Finance Commissions and Disaster Risk Funding: A Paradigm Shift in Methodology by Fifteenth Finance Commission

Disaster Management Act and Disaster Risk Funding

Disaster management as a concept has been formalised in recent years with the Disaster Management Act (DMA), 2005. Before the Act, disaster management was covered under different entries of the Seventh Schedule like public health and flood. By practice and convention, the primary responsibility of disaster management lies with the state governments. ‘The role of Central Government’, writes the High-Powered Committee, ‘is supportive in terms of the supplementation of physical and financial resources’ (Pant, 2001, p. 5). Disaster management has three financing cycles, that is, mitigation, relief and reconstruction. Mitigation involves pre-disaster activities like creating embankments and retrofitting existing infrastructure according to disaster vulnerability, for example, installing early warning systems and improving drainage systems to prevent inundation. Relief work involves pre-disaster and post-disaster assistance in evacuation, food, shelters, health facilities, compensation for loss, etc. Reconstruction is the post-disaster financing activity. It consists of reconstructing the public infrastructure such as schools, hospitals and other community infrastructure. There are three significant sources of disaster risk funding in India. First, Centrally Sponsored Schemes (CSSs) are financed by the union and state government budgets in the manner defined by the central government. Second, Central sector schemes are entirely financed by the union budget. Third, funds recommended by finance commissions (FCs). The Disaster Response and Mitigation Funds are part of the DMA 2005. Overall, India is primarily researched as a centralised federal structure, and financing of disaster management is not an exception (Singh, 2018, pp. 1–26). This article focuses on the methodology of disaster risk funding adopted by FCs. It deconstructs the innovation introduced by the Fifteenth Finance Commission (FC-XV) in the methodology of state-specific vulnerability and its hazard risk vulnerability. It is, therefore, for a critical understanding of innovation disaster risk funding, this article is divided into four major parts, namely (a) Disaster Management Act, 2005; (b) disaster risk financing and methodology of FCs, (c) views of the states and other stakeholders over methodology of disaster risk financing and (d) methodology recommended by the FC-XV for disaster risk funding.

The Disaster Management Act, 2005

The Government of India enacted the DMA in 2005, intending to provide for the effective management of disasters and matters connected to them or incidental to them. The DMA, 2005, provides for the constitution of two major bodies, namely the National Disaster Management Authority (NDMA) and the National Executive Committee (NEC) thereof. The Prime Minister heads NDMA, which comprises a vice-chairman with the status of a cabinet minister and eight members with the status of ministers of state. The authority has been organisationally designed based on a disaster divisions-cum-secretariat system. To manage disasters without any delay, the Act authorises the chairperson to exercise all the functions of NDMA, like laying down policies on disaster management and approval of a national plan. However, such decisions are subject to post facto ratification by the NDMA. As a matter of fact, NDMA, in no uncertain terms, enjoys considerable authority in the management of disasters (DMA, 2005, pp. 4–11).

The NEC assists the NDMA in discharging its functions and responsibilities. It also ensures the state and local authorities’ compliance with the directions issued by the central government. It also acts as a body to coordinate and monitor disaster-related policies. It prepares a national plan for disaster management to be approved by the national authority. The Committee also issues guidelines for a disaster management plan to be prepared by the Union and state government departments, providing technical assistance to state governments and authorities to prepare this plan. It also evaluates the preparation to respond to the disaster or disaster situation, and it can also issue directions to enhance such preparations. The NEC also organises training programmes for the various government employees and ‘voluntary rescue workers.’ It also makes efforts for general awareness about disaster management. It coordinates disaster response in general and central and state ministries, departments and other bodies, including the NGOs involved in disaster management (ibid.).

Chapter nine of the DMA deals with the financial dimension of disaster management. It provides for the formation of disaster response and disaster mitigation funds to cater to the various needs in pre- and post-disaster stages. The funds are created in two categories, that is, disaster response and disaster mitigation. Disaster response funds shall cover the various reconstructional, rescue and recovery requirements in the post-disaster stage, while disaster mitigation funds shall be utilised to create multiple infrastructures and initiate other steps to prevent a possible hazard from resulting in a disaster. The DMA provides that disaster response and disaster mitigation funds are created at the national, state and district levels. However, it does not specify the methodology of the funding mechanism that is left over to the government to formulate and implement. From time-to-time, the union government has mandated FCs to form funds provided in the DMA.

