Exploring Disaster Mitigation in India: A Financial Viewpoint

Abstract

Disaster management is a multidimensional and multistage process. It broadly includes preparedness, rescue, relief rehabilitation and mitigation. Disaster mitigation is an integral part of disaster management. In fact, it is an act of pre disaster stage. It involves the material and social activities to convert disaster-prone areas into disaster resilient one. Disaster mitigation requires proper vulnerability mapping and funds to carry out disaster specific mitigative activities. It is for this reason that Disaster management Act 2005 provides for creation of Disaster Mitigation Funds at national, state and district levels. Irrespective of the consistent demands from states various finance commissions did not recognizing mitigation as an integral part of disaster risk funding as mitigation was left up to the centrally sponsored schemes. However, this task was performed by 15th Finance Commission by creating and allocating the disaster mitigation funds. The FC-XV replaced the earlier expenditure based allocation of funds and devised a new formula based on physical and socio-economic factors like vulnerability of a state to selected disasters like flood and drought and its ratio of poverty. It is under this background that the present research article makes a modest attempt to explore the financial perspective of disaster mitigation in India. Methodologically speaking this paper applies qualitative and qualitative research tools. It is analytical and descriptive in approach and exploratory in its findings. Major part of the present research is based on the primary sources like reports and acts of government of India and texts of international agreements. In addition, it also includes secondary sources like books and journals.

Keywords

Disaster mitigation India finance commission disaster management disaster mitigation fund and disaster management act 2005

Disaster Mitigation in India: Concept and Legal Mapping

Disaster mitigation should be understood as a set of activities which are scientifically prepared to address the disaster vulnerability of a disaster-prone area. In fact, it enhances the disaster resilience of the targeted area. Disaster Management Act, 2005 defines disaster mitigation as measures aimed at reducing the risk, impact or effects of a disaster or threatening disaster situation (Government of India, 2005, p. 2). National Plan on Disaster Management, 2016 explains mitigation as “the lessening or limitation of the adverse impacts of hazards and related disasters” (Government of India, 2016, p. 8). United Nations Office of Disaster Risk Reduction (UNISDR) prefers to use disaster risk reduction in place of mitigation. UNISDR defines disaster risk reduction as preventing new and reducing existing disaster risk and managing residual risk, all of which contribute to strengthening resilience and therefore to the achievement of sustainable development (United Nations, 2009, p. 16). In fact, third UN World Conference in Sendai, Japan i.e., popularly known as Sendai Framework of Disaster Risk Reduction 2015–2030, primarily aims at mitigative efforts. It provides an international outlook for nations to collaborate and coordinate their activities for disaster risk reduction.

Mitigation is an integral part of disaster management. Disaster management has evolved in India as an area of governance from 1999 which marked the constitution of High-Powered Committee (HPC) on disaster management. The recommendations of the HPC have laid the enactment of Disaster Management Act 2005. This act provides a comprehensive framework of disaster management in India. It provides the establishment of National Disaster Management Authority (NDMA) and National Executive Council (NEC) as its executive body. It duly acknowledges the importance of mitigation activities. It defines disaster management as a multidimensional function and mitigation is its important component. It provides that “disaster management” is a continuous and integrated process of planning, organizing, coordinating and implementing measures which are necessary or expedient for the following:

Prevention of danger or threat of any disaster;

Mitigation or reduction of risk of any disaster or its severity or consequences;

Capacity-building;

Preparedness to deal with any disaster;

Prompt response to any threatening disaster situation or disaster;

Assessing the severity or magnitude of effects of any disaster; and

Evacuation, rescue and relief.

Disaster management has three financing cycles i.e., mitigation, relief and reconstruction. Mitigation involves pre disaster activities like creation of embankment, retrofitting existing infrastructure according to disaster vulnerability e.g., installing early warning system and improving drainage system for preventing inundation. Relief work involves pre disaster and post disaster assistance in form of evacuation, food and shelters, health facilities and compensation for loss etc. Reconstruction is the post disaster financing activities it involves the reconstructing the public infrastructure like school, hospitals and other community infrastructure. However, mitigation requires scientific vulnerability study followed by proposed measure to enhance resilience of disaster-prone areas. Therefore, action plan for disaster mitigation is followed by financial arrangements. In fact, without proper financing mechanisms mitigation remain non-functional. This article for the purpose of critical understanding of financial mechanisms of disaster mitigation in India is divided into three major parts namely (a) Locating disaster financing in India: Analysis from second to thirteenth finance commission; (b) Disaster Management Act 2005 and disaster financing; and (c) A paradigm shift: XV Finance commission and disaster mitigation.

Locating Disaster Financing in India: Analysis from Second to Thirteenth Finance Commission

Disaster management as a concept has formalized in recent years with the enactment of Disaster Management Act, 2005. Prior to the Act disaster management was covered under different entries of seventh schedule like public health, flood, and so on. 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” (Ministry of Agriculture, Government of India, 2001, p. 5).

