The growing mismatch between States’ disaster needs and Union disbursements as recently evident in Kerala’s Wayanad case, suggests India’s disaster-risk finance is drifting from cooperative federalism towards a more centralised, conditional model.

About India’s Disaster Financial Framework

India’s disaster-response financing, governed by the Disaster Management Act, 2005, is two-tiered:

• National Disaster Response Fund (NDRF): Fully Union-funded and intended for severe disasters.
• State Disaster Response Fund (SDRF): Jointly financed in a 75:25 ratio (and 90:10 for Himalayan and North-Eastern States). Used for immediate relief: food, shelter, medical care, compensation.
• Shift Toward Central Control: The legally balanced structure functions in practice with delays, discretionary decision-making, and limited State autonomy.

Merits of a Centralized Disaster Response System in India

• Managing the Scale and Complexity of Mega-Disasters:
  • Nature of the Problem: Disasters in India are often multi-state and multi-hazard events that overwhelm local administrative capacities.
  • Need for Central Coordination: Calamities frequently cross jurisdictional boundaries, making a unified command essential for coordinated relief operations.
  • Examples: The 1999 Odisha Super Cyclone and 2013 Uttarakhand floods required multi-agency coordination, involving state governments, central forces, and the military. Only a centralized body such as the NDMA or the National Executive Committee (NEC) could orchestrate these efforts effectively.
    • 2004 Indian Ocean Tsunami: Operations spanned Tamil Nadu, Kerala, Andhra Pradesh, and the Andaman and Nicobar Islands, showing the need for central leadership.
• Bridging Resource Asymmetry and Capacity Gaps:
  • Concern: States differ significantly in financial, institutional, and technical capacity to manage large disasters.
  • Role of the Centre: Economically weaker states such as Bihar (flood-prone) or Odisha (cyclone-prone) often lack specialized equipment, trained personnel, and logistical resilience, which the Union Government provides.
  • Example: The NDRF has 16 specialized battalions trained in Collapsed Structure Search and Rescue and Chemical, Biological, Radiological, and Nuclear (CBRN) response.
  • This centrally managed force offers baseline capability that most SDRFs cannot match.
• Ensuring Speed and Standardization of Response:
  • Critical Issue: In disasters, response time and uniformity are crucial to minimize casualties during the “Golden Hour.”
  • Centralized Advantage: The NDRF is strategically pre-positioned in vulnerability zones to allow rapid deployment within hours, bypassing delays from inter-state coordination.
    • Centralized training and Standard Operating Procedures (SOPs) guarantee a consistent, professional response across states.
  • Example: Kosi breach-related Bihar floods (2008), where the NDRF managed mass evacuations efficiently.
• Better Technology and Early Warning Systems:
  • Technological Challenge: Advanced tools and expertise are concentrated at the Union level.
  • Central Role: Agencies like India Meteorological Department (IMD), National Remote Sensing Centre (NRSC), and Indian Space Research Organisation (ISRO) provide national forecasts, vulnerability maps, and real-time alerts, including the Tsunami Warning System.
  • Strategic Advantage: Only the Union Government can synthesize and disseminate this information nationwide, shifting India from a reactive to a proactive disaster management paradigm.
• Financial Backstop and National Solidarity:
  • Fiscal Challenge: Large-scale disasters impose immense financial burdens that individual states cannot absorb alone.
  • Central Support: While State Disaster Response Funds (SDRFs) provide initial relief, the Union Government fully funds the National Disaster Response Fund (NDRF) and provides supplementary support for severe disasters.
  • Funding Mechanism: Contributions from the Goods and Services Tax (GST) compensation cess ensure national-level fiscal resources are mobilized for disaster relief.
  • Strategic Advantage: Centralized funding maintains fiscal stability, prevents states from bankruptcy, and reinforces national solidarity during crises.

Concerns with the Current Model (Centralization of Disaster Response and Federal Erosion)