Disaster Risk Financing and Methodology of Finance Commissions

Finance Commissions, until recently, primarily recommended disaster financing for post-disaster activities, specifically post-disaster relief and reconstruction work. The Second Finance Commission initiated disaster financing as it had included a margin in a state’s annual revenue while calculating states expenditure for its recommendation period, enabling states to have a sizeable amount that could be used if any natural calamity occurs. Second Finance Commission (FC-II) recommended all states to set up separate funds and deposit the amount calculated for each state in this fund annually. This way, FC-II had created a ‘Margin Money Scheme’ for disaster relief. (Reddy & Reddy, 2018, p. 124). It seemed to be a workable scheme for disaster financing as from the third to eighth, FCs had recommended continuing the scheme with minor changes. The Union government has also contributed to this scheme. It provided grants and loans in the form of central assistance. If the state exceeds its margin fund for natural calamities, the Union contributes an additional share to the state’s fund. In natural calamity, the Centre provides 75% of expenditure. However, out of complete central assistance, 67% is contributed as a loan and 33% as a grant. At the same time, the rest, 25% of the expenditure, has to be arranged by the state government from its resources or as loans from third parties. However, this loan was a soft loan, and in successive FCs, this practice was discontinued (Rao, 2015, pp. 58–72).

Based on its assessment of the Money Margin Scheme, the Ninth Finance Commission (FC-IX) recommended a new arrangement for financing relief expenditure. This new arrangement is known as the Calamity Relief Fund (CRF). It is designed in a way so that state governments may have greater autonomy. In this new mechanism, accountability and responsibilities are placed upon the states. In addition, states are provided adequate means and facilities where these may withdraw and use the fund when it suits them. FC-IX recommended that ₹804 crores be available each year to all states, taking combined relief if natural calamities occur. In the Centre’s contribution to the CRF, FC-IX recommended that the centre contribute 75%, that is, ₹603 crores to CRF each year of the 5 years of FC-IX (FC-IX, 1989, pp. 43–48).

The Tenth Finance Commission (FC-X) dealt with the issue of the calamity of rare severity without giving a clear definition of it. FC-X decided it for many reasons like states in India have large variations in terms of their geography, development, population and hazard risk vulnerabilities. Therefore, creating a clear definition in terms of geographical coverage, nature of disasters and the number of people affected by a disaster may be counter-productive in nature. It may fail the purpose of extending assistance to states in the calamity of rare severity. Hence, FC-X maintained that calamity of rare severity should be decided from case to case. Further, FC-X stated that once a calamity has been categorised as rare severity, it needs to be dealt with as a national calamity, in which case, assistance would be provided beyond CRF. The Centre itself would provide additional assistance. The Commission recommended that apart from CRFs for states, a National Fund for Calamity Relief (NFCR) should be created. It should be managed by a National Calamity Relief Committee in which both states and the Centre would be represented (Government of India, 1995, pp. 42–43).

The Eleventh Finance Commission (FC-XI) has felt that funds allotted in NFCR are insufficient to meet the demand for calamities of rare severity. FC-XI had recommended abolishing NFCR and establishing National Climate Contingency Fund (NCCF) with an initial corpus of ₹500 crores, which was to be funded from the levy of a special surcharge on union taxes. The Twelfth Finance Commission (FC-XII) continued CRF and NCCF by expanding the list of calamities covered under these schemes (FC-XII, 2004, pp. 168–171).

The provisions of the DMA, 2005, require the creation of the State Disaster Response Fund (SDRF) and National Disaster Response Fund (NDRF). The transformation of CRF and NCCF into SDRF and NDRF was recommended by Thirteenth Finance Commission (FC-XIII) and enacted by Fourteenth Finance Commission (FC-XIV). Based on the recommendations of the FC-XIII, the FC-XIV decided to merge available balances in the CRF on 1 April 2010 with the SDRF. FC-XIV has followed the practice of previous FCs for the financing of SDRF. It utilised the past expenditure on disaster relief from 2006–2007 to 2012–2013 to determine the SDRF corpus for each state. This merger of CRF into SDRF and NCRF into NDRF hardly made any difference in the method, sharing cost and allocation patterns of both funds. The significant achievement was implementing Sections 46 and 48 of the DMA, which provided for implementing these funds, leaving its structure and methods of allocation to the governments (FC-XIII, 2010, pp. 190–196).

