National and State Disaster Response Fund
National Calamity Contingency Fund was renamed as National Disaster Response Fund with the enactment of the Disaster Management Act in 2005.
It is defined in Section 46 of the Disaster Management Act, 2005 (DM Act).
It is placed in the “Public Account” of Government of India under “reserve funds not bearing interest“.
Public Accounts: It was constituted under Article 266 (2) of the Constitution.
It accounts for flows for those transactions where the government is merely acting as a banker eg. provident funds, small savings etc.
These funds do not belong to the government and have to be paid back at some time.
Expenditures from it are not required to be approved by the Parliament.
It is managed by the Central Government for meeting the expenses for emergency response, relief and rehabilitation due to any threatening disaster situation or disaster.
It supplements the State Disaster Response Fund in case of a disaster of severe nature, provided adequate funds are not available in the SDRF.
SDRF is the primary fund available with the State governments for responses to notified disasters to meet expenditure for providing immediate relief.
The Centre contributes 75% of the SDRF allocation for general category States and Union Territories, and 90% for special category States/UTs (northeast States, Sikkim, Uttarakhand, Himachal Pradesh, and Jammu & Kashmir).
SDRF is the primary fund available with the State governments for responses to notified disasters to meet expenditure for providing immediate relief.
The Centre contributes 75% of the SDRF allocation for general category States and Union Territories, and 90% for special category States/UTs (northeast States, Sikkim, Uttarakhand, Himachal Pradesh, and Jammu & Kashmir).
How are they funded
Financed through the levy of a cess on certain items, chargeable to excise and customs duty, and approved annually through the Finance Bill.
Currently, a National Calamity Contingent Duty (NCCD) is levied to finance the NDRF and additional budgetary support is provided as and when necessary.
NCCD is levied in the case of goods specified in the Seventh Schedule (goods manufactured or produced).
Department of Agriculture and Cooperation under the Ministry of Agriculture and Farmer Welfare monitors relief activities for calamities associated with drought, hailstorms, pest attacks and cold wave/frost while rest of the natural calamities are monitored by the Ministry of Home Affairs (MHA).
What disasters are covered
NDRF guidelines state that natural calamities of cyclones, drought, earthquake, fire, flood, tsunami, hailstorm, landslide, avalanche, cloud burst, pest attack and cold wave and frost considered to be of severe nature by Government of India (GoI) and requiring expenditures by a state government in excess of the balances available in its own SDRF will qualify for immediate relief assistance from NDRF.
For availing the NDRF funds, states are required to submit a memorandum indicating the sector-wise damage and need of funds.
The Centre, on its part, assesses the damage and grants the additional funds to states.
The financial assistance from NDRF is for providing immediate relief and is not compensation for loss/damage to properties /crops.
In other words, NDRF amount can be spent only towards meeting the expenses for emergency response, relief and rehabilitation.
The National Executive Committee (NEC) of the National Disaster Management Authority takes decisions on the expenses from National Disaster Response Fund.
What is the current dispute between centre and state
It is only after an assessment by its team that any natural disaster is classified as a disaster of severe nature.
As seen in the 2013 floods in Uttarakhand and 2018 floods in Kerala.
In such a case, there is additional financial assistance from the National Disaster Response Fund (NDRF).
There is no question of calling the floods in Tamil Nadu as a “national disaster”.
The central government should ensure clear guidelines when it comes to relief.
It should also consider revising its position on excluding long term or permanent restoration works from the ambit of the SDRF/NDRF.
There must be an open debate on the suggestion by a parliamentary committee in March 2021 that States hit by severe disaster be permitted to use more than the 25% flexi-fund component of centrally sponsored schemes to carry out post-disaster permanent restoration works.
As micro, small and medium enterprises get no relief under the norms of the two funds, the Centre should ensure relief to this sector, which employs nearly 1.4 crore people in the State.
Finally, the Centre must consult cyclone-vulnerable Tamil Nadu, Andhra Pradesh, Odisha, West Bengal and Gujarat and formulate new norms on disaster management that would leave no room for political controversy.
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