Kerala Landslides

The Union Government recently sanctioned only ₹260 crore in disaster relief to Kerala following the Wayanad landslides of July 2024, despite the State’s estimated losses of ₹2,200 crore.
This stark disparity has reignited debates about the weakening of cooperative federalism and the increasing centralisation of disaster-risk finance in India.

India’s Current Disaster-Financing Framework

15th Finance Commission (2021–26)

The 15th Finance Commission expanded India’s disaster-financing architecture beyond the traditional relief-only funds: the National Disaster Response Fund (NDRF) and State Disaster Response Fund (SDRF), created under the Disaster Management Act, 2005.

• It recommended the creation of separate mitigation funds at both central and state levels, leading to the National Disaster Risk Management Fund (NDRMF) and State Disaster Risk Management Funds (SDRMF).

• These funds integrate relief and mitigation into a unified disaster-risk management framework.

• Allocation of disaster-management funds is primarily based on population, total geographical area, and historical spending trends.

State Disaster Response Fund (SDRF)

• Provides immediate relief such as food, shelter, medical aid, and compensation.

• Funding ratio: 75:25 for general states; 90:10 for Northeast and Himalayan states.

• Covers notified disasters like floods, cyclones, earthquakes, and landslides.

• States can use up to 10% for local disasters as per state-defined norms.

• The central contribution is released in two equal installments annually.

National Disaster Response Fund (NDRF)

• Supplements SDRF when a disaster is declared “severe” and SDRF funds are insufficient.

• Fully funded by the Central Government.

National and State Disaster Risk Management Funds (NDRMF & SDRMF)

• The National Disaster Mitigation Fund (NDMF) was established in 2021, with all states (except Telangana) setting up SDMF.

• Centre contributes 75% for general states and 90% for North-Eastern and Himalayan states.

• These funds support mitigation projects like flood control, landslide prevention, and seismic safety.

Concerns with India’s Disaster-Financing Framework

1. Widening Union–State Fiscal Asymmetry: States often receive far less than reported losses, weakening cooperative federalism.

2. Outdated Relief Norms: Compensation (e.g., ₹4 lakh per life lost, ₹1.2 lakh for fully damaged houses) has not kept pace with inflation.

3. Ambiguous ‘Severe Disaster’ Classification: Lack of clarity in the Disaster Management Act, 2005 creates scope for discretionary approvals.

4. Procedural Delays: Multiple approvals slow down fund release, as seen in delayed classification of Wayanad landslides.

5. Distorted Allocation: Finance Commission allocations based on population and area, not hazard exposure, and misinterpretation of committed SDRF funds.

6. Inadequate Local Capacity: Many DDMAs and urban bodies lack staff, GIS tools, and planning capacity.

7. Centralisation Trends: Increasing reliance on conditional approvals indicates a shift away from cooperative federalism.

Disaster Risk Financing Across the Globe

• United States: Uses data-driven triggers like per-capita damage thresholds for automatic federal aid.

• Mexico: Funds released automatically when hazard thresholds (rainfall, wind speed) are crossed.

• Philippines: Activates Quick Response Funds using rainfall and fatality indices.

• African & Caribbean Risk Insurance Pools: Use parametric insurance powered by satellite data.

• Australia: Links federal assistance to state relief expenditure as a share of revenue.

Recommended Reforms for India

1. Objective, Rule-Based Triggers: Automatic fund release based on rainfall intensity, crop loss, fatalities, or loss-to-GSDP, supported by a Disaster Risk Index.

2. Expand Hazard Coverage: Include landslides, cloudbursts, avalanches, and pest attacks; promote parametric insurance and regional risk pools.

3. Update Relief Norms: Revise compensation amounts for death, house damage, and livelihood loss to match current costs.

4. Strengthen Federal Balance: Ensure timely, transparent, and predictable NDRF/SDRF allocations, avoiding conditional releases.

5. Improve Finance Commission Criteria: Replace population-based allocations with scientific multi-hazard vulnerability indices, GIS risk maps, and climate exposure data.

6. Enhance Local-Level Capacity: Strengthen DDMAs, urban local bodies, and panchayats with trained staff, GIS tools, fire services, and emergency operation centers.

7. Expand SDMF/NDMF Utilisation: Support flood protection, slope stabilization, cyclone shelters, early-warning systems, and resilient infrastructure.

8. Scale-Up Local Volunteer Networks: Programs like Aapda Mitra can strengthen first response and last-mile disaster governance.

Conclusion

India’s disaster-financing system faces growing strain, with widening gaps between assessed losses and central aid, weakening cooperative federalism. As climate shocks intensify, a predictable, rules-based, and equitable funding framework is essential to protect states and citizens during future disasters.