Himachal CM requests ‘national disaster’ tag after heavy rains: Who funds disaster relief in India?

States affected by natural disasters often make such requests to the Centre. Demands for special relief packages are also made. What is the basis of such demands and how does the Centre determine the scale of assistance that it provides?

First, why is Himachal Pradesh demanding assistance?

Sukhu has said that Himachal Pradesh suffered losses of Rs 10,000 crore due to rain-related incidents this monsoon. He demanded that the calamity be declared a national disaster and a special disaster package be announced, PTI reported.

According to the state emergency operation centre, 418 people have died (265 in rain-related incidents and 153 in road accidents) since the onset of monsoon on June 24 till September 9, while 39 are missing.

How are states assisted during natural disasters?

There is no official or defined category of “national disasters”. Disasters of this nature come under the 2005 Disaster Management Act, which defines a “disaster” as “a catastrophe, mishap, calamity or grave occurrence in any area, arising from natural or man made causes, or by accident or negligence which results in substantial loss of life or human suffering or damage to, and destruction of, property, or damage to, or degradation of, environment, and is of such a nature or magnitude as to be beyond the coping capacity of the community of the affected area”.

The Act saw the creation of the National Disaster Management Authority (NDMA), to be headed by the Prime Minister, and State Disaster Management Authorities (SDMAs) headed by respective Chief Ministers. Together with district-level authorities, an integrated Disaster Management setup was to be created in India.

The Act also led to the National Disaster Response Force. It has several battalions or teams, which are responsible for on-ground relief and rescue work in several states.

What is the NDRF?

The National Disaster Relief Fund (NDRF) is mentioned in the 2005 Disaster Management Act. Similarly, SDRFs exist for the states and are the primary funds available to state governments for responses to notified disasters. The Central Government contributes 75% to the SDRF in general states and 90% in northeastern and Himalayan states.

The SDRF is to be used only for meeting the expenditure for providing immediate relief to the victims of notified calamities like cyclones, droughts, earthquakes, fires, floods, tsunamis, hailstorms, landslides, avalanches, cloud bursts, pest attacks and frost/cold waves.

According to a publication of the National Disaster Management Authority from November 2019, “The state government is primarily responsible for undertaking rescue, relief and rehabilitation measures in the event of a disaster.” But these can be supplemented with Central assistance.

“In the event of a calamity of a severe nature, where the requirement of funds for relief operations is beyond the funds available in the State’s Disaster Response Fund account, additional Central assistance is provided from National Disaster Response Fund, after following the laid down procedure,” it says.

What is a severe calamity?

This classification is based on a specific procedure, where the state government needs to submit a memorandum indicating the sector-wise damage caused by a disaster and its requirement of funds. Afterwards, an inter-ministerial central team is constituted and it conducts an on-the-spot assessment of damage and requirement of funds for relief operations.

After this, specific committees examine these assessments and submit their reports. A High-Level Committee must approve the quantum of immediate relief to be released from the NDRF. The Disaster Management Division of the Ministry of Home Affairs will then provide support and monitor the utilisation of funds.

Heavy rain caused widespread damage in Himachal.

A calamity is declared to be of “rare severity”/”severe nature” based on undefined criteria, but factors such as the intensity and magnitude of the calamity, level of assistance needed, etc. are looked at. A Calamity Relief Fund (CRF) is set up, with the corpus shared 3:1 between Centre and state. When resources in the CRF are inadequate, additional assistance is considered from the National Calamity Contingency Fund (NCCF), funded 100% by the Centre. Relief in repayment of loans or for grant of fresh loans to the persons affected on concessional terms, too, are considered once a calamity is declared “severe”.

Otherwise, the funds for the NDRF and SDRFs, for preparedness, mitigation and reconstruction, are allocated by the Government as a part of budgetary allocations. Funds for immediate relief are recommended by the Finance Commission – a constitutional body that recommends the distribution of financial resources among the states and the Centre – for a five-year period.

The 15th Finance Commission (for 2021-22 to 2025-26) adopted a new methodology for state-wise allocations, based on factors like past expenditure, risk exposure (area and population) hazard and vulnerability of states. Rs. 54,770 crore has been allocated by the commission under the NDRF. It allocated a total of Rs. 1,28,122 crore in SDRF to all states, in which the Central share is Rs. 98,080 crore and the state government’s share is Rs. 30,041 crore.

The annual Central contribution is released in two equal instalments as per the recommendation of the Finance Commission. These are released on the receipt of a Utilisation Certificate of the amount released in the earlier instalment and the receipt of a report from the state government on the activities undertaken by SDRF. However, in July this year, these requirements were waived “in view of the urgency” during extreme rainfall in many states.

In addition, an amount of Rs 32,030 crore has been allocated by the commission under the State Disaster Mitigation Fund (SDMF), which is for carrying out works such as restoration of forests, raising public awareness, etc. and Rs. 13,693 crore for the National Disaster Mitigation Fund (NDMF).