• Structural Deficiencies in Disaster Financing:
  • Outdated Relief Norms: Compensation levels such as ₹4 lakh per life lost and ₹1.2 lakh for a fully damaged house have remained unchanged for a decade and do not reflect actual reconstruction costs.
    • Example: Kerala’s 2024 Wayanad landslides saw the inadequacy of compensation norms for rebuilding efforts.
  • Ambiguity in Defining “Severe Disaster”: The absence of a clear statutory definition allows wide Union discretion on NDRF eligibility, resulting in inconsistent disaster classifications and delays in aid allocation.
    • Example: Uttarakhand’s 2021 floods were initially not classified as a “severe” disaster, delaying access to higher financial support from NDRF due to the lack of clear criteria.
  • Non-Automatic Aid Release: Approvals depend on state memoranda, central assessments, and high-level clearances, causing delays in the release of funds when urgent action is needed.
    • Example: Following Cyclone Amphan in 2020, West Bengal and Odisha faced delays in receiving NDRF funds due to the time-consuming approval process, hindering immediate relief efforts.
  • Weak Finance Commission Criteria: Allocations based on population, geographical area, and poverty levels fail to capture real hazard exposure, lacking a scientifically constructed Disaster Vulnerability Index.
    • Example: Assam’s flood-prone areas continue to face inadequate financial support, as the Finance Commission’s allocation criteria overlook the state’s specific vulnerability to floods and riverbank erosion.
• Legal and Political Overreach:
  • Central Direction Power: Section 62 of the DM Act allows the Union to issue binding directions to states, demonstrated controversially during the COVID-19 lockdowns, allowing central control over State List subjects like Public Health.
  • Hierarchical Imbalance: The NDMA (chaired by the PM) structurally undermines the state SDMAs (chaired by the CMs), fostering a necessary but often politically exploitable top-down response mechanism.
  • States as Supplicants: The process requires states to submit memoranda and await Union approval for NDRF funds, transforming aid into a negotiated, discretionary transfer rather than predictable support.
  • Conditional Relief: The Centre often cites unspent SDRF balances or prior loans (e.g., Wayanad case) to justify reducing aid, treating relief as conditional rather than grant-based solidarity and undermining the concept of national solidarity.
  • Selective Aid: The discretionary release of NDRF battalions and financial packages allows for the potential for political exploitation, favouring states aligned with the ruling party and eroding the neutrality of the humanitarian response.
  • Shifting Credit: Announcements regarding the Prime Minister’s Relief Fund often overshadow the substantial response efforts and expenditures of state governments, shifting the political narrative and credit entirely towards the Union.
• Operational Gaps and Erosion of Local Resilience:
  • Last-Mile Connectivity: Disasters severely disrupt communication and transport networks. The slow adoption of resilient systems (satellite phones, ham radios) and the lack of standardized local protocols impede immediate relief.
  • Technology Integration Gap: While central agencies (IMD, ISRO) possess advanced early-warning data, the slow integration of this data at the district/block level reduces its effectiveness for localized decision-making.
  • Ignoring Local Expertise: Centralized planning often overlooks the intimate knowledge of local vulnerabilities, topography, and traditional coping mechanisms held by PRIs (Panchayati Raj Institutions), leading to less effective interventions.
  • Erosion of State Capacity: Dependence on the Centre to absorb large disaster costs discourages state investment in enhancing their own SDRF capacity and long-term mitigation infrastructure, perpetuating financial and operational dependency.

Way Forward

• Reforming the Financial and Fund Flow Architecture: 
  • Updating and Indexing Relief Norms: Revise compensation ceilings under the SDRF and NDRF to reflect present-day construction, rehabilitation, and livelihood restoration costs.
    • Link these ceilings to inflation and disaster-specific needs to ensure they match the actual costs of recovery and rebuilding, alleviating fiscal stress on states.
  • Introducing Data-Driven Triggers for Assistance: Define “severe disaster” transparently in the DM Act, 2005, and adopt objective, data-driven indicators (e.g., rainfall intensity thresholds, fatalities per million, loss-to-GDP ratio).
    • This ensures automatic, timely releases of NDRF funds without delays or political discretion, replacing the current IMCT assessment process.
  • Reforming Fund Flow Mechanisms: Shift from multi-layered approvals to a time-bound, rules-based disbursal of SDRF installments (e.g., releasing them quarterly).
    • Grant greater flexibility to states for spending on reconstruction and livelihood restoration, not just immediate relief, ensuring a faster, more effective recovery process.
  • Institutionalising Climate-Resilient Disaster Financing: Establish a National Climate Risk Financing Window for anticipatory action.
    • This provides incentivized funding through matching grants to encourage states to invest in risk reduction, early warning systems, and climate-resilient infrastructure to prepare for future climate-induced disasters.
• Strengthening Federal Governance and Accountability: 
  • Restoring Cooperative Federalism through Balanced Fiscal Authority: Ensure that disaster assistance remains grant-based, not loan-based, and provide states with operational control over SDRF and NDRF utilisation.
    • The Union should focus on post-audit verification instead of prior approvals, transforming the system from bureaucratic negotiation to a trust-based federal partnership.
  • Strengthening Finance Commission Criteria: Move beyond simplistic proxies (population and area) by developing a comprehensive disaster-risk and vulnerability index considering hazard exposure, climate risk, and geological fragility.
    • This ensures more fair, risk-aligned allocations for states, matching financial capacity with actual risk.
  • Amending the DM Act and Depoliticizing Declarations: To make the Centre’s directive power time-bound and only during formally declared national disasters. 
    • This limits central overreach and ensures the neutral, technical basis for triggering aid.
  • Institutionalizing Federal Consultative Bodies: Establish a Federal Disaster Council (akin to the GST Council) comprising the PM, select CMs, and experts.
    • This platform ensures policy, funding, and allocation criteria are determined collaboratively, maximizing state buy-in.

• Adopting Global Best Practices and Local Empowerment:
  • Deploying Global Best Practices for Rapid Payouts: Integrate mechanisms from global systems to enhance speed and transparency.
    • Learning from models like the Philippines (fatality- and rainfall-based triggers), FONDEN (former), Mexico (automatic wind/rainfall thresholds), and African–Caribbean risk pools (satellite-based parametric insurance), Federal Emergency Management Agency (FEMA),US (Per-capita damage thresholds), and Australia (linkage of federal aid to state relief spending relative to revenue) allows India to adopt systems that provide rapid, rule-based payouts.
  • Capacity Building and Legal Recognition: Substantially boost SDRF capacity building (e.g., 50% NDRF-like training) and grant Legal recognition of “Local Disasters”.
    • This ensures that small-scale events are handled entirely by empowered Districts/PRIs, while strong SDRFs reduce immediate dependency on the Centre, strengthening grassroots accountability.

Conclusion

Disaster solidarity must not undermine federal autonomy. Reducing central discretion through transparent, rules-based fund transfers and empowering state and district authorities can replace approval-driven relief with a predictable, trust-based system—ensuring faster response while upholding cooperative federalism.

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