recommendations of XV FC in detail.