FC-XIV recommended the financing of the NDRF almost wholly through the levy of cess on selected items. A sum of ₹21,295.89 crore was collected through National Calamity Contingent Duty (NCCD) from 2002 to 2012, and ₹23,346.92 was distributed to states for the same period. As a result, ₹2,051.03 crores were given through budgetary resources from the Government of India (2015)(Bhaskar, 2018, pp. 39–48).

Table 1 on the past 10 years on collections and allocations of the NCCF clearly indicates that whenever the state required more supply of funds from the union government, it was readily provided from the additional budgetary resources, for example, in the years 2004–2005, 2005–2006, 2006–2007, 2009–2010 and 2010–2011 collection was less and allocation was more. This mismatch between the allocation and collection was always replenished by the union government by its own budgetary resources rather than putting a curb on the demands of the states.

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Table 1.

Collection and Release of National Calamity Contingency Fund to States from 2002–2012 (₹ crore)

Sl. No.	Year	Collection	Release
1	2002–2003	1,648.45	1,600.00
2	2003–2004	1,740.13	1,587.42
3	2004–2005	1,484.44	2,583.12
4	2005–2006	1,274.67	3,061.44
5	2006–2007	1,727.88	1,962.05
6	2007–2008	2,268.36	3,73.38
7	2008–2009	2,319.73	2,279.92
8	2009–2010	2,619.56	3,261.52
9	2010–2011	2,966.51	4,179.25
10	2011–2012	3,246.16	2,458.12
Total		21,295.89	23,346.92

Source: The Fourteenth Finance Commission Report (Government of India, 2015, p. 131).

However, FC-XIV recommended that when cesses are discontinued or merged under the Goods and Services Tax (GST) in the future, the union government considers ensuring an assured source of funding for the NDRF (Bhaskar & Kelkar, 2019, pp. 39–47). It has not been achieved yet, though FC-XV has recommended several other sources to augment funds in NDRF such as corporate social responsibility, crowdfunding, reconstruction bonds and availing contingent credits from international financial institutions (Government of India, 2019, pp. 253–254). The above-mentioned analysis shows that the methodology of disaster risk funding from FC-I to FC-XIV was based on past expenditures. It is also resisted by states and other stakeholders.

Views of States and Other Stakeholders

The FCs invited stakeholders’ views on difficulties faced and possible improvements to the existing mechanism. States, while expressing views to FC-XIV, maintained that while calculating the state-specific allocation of response funds, weightage should be given to the vulnerability of the state rather than an actual past expenditure of the state (Government of India, 2015, p. 128). States stressed that two criteria, that is, (a) area of a hazard-prone zone and (b) duration of the hazard should be considered while allocating the funds to the states. States also maintained that the database prepared by the NDMA could be utilised for this purpose.

The Ministry of Home Affairs (MHA) and NDMA maintained that the size of the SDRF should be determined by the hazard risk vulnerability profile of the states, and one-size-fits-all approach is not appropriate. In fact, NDMA has also shared the different vulnerability indexes of other hazards such as floods, earthquakes, drought, erosion, landslide and tidal waves.

Disaster Risk Funding: Amended Methodology

The FC-XV has found that expenditure-based funding of the past FCs needs to be amended. It may increase the discrepancy in the allocation of funds among the state as states with lower and higher expenditures generate asymmetrical distributions of funds (Government of India, 2019, p. 55). Therefore, in addition to the expenditure, FC-XV has introduced three criteria, that is, (a) area; (b) population; and (c) risk profile of every state for allocation of funds. It recommended that each area and population be given 15% weightage separately. However, in the case of north-east and Himalayan states, an additional 11% has been provided considering the requirement of infrastructure resilience due to their greater exposure to natural calamities. Disaster Risk Index (DRI) has been prepared considering two parameters: the probability of hazards striking states and the extent of vulnerability. Hazards connote potential risks of landslides, floods, earthquakes, drought and other such perils. Interestingly, hazards are convertible in disasters only when interacting with human communities. An event of hazard resulting in loss of lives, destruction of infrastructure and disruption of economic activities proves to be a disaster. Vulnerability refers to a group’s weak capacities to deal, recover or adequately respond to a potential man-made or natural hazard. Vulnerabilities denote the material and non-material parts as they include the loss of income and destruction of frail houses and community infrastructures like schools and hospitals. In addition, poor social support, geographical isolation and other physical and social vulnerabilities are also counted under vulnerabilities. FC-XV found that data on past disasters and their social and economic impacts are largely absent. Therefore, in the absence of a disaster database at the national level, it has utilised national hazard zonation and risk exposure maps to assign different scores to the states based on their hazard profile.