Disaster financing is an integral part of disaster management. It is redistributive part of federal finance mechanism of Indian federalism (Rao, 2015, p. 62). This fact was well acknowledged by The Second Finance Commission (1957–1962). While, calculating states expenditure for its recommendation period, FC-II has included a margin in annual revenue of a state, enabling states to have a sizeable amount which could be used if any natural calamity occurs. FC-II has recommended all states to set up separate funds and deposit the amount calculated for each state in this fund annually. This way FC-II has created “Money Margin Scheme” for disaster relief (Reddy & Reddy, 2018 p. 124). It seemed to be a workable scheme for disaster financing as from third to ninth Finance Commissions had recommended for the continuation of scheme with minor changes. This Scheme was also contributed by the center. It provided grant and loan in form of central assistance. If state exceeded its margin fund for the purpose of natural calamities center contributed additional share in state’s fund. Centre, in case of natural calamity, provided 75 percent of expenditure. However, out of complete central assistance 67 percent was contributed as loan and 33 percent as grant. While the rest 25 percent of the expenditure had to be arranged by the state government from its own resources or as loans from third parties (Kamepalli, 2019, pp. 20-22).

Ninth Finance Commission, on the basis of its assessment of Money margin scheme has recommended for a new arrangement for financing relief expenditure. This new arrangement is known as Calamity Relief Fund (CRF). It is designed in a way so that state government 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 states may withdraw and use the fund as and when it suits them. Ninth Finance Commission recommended that ₹804 crores should be available each year to all states taken combined relief in case if natural calamities occur. In context of center’s contribution in calamity Relief Fund, Ninth Finance Commission recommended that center required to contributes 75 percent, that is, 603 crores to CRF each year of the five-year period of Ninth Finance Commission (Government of India, 1989, pp. 43-48).

Tenth Finance Commission has dealt with the issue of calamity of rare severity without giving a clear definition of it. However, commission maintained that calamity of “rare severity” need to be adjusted on case-to-case basis by taking following points in to account.

The intensity and magnitude of the calamity;

Level of relief assistance required;

The capability of the state to tackle the calamity; and

The alternative and flexibility available with the plans to provide relief and grant.

Further, FC-X stated that once a calamity has been categorized as rare severity it needs to be dealt as a national calamity in which case assistance would be provided beyond CRF and additional assistance would be provided by center itself. The commission recommended that apart from CRFs for states, a national fund for calamity relief (NFCR) should be created and it should be managed by a National Calamity Relief Committee in which both states and center would be represented (Government of India, 1995, pp. 42–43).

Eleventh Finance commission felt that fund allotted in NFCR was insufficient to meet the demand of calamities of rare severity. FC-XI had recommended for abolition of NFCR and establishment of National Climate Continency Fund (NCCF) with an initial corpus of ₹500 crore which was to be funded from levy of a special surcharge on union taxes. Twelfth finance commission continued CRF and NCCF with enlarging the list of calamities covered under these schemes (Bhaskar & Kelkar, 2019 pp. 39-47).

Figure 1.

Source: Data Collected From 2nd to 12th Finance Commissions, 1957-2010.

Disaster Management Act 2005 and Disaster Financing

Disaster management act was enacted in 2005 and FC-XII had to give its recommendation for 2005–2010. However, disaster management act was not part of its terms of reference. Para 10 of terms of reference provides that:

the Commission may review the present arrangements as regards financing of Disaster Management with reference to the National Calamity Contingency Fund and the Calamity Relief Fund and make appropriate recommendations thereon.

FC-XII did not introduce major changes in existing schemes of CRF and NCCF and continued it without any change. It has enhanced the corpus of CRF to ₹21,333.33 crore and kept an amount of ₹500 crores for NCCF (Government of India, 2004, p. 170). Para 8 of terms of reference of FC-XIII provided “review the present arrangements as regards financing of disaster management with reference to the National Calamity Contingency Fund and the Calamity Relief Fund and the funds envisaged in the Disaster Management Act, 2005” (Government of India, 2010, p. 13). Section 43 of DMA provides for creation of National Disaster Mitigation Fund (NDMF). It provides that central government shall create a dedicated fund for mitigation and provides its channel for funding by act of Parliament. This fund shall be applied by NDMA. Section 48 provides the establishment of disaster related funds by State government. State Disaster Mitigation Fund (SDMF) and District Disaster Mitigation Funds (DDMF) are important component of these funds. DMA provides that these funds shall be respectively operated by state and district authorities.

FC-XIII recommended a merger of the CRF with the State Disaster Response Fund (SDRF) of the respective states and contribution for SDRF should be 75:25 between Union and State for normal states and 90:10 for special category states. It declared an amount of ₹33,581 crores for SDRF. FC-XIII also considered State Disaster Mitigation Fund under DMA, 2005 and it maintained that “mitigation and reconstruction activities to be kept out of the schemes funded through FC grants and be met out of overall development plan funds of the centre and the states” (Government of India, 2010, p. 202). Interestingly, FC-XII has recommended a grant of ₹525 funds for Capacity Building which is unprecedented to its previous finance commissions. This grant was not given under the head of mitigation, but the overall purpose of the grant was to enhance the capacity of the state to mitigate disaster in form of training, education, creating community infrastructure, and so on.

