India’s Disaster Response: A Slippery Slope for Federalism

Context:

• The Wayanad landslides (July 2024) have exposed deep structural and fiscal asymmetries in India’s disaster-response framework.

• Kerala’s request of ₹2,200 crore for loss and damage was met with an approval of only ₹260 crore by the Union government, raising concerns over cooperative federalism, discretionary control, and adequacy of disaster-risk financing.

Key Highlights:

Centre–State Asymmetry in Disaster Financing

• The disparity between assessed losses and actual disbursement reflects a growing centralisation of disaster relief decisions.

• Disasters have become fiscal stress tests for States, revealing constraints in accessing timely and adequate support.

Existing Institutional Framework

• Governed by the Disaster Management Act, 2005, India’s financing architecture includes:

  • State Disaster Response Fund (SDRF):

    • Jointly funded by Centre and States in 75:25 ratio ( 90:10 for Himalayan and North-Eastern States).

  • National Disaster Response Fund (NDRF):

    • Fully funded by the Union government for ‘severe’ disasters.

Outdated Relief Norms

• Compensation ceilings remain unchanged for over a decade:

  • ₹4 lakh per life lost

  • ₹1.2 lakh for fully damaged houses

• These limits fail to reflect inflation, rising construction costs, and climate-intensified disasters.

Discretion and Delays

• Ambiguity in classifying a disaster as ‘severe’ allows administrative discretion in approving NDRF aid.

• Sequential clearances cause delays, undermining the principle of timely relief.

Allocation Criteria Concerns

• Finance Commission criteria rely on population and geographical area, while:

  • Actual hazard exposure is ignored

  • Poverty is used as a proxy for vulnerability, despite weak correlation with disaster risk

• This results in misaligned allocations, especially for climate-vulnerable States.

Centre’s Justification and Counter-Arguments

• The Union cited:

  • Unspent SDRF balances

  • Earlier interest-free loans

• States argue SDRF balances often represent committed expenditures, not idle funds.

Global Best Practices

• Countries like:

  • USA (FEMA)

  • Mexico (FONDEN)

  • Philippines

• Use data-driven triggers, transparent criteria, and automatic fund release mechanisms.

Opportunity for Reform

• The Sixteenth Finance Commission has scope to reframe disaster-risk finance by:

  • Updating relief norms

  • Revising allocation criteria

  • Ensuring grant-based, predictable assistance

Relevant Prelims Points:

• Issue: Inadequate and asymmetric disaster-response financing.

• Legal Framework: Disaster Management Act, 2005.

• Funds:

  • SDRF: 75:25 (Centre:State), 90:10 for special category States

  • NDRF: Fully Union-funded

• Challenges: Outdated norms, discretionary approvals, delayed releases.

• Impact: Strain on State finances, erosion of cooperative federalism.

Relevant Mains Points:

• Key Concepts:

  • Fiscal Federalism: Division of financial powers and responsibilities

  • Disaster-Risk Financing: Pre-arranged financial mechanisms to respond to disasters

• Polity & Governance (GS II):

  • Centre–State relations during crises

  • Need to restore trust-based cooperative federalism

• Disaster Management (GS III):

  • Climate change increasing frequency and intensity of disasters

  • Importance of predictable, timely, and needs-based financing

• Comparative Perspective:

  • Learning from rule-based global models

• Way Forward:

  • Objective, hazard-linked allocation criteria

  • Automatic fund triggers

  • Inflation-indexed compensation norms

  • Operational control of SDRF with States, with Union role limited to post-audit verification

UPSC Relevance (GS-wise):

• GS II: Polity, Federalism, Governance

• GS III: Disaster Management, Climate vulnerability, Public finance

• Prelims: SDRF, NDRF, Disaster Management Act, Fiscal federalism