According to FC-XV, hazards lead to disasters. Hence, hazards are assigned a higher score of 70% out of 100, and 30% weightage is given to the vulnerabilities. FC-XV also maintained that a hazard has a bigger impact area in terms of disrupting people, their economic activities and existing infrastructure. For this reason, India initiated the Coalition of Disaster Resilience Infrastructure (CDRI) in 2018 (Sinha, 2021). Its primary objective is to minimise economic loss by protecting developing countries’ existing and upcoming infrastructure. FC-XV also assigned a lower score to vulnerabilities because area and population are also included as essential indicators for calculating the state’s share in disaster risk funding.

FC-XV has opted for four major hazards, namely floods, drought, cyclones and earthquakes. FC-XV, considering the probability of hazard in the states, assigned three levels of scoring high (15 points), medium (10 points) and low (5 points). These four hazards constitute 60 points. FC-XV also considered that different states suffer from a variety of beyond computable hazards. Hence, all states have been assigned a score of 10 points, making hazard a 70-point indicator. Location and past experiences of the states are also considered for assigning scores in hazard risk vulnerabilities.

The score for flood hazard was based on two sets of data: (a) Rashtriya Barh Ayog’s estimate of the flood-prone area in India and (b) states’ report on flood-prone area submitted to the Eleventh Five-Year Plan Working Group. FC-XV made three categories: (a) states having more than 20% flood-prone areas are given 15 points; (b) states with 10–20% flood-prone areas are given 10 points; and (c) rest of the states are given 5 points. Arunachal Pradesh, based on locations, and Tamil Nadu and Uttarakhand, based on their past experience, are assigned 15 points though all have less than 20% flood-prone areas.

For the data on the drought map, FC-XV relied on the Ministry of Agriculture and Farmers Welfare. The data were collected for the period from 2000 to 2015. India as a whole has been divided into three drought zones (a) chronically drought-prone areas and states falling under this zone were assigned a score of 15 points; (b) drought-prone areas and states covered under this zone were assigned 10 points; and (c) the rest of the states were assigned 5 points. Interestingly, FC-XV noted that many states such as Andhra Pradesh, Bihar, Odisha, Gujarat and Uttar Pradesh are falling into the high-risk hazard zones of the flood as well as drought. Some parts of these states fall into the flood-prone areas, and some other regions are marked by chronically drought-prone zones. FC-XV also noted that the rainfall pattern is also changing due to climate change and the incidence of drought and flood in close geographical locations is a matter of concern. The climate change-induced pattern of hazards needs to be monitored regularly to tap the changes in the existing geographical hazard locations.

Cyclone is linked to the coastal states mostly. Therefore, states exposed to very high cyclone-prone hazards such as Andhra Pradesh, Odisha and West Bengal are assigned 15 points. States having high cyclone-prone districts such as Tamil Nadu, Kerala and Gujarat are assigned 10 points. Finally, Karnataka, Goa and Maharashtra, having a moderate risk of the cyclone, are assigned 5 points. FC-XV also noted that cyclones on the east coast are becoming more frequent and furious because of climate change; therefore, a periodic review of states exposed to cyclone hazards must be undertaken.

India is divided into five zones from high to low risk of earthquake hazards. FC-XV considered the data provided by the Bureau of Indian Standard to locate the risk zone of earthquake hazards in states. FC-XV found that entire north-eastern and Himalayan states, along with Bihar, Gujarat and Maharashtra, are highly prone to the earthquake. Therefore, 15 points are assigned to these states. States with moderate risk zone are assigned 10 points. Uttar Pradesh and West Bengal fall into this category. The remaining states falling into the low-risk category were assigned 5 points by the FC-XV.