Table 1.

Grant for Capacity Building for 2010–2015.

S. No.	States	2010–2011	2011–2012	2012–2013	2013–2014	2014–2015	Total 2010–2015
1	Andhra Pradesh	6.00	6.00	6.00	6.00	6.00	30.00
2	Arunachal Pradesh	1.00	1.00	1.00	1.00	1.00	5.00
3	Assam	5.00	5.00	5.00	5.00	5.00	25.00
4	Bihar	5.00	5.00	5.00	5.00	5.00	25.00
5	Chhattisgarh	4.00	4.00	4.00	4.00	4.00	20.00
6	Goa	1.00	1.00	1.00	1.00	1.00	5.00
7	Gujarat	6.00	6.00	6.00	6.00	6.00	30.00
8	Haryana	5.00	5.00	5.00	5.00	5.00	25.00
9	Himachal Pradesh	4.00	4.00	4.00	4.00	4.00	20.00
10	Jammu & Kashmir	4.00	4.00	4.00	4.00	4.00	20.00
11	Jharkhand	5.00	5.00	5.00	5.00	5.00	25.00
12	Karnataka	4.00	4.00	4.00	4.00	4.00	20.00
13	Kerala	4.00	4.00	4.00	4.00	4.00	20.00
14	Madhya Pradesh	5.00	5.00	5.00	5.00	5.00	25.00
15	Maharashtra	5.00	5.00	5.00	5.00	5.00	25.00
16	Manipur	1.00	1.00	1.00	1.00	1.00	5.00
17	Meghalaya	1.00	1.00	1.00	1.00	1.00	5.00
18	Mizoram	1.00	1.00	1.00	1.00	1.00	5.00
19	Nagaland	1.00	1.00	1.00	1.00	1.00	5.00
20	Orissa	5.00	5.00	5.00	5.00	5.00	25.00
21	Punjab	5.00	5.00	5.00	5.00	5.00	25.00
22	Rajasthan	6.00	6.00	6.00	6.00	6.00	30.00
23	Sikkim	1.00	1.00	1.00	1.00	1.00	5.00
24	Tamil Nadu	5.00	5.00	5.00	5.00	5.00	25.00
25	Tripura	1.00	1.00	1.00	1.00	1.00	5.00
26	Uttar Pradesh	5.00	5.00	5.00	5.00	5.00	25.00
27	Uttarakhand	4.00	4.00	4.00	4.00	4.00	20.00
28	West Bengal	5.00	5.00	5.00	5.00	5.00	25.00
Total		105.00	105.00	105.00	105.00	105.00	525.00

Source: Government of India (2010). Report of 12th Finance Commission, 2005-2010.

FC-XIV interacted with different stakeholders on the issue of mitigation funding. MHA informed FC-XIV that no final decision has been taken on establishment of mitigation funds at national and state level. However, NDMA has strongly requested FC-XIV to constitute mitigation funds as mandated by Disaster Management Act, 2005. The Ministry of Finance has informed FC-XIV that it has issued guidelines under flexi-funds in which states are allowed to utilize 10 percent funds out of centrally sponsored scheme like MNREGA for the purpose of mitigation. Apart from these financial sources Chief Minister’s Fund is another important source for funding for disaster mitigation. This is a non-plan outlay.

The FC-XIV acknowledged that its term of reference was to review the present arrangement of financing disaster management. Therefore, FC-XIV gave its recommendations for NDRF, SDRFs and DDRFs as these funds were already constituted. However, National Disaster Mitigation Fund (NDMF), State Disaster Mitigation Fund (SDMF) and District Disaster Mitigation Fund (DDMF) were yet to be constituted therefore, these were out of the preview of commission (Government of India, 2015, pp. 127-132). Therefore, disaster mitigation funds were also ruled out as these funds were not created at national and state levels.

A Paradigm Shift: XV Finance Commission and Disaster Mitigation

FC-XV has analysed the existing disaster risk financing and found that disaster financing is oriented towards the response and relief, and it lack to address the wider approach of adaptation, mitigation, preparedness, recovery and reconstruction. FC-XV has noted that FC-XIII had taken an innovative step by constituting Capacity Building Fund. Though it was not mitigation fund as per DMA still it provided fund to state governments for preparedness. Unfortunately, this scheme was discontinued by the FC-XIV. Besides, FC-XIV has not recommended for mitigation funds. It suggested various measures for carrying out mitigation functions like forming a larger partnership among state, district and private players for constant funding of mitigation activities.

