Financial mechanism under Disaster Management Act, 2005

National Calamity Contingency Fund (NCCF) was renamed as National Disaster Response Fund (NDRF) under the provisions of the DM Act in 2005. The fund is defined under Section 46 of the DM Act, 2005. It is constituted under the Public Account of India under “reserve funds not bearing interest”.

• It is administered by the Central Government for meeting the expenditure for emergency response, relief and rehabilitation due to any disaster
• It supplements the State Disaster Response Fund (SDRF) if a disaster is of severe nature and adequate funds are not available in the SDRF
• It is financed through the levy of a Cess on certain items, chargeable to excise and customs duty, and approved annually through the Finance Bill
• Recently, The Central Government has allowed contributions from any person or institution in the National Disaster Response Fund (NDRF) as per Section 46(1)(b) of the Disaster Management (DM) Act, 2005
• Department of Agriculture and Cooperation monitors relief activities for calamities associated with drought, hailstorms, pest attacks and cold wave/frost while the rest of the natural calamities are monitored by the Ministry of Home Affairs (MHA)
• The National Disaster Response Fund is audited by the Comptroller and Auditor General (CAG)
• The main task of NDRF is to provide specialist response in case of disasters which broadly covers:
  • Assistance to civil authorities to distribute relief material
  • First medical response to victims
  • Capacity building
  • To conduct mock exercises in coordination with other stakeholders for well-coordinated response during disasters.
  • To train State Disaster Response Force (SDRF), community and NGO’S in disaster management.

State Disaster Response Fund

• Established under Section 48 (1) (a) of the DM Act, 2005, is the primary fund available with State Governments for responses to notified disasters.
• The Central Government gives 75% of SDRF share for general category States/UTs and 90% for special category States/UTs (NE States, Sikkim, Uttarakhand, Himachal Pradesh, Jammu and Kashmir).
• The annual Central contribution is released in two equal installments as per the recommendation of the Finance Commission.
• SDRF can be used only for meeting the expenditure for providing immediate relief to the disaster affected people.
• Local Disaster: A State Government may use up to 10% of the SDRF for providing immediate relief to the people affected by the natural disasters within the local context in the State and which are not included in the notified list of disasters of the Ministry of Home Affairs. It is subjected to the condition that the State Government has listed the State specific natural disasters and notified clear and transparent norms and guidelines for such disasters with the approval of the State Authority, i.e., the State Executive Authority (SEC).

Finance Commission recommendations on Disaster Management

• The 15th FC recommended for establishing National & State Disaster Management Funds (NDMF and SDMF) for the local level mitigation activities. It has also recommended retaining the existing cost-sharing mechanism between the Centre and states to fund the SDMF (new) and the SDRF (existing). The cost- sharing pattern between centre and states is (i) 75:25 for all states, and (ii) 90:10 for northeastern and Himalayan states.
• The terminology, “Disaster Risk Management” instead of “Disaster Management” has been introduced for the first time. This signals a move towards an   advanced   approach of managing disaster risk, which is proactive and preparedness based rather than response centric.
• The term ‘river erosion’ has been used for the first time in the Finance Commission report. This may mark the beginning of systematic efforts to address ‘riverine erosion’ as a significant hazard affecting vulnerable communities.