On the other hand, the vulnerability score has been devised using the poverty line of the states in 2011–2012. Tendulkar Methodology was applied to decide this below the poverty line of the states. Tendulkar Committee was formed in 2005 by the Planning Commission to recommend methods to calculate the poverty line in India. It was set up under the chairmanship of Suresh Tendulkar. The Committee submitted its report in 2009. It recommended many departures from the past calculation of the poverty line. First, earlier poverty line was based on the intake of calories, but the Tendulkar Committee recommended considering nutritional items such as consumption of vegetables, non-vegetarian food, cereals, dry fruits and fruits. The Committee also denounced the earlier practice of different poverty line baskets for rural and urban populations. The Committee recommended using a uniform poverty line basket for calculating urban and rural populations (Panagariya & Mukim, 2014, pp. 1–52). For all these reasons, FC-XV found Tendulkar Committee the most suitable for deciding the poverty line in each state. Based on the Tendulkar Committee methods, states with below 13% poverty are assigned 10 points; states with poverty between 13 and 26% are assigned 20 points and states with more than 26% poverty are allocated 30 points (Government of India, 2019, p. 236).

Methodology for Allocation under State Disaster Response Fund

FC-XV has adopted three criteria for allocation under SDRF. First, considering the past practices, it has assigned 70% weightage to the states’ past expenditure, that is, AE₇₀. Second, it also allocated 15% weightage to each population (P₁₅) and area (A₁₅) of the respective state. FC-XV has selected Maharashtra as an ideal state for calculating the unit value of the population. It is done for three reasons (a) Maharashtra has received the maximum share of SDRF from 2015 to 2020; (b) Maharashtra has a moderate population and area and (c) it is also exposed to many hazards. First, the score of past expenditure, area and population size is calculated (i.e., W = AE₇₀ + A₁₅ + P₁₅). After that, this value of W is multiplied by the DRI of each state to get the value of Y (i.e., Y = W*DRI). This is followed by integrating this product, that is, Y with W, which leads to the final score Z, calculated as (Z = Y + W). This final product Z is the base value of a state. This base value is finally calculated with the standard practice of considering 5% inflation (ibid., p. 311). A state-wise score of disaster risk index is given in Table 2.

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Table 2.

State-wise Disaster Risk Index Scores 2021–2025

Sl. No.	Name of State	Flood	Drought	Cyclone	Earthquake	Others	Total Score Out of 70	Poverty Points Out of 30	Total Score Out of 100	Points
A	B	C	D	E	F	G	H	I	H + I	H + I/100
1	Andhra Pradesh	10	15	15	5	10	55	10	65	0.650
2	Arunachal Pradesh	15			15	10	40	30	70	0.700
3	Assam	15			15	10	40	30	70	0.700
4	Bihar	15	10		15	10	50	30	80	0.800
5	Chhattisgarh	5	5		5	10	25	30	55	0.550
6	Goa	5		5	5	10	25	10	35	0.350
7	Gujarat	10	15	10	15	10	60	20	80	0.800
8	Haryana	15	5		5	10	35	10	45	0.450
9	Himachal Pradesh	5	5		15	10	35	10	45	0.450
10	Jharkhand	5	10		5	10	30	30	60	0.600
11	Karnataka	5	15	5	5	10	40	20	60	0.600
12	Kerala	15	5	10	5	10	45	10	55	0.550
13	Madhya Pradesh	5	10		5	10	30	30	60	0.600
14	Maharashtra	5	15	5	15	10	50	20	70	0.700
15	Manipur	5			15	10	30	30	60	0.600
16	Meghalaya	5			15	10	30	10	40	0.400
17	Mizoram	5			15	10	30	20	50	0.500
18	Nagaland	5			15	10	30	20	50	0.500
19	Odisha	15	15	15	5	10	60	30	90	0.900
20	Punjab	15	5		5	10	35	10	45	0.450
21	Rajasthan	5	15		5	10	35	20	55	0.550
22	Sikkim	5			15	10	30	10	40	0.400
23	Tamil Nadu	10	10	10	5	10	45	10	55	0.550
24	Telangana	5	15		5	10	35	10	45	0.450
25	Tripura	15			15	10	40	20	60	0.600
26	Uttar Pradesh	15	10		10	10	45	30	75	0.750
27	Uttarakhand	15			15	10	40	10	50	0.500
28	West Bengal	15	5	15	10	10	55	20	75	0.750

Source: Report of Fifteenth Finance Commission for 2021–2026.