It was in 2016 that Supreme court of India in Swaraj Abhiyan vs. Union of India and others has ordered that

Section 47 of the DM Act provides for the constitution of a National Disaster Mitigation Fund for projects exclusively for the purposes of mitigation which, as mentioned earlier, means measures aimed at reducing, inter alia, the risk of a disaster or threatening disaster situation. Although, the DM Act has been in force for more than 10 years, the National Disaster Mitigation Fund has not yet been constituted. There is, therefore, no provision for the mitigation of a disaster…. Risk assessment and risk management also appear to have little or no priority as far as the Union of India and the State Governments are concerned…a National Disaster Mitigation Fund is required to be established. Unfortunately, no such Fund has been constituted till date. Accordingly, we direct the Union of India to establish a National Disaster Mitigation Fund within a period of three months from today. (Supreme Court of India, 2016)

FC-XV has also received views of states and ministries and institutions of union government regarding creation of mitigation funds. States maintained that mitigation has emerged as an important component of disaster management and states are engaged in disaster risk reducing activities by their own, but these funds are insufficient. Therefore, states demanded that union government should urgently provide a dedicated funding for mitigation. NDMA for a long time has been advocating for setting up of NDMF and SDMF so that risk reduction measures are effectively implemented on the ground. Ministry of Finance (MoF) has also supported the establishment of NDMF so that disaster preparedness may be well planned in advance. National Institute of Disaster Management (NIDM) has also suggested that a separate window of funding is required to accomplish capacity building, research and development and spreading awareness. FC-XV sought inputs from expert group therefore, it commissioned a study under the United Nations Development Program (UNDP) with collaboration of NDMA for important policy suggestions. This study maintained that preparedness should be visible in measurable outcomes and funds should be utilized with greater accountability. FC-XV maintained that in public finance disasters are looked upon as “contingent liability.” Contingent liability is known as liability which may arise out of unforeseen probable event. Government, in case of disaster, initiates its obligation when potential but unexpected event takes place. In this manner contingent liabilities only meets the post disasters requirement but not able to reduce them. Therefore, FC-XV was in favour of creating mitigating fund so that potential disasters may be avoided up to a certain level. FC-XV maintained that mitigation can be understood as “lessening or minimising of the adverse impacts of a hazardous event.” Mitigation has both structural and non-structural measures. Structural mitigation involves two types of activities: (a) large projects like coastal walls and river embankment to control flood; and (b) small community-based interventions to reduce the potential of disasters to a certain extent. FC-XV was of the view that large scale mitigation intervention should be accomplished by regular development plans and not by mitigation fund. FC-XV stated “We are of the view that the mitigation fund created should be used for those local level and community-based interventions which reduce risks and promote environment-friendly settlements and livelihood practices” (Government of India, 2019, p. 235). Commission has focused an approach to address potential hazards with community level soft measures funded by mitigation fund.

It is under these background that FC-XV has recommended for setting up of National Disaster Mitigation Fund (NDMF) at national level and State Disaster Mitigation Fund (SDMF) at state level. FC-XV has created a hybrid model of fund addressing both response and mitigation of disaster. In place of creating two different funds for mitigation and response it recommended for inclusion of mitigation fund in already existing schemes of National Disaster Response Fund (NDRF) and State Disaster Response Fund (SDRF). The new conversed schemes shall be known as National Disaster Response and Mitigation Fund (NDRMF) and State Disaster Response and Mitigation Fund (SDRMF).

FC-XV, for 2021–2026, has recommended allocation of ₹68,463 crores for NDRMF and ₹160,153 crores for SDRMF. It provided that 20 percent of the allocated fund should be utilized for the mitigation purpose and rest of the 80 percent for disaster response. (Government of India, 2020, pp. 238–239). It maintained that earlier National Disaster Response Fund (NDRF) was funded by National Calamity Contingency Duty (NCCD) as most of the commodities are covered under Goods and Services Tax (GST) as a result NCCD shall not be adequate to fund NDRF (Bhaskar & Kelkar, 2019 pp. 39-47). Therefore, FC-XV recommended for “annual budgetary provision for NDRF.” FC-XV also provided that to check unnecessary and inflated demands from the state it is provisioned that central assistance via NDRF and NDMF should be allocated on a cost-sharing basis. It recommended that for initial ₹250 crores state should contribute 10 percent, for the assistance of ₹500 crores states need to contribute 20 percent and 25 percent if assistance exceed from ₹500 crores. FC-XV also provided that if funding pool of SDRMF and NDRMF falls short of required assistance central and state governments should locate other sources of funding like reconstruction board, corporate social responsibility and crowdfunding.

Table 2.

Union’s Share in State Disaster Response and Mitigation Fund (SDRMF/SDMF) for States: 2021–2026 (₹ Crore).

