Financial Arrangements

The Disaster Management Act, 2005 provides the legal framework for disaster management and all related matters, including the ﬁnancial aspects. As per the DM Act, financial assistance in the wake of disasters is provided through the State Disaster Response Fund (SDRF) and National Disaster Response Fund (NDRF). These funds have been created under the legal framework of Section 46 and 48 (1) (a) of the Disaster Management Act, 2005. The allocations to SDRF and NDRF are made by the Ministry of Finance as per Finance Commission recommendations.

Allocation of disaster management funds to State Disaster Risk Mitigation Fund (SDRMFs) should be based on factors of past expenditure, area, population, and disaster risk index (which reflect States’ institutional capacity, risk exposure, and hazard and vulnerability respectively). Assuming an annual increase of 5 per cent, the Finance Commission has arrived at the total corpus of Rs.1,60,153 crore for States for disaster management for the duration of 2021-26, of which the Union share is Rs. 1,22,601 crore and the states share is Rs. 37,552 crores.

The total states allocation for SDRMF is subdivided into funding windows that encompass the full disaster management cycle. Thus, the SDRF has received 80 per cent of the total allocation and the State Disaster Mitigation Fund (SDMF) has received 20 per cent.

State Disaster Response Fund (SDRF) :

The State Disaster Response Fund (SDRF), constituted under Section 48 (1) (a) of the Disaster Management Act, 2005, is the primary fund available with State Governments for responses to notified disasters. The Central Government contributes 75% of SDRF allocation 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 shall be used only for meeting the expenditure for providing immediate relief to the victims.

Centrally notified Disaster (s) covered underSDRF: Cyclone, drought, earthquake, fire, flood, tsunami, hailstorm, landslide, avalanche, cloudburst, pest attack, frost and cold waves. State notified disaster A State Government may use up to 10 percent of the funds available under the SDRF for providing immediate relief to the victims of natural disasters that they consider to be ‘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 subject 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).

Maharashtra State has notified disaster such as Lightning, Heavy Rainfall, Incessant Rain, Unseasonal rain, Storm Surge and Accidental fire.

National Disaster Response Fund (NDRF) :

The National Disaster Response Fund (NDRF), constituted under Section 46 of the Disaster Management Act, 2005, supplements SDRF of a State, in case of a disaster of severe nature, provided adequate funds are not available in SDRF.

The two response funds at the national and state level have provisions for the following:

Gratuitous Relief
Search and Rescue operations
Relief measures
Air dropping of essential supplies
Emergency supply of drinking water
Clearance of affected area, including management of debris
Agriculture, Animal husbandry, ﬁshery, handicraft, artisans
Repair/ Restoration (of immediate nature) of damaged Infrastructure.
Capacity development

State Disaster Mitigation Fund (SDMF)

15th Finance Commission, in its report had made recommendations for setting up Mitigation Funds and suggested allocations at National and State level. Accepting the recommendations of the Finance Commission, Central Government has allocated Rs. 13,693 Crore for the National Disaster Mitigation Fund (NDMF) and Rs. 32,030.60 crore for State Disaster Mitigation Fund (SDMF) for the period 2021-22 to 2025-26. Further Rs 5,796.60 crore was also allocated for SDMF for the period of 2020-21, based on the interim recommendations of the15th Finance Commission.

Central Government had constituted the National Disaster Mitigation Fund (NDMF) on 05.02.2021 and also advised all the State Governments to set up State Disaster Mitigation Fund (SDMF) in the State. So far, all the States, except Telangana, have intimated setting up of SDMF. For the first time allocation of funds, exclusively for the mitigation of disaster risks, has been made by the Government, both at national and state level. It will help the States in carrying out mitigation activities for reducing the impact of disasters.

Central Government contributes 75% for all States (90% for North-Eastern and Himalayan States) as Centre share in SDMF.

Allocation of funds to Maharashtra Government for Disaster Risk Management:

The total allocation for Disaster Risk Management Fund for 2021-26 is Rs 23,737 Crore for Maharashtra. The Disaster Risk Management Fund has been recommended as a comprehensive fund, both for response and mitigation activities. The break-down of the Fund is Response and Relief (40%), Recovery and Reconstruction (30%), Capacity Building (10%) and Mitigation (20%).

Finance Arrangement