This new methodology of calculating states’ share of disaster funds breaks away from past practices and indicates a paradigm shift. Funding is an essential tool for disaster management and handling. Funding has to be based on empirical factors strengthening states’ efforts to implement mitigation, relief and reconstruction robustly. Earlier FCs considered the sole criteria of past expenditure for allocating states’ share in disaster funds. However, this was not adequate as many states having a higher risk of hazard vulnerabilities and poor economic capacities were finding it difficult to match their financial resources with events of disasters. States have raised this concern before many FCs, and MHA and NDMA also supported it. The above-mentioned analysis shows that FC-XV has attempted to integrate the capacities and vulnerabilities of states while calculating allocations for disaster risk funds. Though FC-XV did not leave the past expenditure criteria, it is still clubbed with the area and population of the states and, most importantly, states’ exposures to hazards and their economic vulnerability to respond to disasters. This methodology tries to match a state’s allocation to its exposure to hazards, capabilities and vulnerabilities. It is evident that in the DRI, states like Odisha scored 90 out of 100, and West Bengal scored 75. On the other hand, states having less population and geographical area like Goa received a score of 35. Chhattisgarh having a low score on its hazard exposure received a score of 25, while Haryana scored 35. However, in terms of vulnerability, while Haryana scored 10 points, Chhattisgarh scored 30 points. Overall, Chhattisgarh scored 55 points, while Haryana received a score of only 45 points. This score multiplied by a combination of past expenditure, population and the area provides a more scientific and rational allocation of funds to states (Table 2).

Comparing the State Disaster Response Fund (SDRF) of FC-XIV and FC-XV, there is around a three to five times increase in state allocations. This indicates a paradigm shift as the earlier single-factored approach of expenditure is cut down in size, and other factors of the area, population, exposure to hazards and vulnerability of states are recognised and produced a significant result and rise in the quantum of SDRF grant in comparison to the previous term.

The recent application and exercise of disaster risk funding suggest that the union government during 2021–2022 has released ₹17,747.20 crores, that is, its contribution to SDRF. In addition to this, the union government has also released ₹4,645.92 crores from National Disaster Response Fund (NDRF) to eight states that suffered from acute floods and cyclones. The union government handed over ₹1,000 crores to Gujarat to handle the crisis of Tauktae and also handed out ₹300 crores to West Bengal in the wake of Cyclone Yaas. Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Odisha and Tamil Nadu received ₹200 crores, ₹1,130.91 crores, ₹600.50 crores, ₹710 crores, ₹500 crores and ₹213.51 crores, respectively, to deal with excessive floods and landslides caused by rains during the monsoon season.

India, as a federal country, is governed by the principle of shared governance. In federal governance, the extent of autonomy is determined on the basis of the availability of two rights, namely Right to Decide and Right to Act. While the former denotes to decisional legislative autonomy, the later mentions the administrative executive competence to implement decisions. In the present scenario, the right to decide, that is, methodology and quantum of SDRF, rests with the union government, while the right to execute these funds largely remains in the jurisdiction of the state. Disaster risk funding allows the federal government to take decisions, while its implementation rests with the states (Braun, 2000, p. 30). While in the case of State Disaster Risk Management Fund (SDRMF), the right to act is exercised by the state governments, FC-XV brought out a new mechanism for allocation of SDRMF, and the states got a respectable increase in their funds. States enjoy autonomy in execution methods as, besides broader guidelines, states may decide how and where to use the available fund. The union government has no role in the internal decisions of states. Therefore, each state has its wits and priorities to utilise the fund available in the SDRMF.

Conclusion

Disaster risk financing has been a permanent feature since second finance commission. Initially, it was based on past expenditure of the states. It was justified initially, as state-specific data were not available for such calculations. However, now India has a history of 70 years of state-specific hazard vulnerability profiles, which NDMA prepares as the nodal and apex agency of disaster management in India. Still, till FC-XIV, allocation of the SDRF was based on past expenditure, which is highly objected to by states having high disaster risk vulnerability profiles. Other stakeholders like the MHA and NDMA also acknowledged this. This long-standing demand was addressed by FC-XV, which, along with expenditure, attempted to include two other indicators, namely the probability of hazard and vulnerability profile of a state. However, the FC-XV has just laid down a founding stone and initiated a way for future FCs to totally do away with expenditure-based funding and entirely base it on state-specific hazard profiles and vulnerability scales to cope with possible hazards.