Union’s Share
S. No	Name of State	2021–2022		2022–2023		2023–2024		2024–2025		2025–2026		Total
S. No	Name of State	SDRMF	SDMF	SDRMF	SDMF	SDRMF	SDMF	SDRMF	SDMF	SDRMF	SDMF	SDRMF	SDMF
1	Andhra Pradesh	1,119	223.8	1,175	235	1,234	246.8	1,295	259	1,360	272	6,183	1236.6
2	Arunachal Pradesh	250	50	263	52.6	276	55.2	289	57.8	304	60.8	1,382	276.4
3	Assam	772	154.4	811	162.2	851	170.2	895	179	939	187.8	4,268	853.6
4	Bihar	1,416	283.2	1,487	297.4	1,561	312.2	1,639	327.8	1,721	344.2	7,824	1564.8
5	Chhattisgarh	432	86.4	454	90.8	476	95.2	500	100	525	105	2,387	477.4
6	Goa	12	2.4	12	2.4	12	2.4	13	2.6	14	2.8	63	12.6
7	Gujarat	1,324	264.8	1,390	278	1,460	292	1,533	306.6	1,609	321.8	7,316	1463.2
8	Haryana	491	98.2	516	103.2	542	108.4	569	113.8	597	119.4	2,715	543
9	Himachal Pradesh	409	81.8	428	85.6	451	90.2	473	94.6	497	99.4	2,258	451.6
10	Jharkhand	568	113.6	596	119.2	626	125.2	658	131.6	690	138	3,138	627.6
11	Karnataka	791	158.2	830	166	872	174.4	915	183	961	192.2	4,369	873.8
12	Kerala	314	62.8	330	66	347	69.4	364	72.8	383	76.6	1,738	347.6
13	Madhya Pradesh	1,820	364	1,911	382.2	2,007	401.4	2,108	421.6	2,213	442.6	10,059	2011.8
14	Maharashtra	3,222	644.4	3,383	676.6	3,552	710.4	3,730	746	3,916	783.2	17,803	3560.6
15	Manipur	42	8.4	44	8.8	47	9.4	50	10	51	10.2	234	46.8
16	Meghalaya	66	13.2	68	13.6	73	14.6	76	15.2	80	16	363	72.6
17	Mizoram	47	9.4	49	9.8	52	10.4	54	10.8	57	11.4	259	51.8
18	Nagaland	41	8.2	43	8.6	46	9.2	48	9.6	50	10	228	45.6
19	Odisha	1,604	320.8	1,685	337	1,769	353.8	1,857	371.4	1,950	390	8,865	1,773
20	Punjab	495	99	520	104	546	109.2	573	114.6	602	120.4	2,736	547.2
21	Rajasthan	1,481	296.2	1,556	311.2	1,634	326.8	1,715	343	1,800	360	8,186	1637.2
22	Sikkim	50	10	53	10.6	56	11.2	59	11.8	61	12.2	279	55.8
23	Tamil Nadu	1,020	204	1,071	214.2	1,125	225	1,181	236.2	1,240	248	5,637	1127.4
24	Telangana	449	89.8	472	94.4	495	99	521	104.2	546	109.2	2,483	496.6
25	Tripura	68	13.6	71	14.2	76	15.2	79	15.8	84	16.8	378	75.6
26	Uttar Pradesh	1,933	386.6	2,030	406	2,132	426.4	2,239	447.8	2,351	470.2	10,685	2,137
27	Uttarakhand	937	187.4	984	196.8	1,033	206.6	1,085	217	1,139	227.8	5,178	1035.6
28	West Bengal	1,011	202.2	1,062	212.4	1,115	223	1,170	234	1,229	245.8	5,587	1117.4
29	Total	22,184	4436.8	23,294	4658.8	24,466	4893.2	25,688	5137.6	1,222,601	244520.2	122,601	24520.2

Source: Report of the 15th Finance Commission, 2021–2026 and calculation of SDMF.

The NDRMF and SDRMF shall be divided in a manner where 80 percent shall be utilized for response and rest 20 percent for mitigation. FC-XV specifically explained that mitigation fund should be utilized for local and community level to lessen the hazard leading to environment friendly sustainable livelihood. The cost sharing for SDRF and SDMF shall be in ratio of 75:25 between Union and State governments. This shall be 90:10 in case of the North-East and Himalayan states. FC-XV has made a departure from earlier finance commission expenditure-based approach and recommended for state specific funding based on risk and vulnerability of the respective states.

Table 3.

State’s Share in State Disaster Response and Mitigation Fund (SDRMF) for States: 2021–2026 (₹ Crore).

State’s Share
S. No	Name of State	2021–2022		2022–2023		2023–2024		2024–2025		2025–2026		Total
S. No	Name of State	SDRMF	SDMF	SDRMF	SDMF	SDRMF	SDMF	SDRMF	SDMF	SDRMF	SDMF	SDRMF	SDMF
1	Andhra Pradesh	372	74.4	391	78.2	410	82	431	86.2	452	90.4	2,056	411.2
2	Arunachal Pradesh	28	5.6	29	5.8	31	6.2	32	6.4	34	6.8	154	30.8
3	Assam	86	17.2	90	18	95	19	99	19.8	104	20.8	474	94.8
4	Bihar	472	94.4	496	99.2	520	104	546	109.2	574	114.8	2,608	521.6
5	Chhattisgarh	144	28.8	151	30.2	159	31.8	167	33.4	175	35	796	159.2
6	Goa	3	0.6	4	0.8	4	0.8	4	0.8	5	1	20	4
7	Gujarat	441	88.2	463	92.6	486	97.2	511	102.2	536	107.2	2,437	487.4
8	Haryana	164	32.8	172	34.4	180	36	189	37.8	199	39.8	904	180.8
9	Himachal Pradesh	45	9	48	9.6	50	10	52	10.4	55	11	250	50
10	Jharkhand	189	37.8	198	39.6	208	41.6	219	43.8	230	46	1,044	208.8
11	Karnataka	263	52.6	277	55.4	290	58	305	61	320	64	1,455	291
12	Kerala	105	21	110	22	115	23	121	24.2	127	25.4	578	115.6
13	Madhya Pradesh	607	121.4	637	127.4	669	133.8	702	140.4	737	147.4	3,352	670.4
14	Maharashtra	1,074	214.8	1,128	225.6	1,184	236.8	1,243	248.6	1,305	261	5,934	1186.8
15	Manipur	5	1	5	1	5	1	5	1	6	1.2	26	5.2
16	Meghalaya	7	1.4	8	1.6	8	1.6	8	1.6	9	1.8	40	8
17	Mizoram	5	1	5	1	5	1	5	1	6	1.2	26	5.2
18	Nagaland	5	1	5	1	5	1	5	1	6	1.2	26	5.2
19	Odisha	535	107	561	112.2	589	117.8	619	123.8	650	130	2,954	590.8
20	Punjab	165	33	173	34.6	182	36.4	191	38.2	201	40.2	912	182.4
21	Rajasthan	494	98.8	518	103.6	544	108.8	571	114.2	600	120	2,727	545.4
22	Sikkim	6	1.2	6	1.2	6	1.2	6	1.2	7	1.4	31	6.2
23	Tamil Nadu	340	68	357	71.4	375	75	394	78.8	413	82.6	1,879	375.8
24	Telangana	150	30	157	31.4	165	33	173	34.6	182	36.4	827	165.4
25	Tripura	8	1.6	8	1.6	8	1.6	9	1.8	9	1.8	42	8.4
26	Uttar Pradesh	645	129	677	135.4	710	142	746	149.2	783	156.6	3,561	712.2
27	Uttarakhand	104	20.8	109	21.8	115	23	120	24	126	25.2	574	114.8
28	West Bengal	337	67.4	354	70.8	372	74.4	390	78	410	82	1,863	372.6
29	Total	6,799	1359.8	7,137	1427.4	7,491	1498.2	7,864	1572.8	8,261	1652.2	37,552	7510.4

Source: Report of the 15th Finance Commission, 2021-2026 and calculation of SDMF.

Disaster Risk Funding: An Amended Methodology

FC-XV has found that expenditure-based funding of the past FCs needs to be amended as it may increase the discrepancy in the allocation of funds amongst the states as states having lower and higher basis of expenditure generates asymmetrical allocations of funds (Government of India, 2019, p. 55). Therefore, FC-XV in addition to expenditure, has introduced three criterions, i.e., area, population and risk profile of every state for allocation of funds. It recommended that each area and population should be given 15 percent weightage separately. However, in case of the North-East and Himalayan states additional 11 percent 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 namely probability of hazards striking the states and the extent of vulnerability. Hazards embodies potential risks of landslides, flood, earthquake, drought and other such risks. Vulnerability refers to weak capacities of a group to deal, recover or properly responds to a potential manmade or natural hazard. However, FC-XV recognized its limitation of absence of disaster database at national level. Under such circumstances it utilized national hazard zonation and risk exposure maps to assign score for DRI. Considering hazards major indicators of disasters FC-XV has assigned 70 percent weightage out of 100 to potential hazards and 30 to vulnerability profile of the state. FC-XV has opted four major hazards namely floods, drought, cyclone and earthquake with three levels of scoring High (15 points), medium (10 points) and low (5 points). On the other hand, vulnerability score has been devised by using poverty line of each state in 2011–2012 applying Tendulkar Methodology. States with below 13 percent of poverty are given 10 points; states with poverty between 13–26 percent are given 20 points and states having more than 26 percent poverty are given 30 points (Government of India, 2020, p. 236).

Table 4.

State-wise Disaster Risk Index Scores 2021–2025.

S. 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 15th Finance Commission, 2021–2026.

Region-Specific Mitigation Funds

FC-XV has also recommended four sectoral and region-specific allocations of ₹5,950 crores out of National Disaster Mitigation Fund (NDMF) corpus of ₹13,693 for the period of 2021–2026. FC-XV has recognized the fact that some regional vulnerabilities like drought, urban flooding, seismic activities and landslides and soil erosion are persistent over the period of time. Commission was of the view that these regional vulnerabilities can be addressed effectively with long term projects of the government. However, FC-XV maintained that small community level interventions in form of mitigation may also provide good results and therefore, an area specific grant has been recommended under NDMF.

Table 5.

Earmarked Allocations Under NDMF.

S. No.	Funding Window	Earmarked Purpose	Total Allocations in crores (2021–2026)
1.	NDMF	Catalytic Assistance to Twelve Most Drought-prone States	1,200
2.	NDMF	Reducing the Risk of Urban Flooding in Seven Most Populous Cities	2,500
3.	NDMF	Managing Seismic and Landslide Risks in Ten Hill States	750
4.	NDMF	Mitigation Measures to prevent Erosion	1,500
Total			5,950

Source: Main report of the 15th Finance Commission, 2021–2026.

Catalytic Assistance to Twelve Most Drought-Prone States

FC-XV is of the view that drought is a silent killer and has multiple impacts. Many states of India like Andhra Pradesh, Maharashtra and Rajasthan are located in the low rainfall zone and small and marginal farmers are primarily dependent on rain. Therefore, poor rainfall resulting into draught affects the poor and marginal farmers the most. FC-XV recommended that large scheme of addressing drought is planned and executed by states and union governments do not have strong impact on the ground as these are implemented by various agencies. FC-XV has recommended to develop a “district-level drought mitigation plans” with objectives to focus area-specific farming systems, enhancing efficiency of water use, improvement in ground and surface water management and promotion of agri-forestry and use of solar energy. Commission has allocated ₹100 crores to most drought prone states.

Table 6.

Allocation of Funds for Drought Mitigation to Drought-Prone State.

S. No.	States	Total Allocations in Crore
1	Andhra Pradesh	100
2	Bihar	100
3	Gujarat	100
4	Jharkhand	100
5	Karnataka	100
6	Madhya Pradesh	100
7	Maharashtra	100
8	Odisha	100
9	Rajasthan	100
10	Tamil Nadu	100
11	Telangana	100
12	Uttar Pradesh	100
Total		1,200

Source: Main report of 15th Finance Commission, 2021-2026.

Reducing the Risk of Urban Flooding in Seven Most Populous Cities

States have brought the issue of urban flooding before the FC-XV. It recognized the fact that urban flooding disrupts the life and economic activities of cities. The commission emphasized that an integrative approach incorporating urban planning, ecological conservation and disaster management is required to address urban flooding. It also maintained that urban flooding cannot be managed by a single department rather coordinated actions of many agencies are required to mitigate urban flooding. On the basis of past incidents and size of five million plus population, FC-XV has identified seven metropolitan cities for targeted allocation to address urban flooding. These seven cities are further categorized in two groups. The first group includes cities of Mumbai, Chennai and Kolkata. FC-XV has allocated ₹100 crore per cities per annum to these cities for integrated flood management. Second group comprises of cities of Bengaluru, Hyderabad, Ahmadabad and Pune and FC-XV has allocated ₹50 crore per annum to these cities. However, these allocations are made on cost sharing basis in which 10 percent of the cost of resources shall be shared by the respective cities (Government of India, 2020, pp. 246–247).

Table 7.

Allocation of Funds to Seven Cities for Management of Urban Flooding.

S. No.	Cities	Annual Allocation	Total Allocation (2021–2026)
1	Mumbai	100	500
2	Chennai	100	500
3	Kolkata	100	500
4	Bengaluru	50	250
5	Hyderabad	50	250
6	Ahmedabad	50	250
7	Pune	50	250
Total		500	2,500

Source: Main report of 15th Finance Commission, 2021-2026.

Managing Seismic and Landslide Risks in 10 Hill States

FC-XV maintained that entire Himalayan region is under the risk of seismic activities and highly prone to landslides as well. The seismic map of India reveals that Himalayan states like Himachal Pradesh, Uttarakhand and all north-eastern states are covered in zone IV and V of seismic activities. The Himalayas are the youngest mountains of the world and are highly vulnerable from earthquakes. Besides seismic activities excessive rain, soil erosion, developmental activities, and flooding are also exposing and increasing the risk of landslides in the region. As a result, seismic activities and landslides cause loss of life, infrastructure and economic loss. FC-XV strongly believed that all the Himalayan states should prepare mitigative plans for landslides and earthquakes in the region. Therefore, FC-XV recommended ₹250 crores for Himachal Pradesh and Uttarakhand at the rate ₹50 crore per annum. Further, it has allocated ₹250 crores for entire north-eastern states. It also provided that allocation for north-eastern states may be increased if this sum is utilized and exhausted before five years.

Table 8.

Allocation of Funds for Seismic and Landslides Risk in the Himalayan Region.

S. No	States	Annual Allocation	Total Allocation (2021–2026)
1	Himachal Pradesh	50	250
2	Uttarakhand	50	250
3	All North-Eastern States		250
Total			750

Source: Main report of 15th Finance Commission, 2021-2026.

Mitigation Measures to Prevent Erosion

Mitigation measures to prevent erosion is covered under coastal and river erosion. FC-XV is convinced with the fact that coastal and river erosion are increasing year by year and mark many socio-economic imprints on the society. It is scientifically laid down in 2014 that 45 percent of India’s coastline is highly prone and suffering from erosion. Rivers are not exception to it and facing soil erosion. FC-XV has divided its recommendation for two different activities: (a) mitigation measures to prevent erosion. It shall be carried under National Disaster Mitigation Fund (NDMF); and (b) Resettlement of displaced people affected by erosion to be funded under National Disaster Response Fund (NDRF). FC-XV maintained that to prevent flood caused by river erosion major project is required to be undertaken at large scale and these cannot be funded by the Finance Commission. However, a sum of ₹1,500 has been proposed for community level mitigation activities for the period of 2021–2026. This fund can be availed by states via applying to the ministry of home affairs and National Disaster Management Authority. This fund can be utilized with sharing of 10 percent cost of the overall allocated fund by the respective states.

Conclusion

Disaster mitigation is incomplete with a strong and uninterrupted channel of funding. Disaster financing in India in principle was covered under contingent liability. It was primarily oriented towards post disaster activities. Beginning from FC-II many successive FCs had devised different schemes like Money Margin Scheme, Calamity Relief Fund for states to manage the unseen disasters. Besides, a national fund like National Calamity Contingency Fund (NCCF) was also created to fund the calamity of rare severity. However, for mitigation FCs have not created a separate fund and it was believed that central sponsored schemes and central sector schemes are taking care of the mitigation and no need to create a different fund as it may cause duplicity of work. It was in Disaster Management Act, 2005 that mitigation fund was proposed with legal foundation at national, state and district levels. FCs formed after the advent of DMA, 2005 also did not pay attention towards the creation of mitigation funds for different reasons. DMA, 2005 was out of ambit of FC-XII (2005–2010). Interestingly, FC-XIII and FC-XIV maintained that their terms of reference mandate to review the existing schemes of disaster funding, mitigation fund as it does not appear in existing scheme of disaster funding, therefore, is not a part of their preview. Nevertheless, there was a constant demand from states to create a mitigation fund. It was also supported by NDMA and MHA. In addition to it, the Supreme Court of India in Swaraj Abhiyan vs Union of India and others has also ordered the union government for creation of national mitigation fund. It was because of all these strong inputs that FC-XV has recommended for creating mitigation fund at national and state levels. However, FC-XV has merged mitigation fund in already existing NDRF and SDRF. Presently there are two funds, that is, NDRMF and SDRMF. FC-XV has also accommodated the long-standing demands of states to switch expenditure-based funding into hazard and vulnerability-based funding. States like Uttarakhand, Bihar, West Bengal, Orissa and Gujarat because of greater hazard and vulnerability profile were not contended with expenditure-based funding. Therefore, incorporation of area, hazard and vulnerability profile of a state in funding mechanism is a welcome step and appreciated by the concerned parties. However, disaster database at national level is still under preparation and it is a collective duty of NDMA and Ministry of Home to complete it as soon as possible. It will further strengthen the disaster risk financing in India. FC-XV has also introduced some constructive reform in disaster risk financing as along with disaster response fund it has provided mitigation fund for community level funding to make sustainable livelihood of people. Disaster mitigation is required to be improved further by utilizing disaster database for allocation of funds to different states. Centre and states, while applying mitigation funds, should avoid a top-down approach and community participation must be ensured as specially mentioned by FC-XV. Civil societies and Panchayati Raj Institutions (PRIs) should be involved in planning and executions for a comprehensive and full proof mitigation in the hazard prone areas. Now states have prime responsibility to utilize the mitigation fund in decentralized manner and meet the local demands of community level mitigation activities.

Footnotes

Declaration of Conflicting Interests

Funding

The author received no financial support for the research, authorship and/or publication of this article.

References

Bhaskar

, & Kelkar

(2019). Financing disaster management: option for gst council and fifteenth finance commission. Economic Political and Weekly, 25, 39-47.

Government of India. (1995). Report of tenth finance commission-chapter 9 (1990–1995) . Ministry of Finance.

Government of India. (1989). Report of ninth finance commission (1990-1995). Ministry of Finance.

Government of India. (2004). Report of twelfth finance commission (2005–2010) . Ministry of Finance.

Government of India. (2005). Disaster Management Act . Ministry of Home Affairs.

Government of India. (2010). Report of thirteenth finance commission (2005–2010) . Ministry of Finance.

Government of India. (2015). Report of fourteenth finance commission (2015–2020) (Vol I). Ministry of Finance.

Government of India. (2016). National disaster management plan . National Disaster Management Authority.

Government of India. (2019). Report of fifteenth finance commission (2020–2021) . Ministry of Finance.

10.

Government of India. (2020). Report of fifteenth finance commission (2021–2026). Ministry of Finance.

11.

Kamepalli

L. B.

(2019). Disaster relief financing: a journey from margin money to state disaster response funds. Economic Political and Weekly, 54(16), 20-22.

12.

Ministry of Agriculture, Government of India. (2001). High-powered committee on disaster management . National Centre for Disaster Management.

13.

Rao

M. G.

(2015). Political economy of government finance in india. India Review, 14, 58-72.

14.

Reddy

Y.V.

Reddy

G.R.

(2018). Indian fiscal federalism . Oxford Publication.

15.

Supreme Court of India. (2016). Swaraj Abhiyan vs. Union of India . Writ Petition (Civil) No. 857 of 2015 .

16.

United Nations. (2009). 2009 UNISDR terminology on disaster risk reduction . United Nations Office for Disaster Risk Reduction.