Introduction

The Wayanad tragedy of July 2024, claiming nearly 300 lives and destroying thousands of homes, revealed deep weaknesses in India’s disaster financing structure. Though Kerala estimated losses at ₹20,820 crore, the Union approved only ₹260 crore, signalling a widening disconnect between State needs and Union allocations. As climate disasters intensify, India’s disaster-risk financing model shows visible drift, raising questions on fiscal federalism, institutional design, and equity.

Why in the news

The Wayanad landslides (July 2024) brought focus to an unprecedented gap between State-estimated losses (₹20,820 crore) and Union-approved relief (₹260 crore). For the first time, the mismatch was so steep that the State sought a special memorandum to claim recovery support. This experience, mirroring similar delays in Himachal, Uttarakhand, Assam, and Odisha, highlights growing centralisation of disaster financing, outdated relief norms, and procedural bottlenecks that slow down urgent aid.

Where is the drift in India’s disaster financing framework?

1. Two-tier structure: SDRF (shared) and NDRF (Union-funded) forms the legal basis under Disaster Management Act, 2005; however, practice diverges from cooperative design.
2. Outdated norms: Relief amounts, like ₹6 lakh for death and ₹1.2 lakh for fully damaged houses, have not kept pace with current needs.
3. Limited use flexibility: States face constraints using SDRF funds beyond notified categories, leaving gaps during reconstruction needs.
4. Delayed releases: Sequential approvals (State-Centre-High-level committees) slow down disbursal even during severe calamities.

Why does classification and discretion weaken the system?

1. Ambiguous disaster definition: The Act gives no clarity on what qualifies as a ‘severe’ disaster for NDRF aid, leaving room for variable central discretion.
2. Procedural-not automatic triggers: India relies on approvals; unlike global practices using rainfall thresholds, satellite data, or actuarial triggers.
3. Bias in allocations: Finance Commission criteria use population and geography proxies; actual vulnerability (poverty, hazard exposure) gets underestimated.

How did the Wayanad episode reveal institutional deficiencies?

1. Unspent SDRF balances: Kerala had ₹780 crore in SDRF and earlier deposits but faced constraints using them due to rigid rules.
2. Cuts in interest support: ₹529 crore Centre interest-free support was withdrawn, reducing flexibility.
3. Mismatch in severity classification: Landslides treated as “severe disaster” only after delays, reducing timely access to NDRF.
4. Comparative delays: Similar underfunding seen in Himachal, Uttarakhand, Assam, Nagaland, and Karnataka after recent floods.

How can global models inform India’s reforms?

1. US FEMA: Catastrophe declarations based on clear, measurable thresholds; faster releases.
2. Mexico FONDEN: Automatic fund release beyond rainfall limits; rules-based framework.
3. Philippines model: Quick-response funds tied to rainfall-fatality indices.
4. Australia: Funds tied to State expenditure and accountability.
5. African/Caribbean insurance pools: Satellite-data triggers reduce discretion and delays.

What is needed to restore India’s federal spirit?

1. Sixteenth Finance Commission: Expected to overhaul financing architecture, align relief norms to actual costs, revise allocation formulas, and integrate vulnerability indicators.
2. Unified disaster authority: A national, airshed-like authority beyond NCR to manage transboundary disaster risks.
3. Stable fiscal autonomy: Allow States greater control over disaster funds without excessive approvals.
4. Rules-based financing: Objective, measurable triggers (rainfall intensity, satellite data, loss-to-GSDP ratio) to reduce delays.

Conclusion

India’s disaster-response financing, originally structured for cooperative federalism, has shifted toward centralised discretion, resulting in mismatches between actual losses and approved relief. The Wayanad landslides demonstrate the urgent need for rules-based, automatic, and scientifically triggered fund release mechanisms. Strengthening fiscal autonomy, updating norms, and adopting global best practices are essential for a resilient, federal, and future-ready disaster management system.

PYQ Relevance

[UPSC 2020] Discuss the recent measures initiated in disaster management by the Government of India departing from the earlier reactive approach.

Linkage: The question aligns with the article’s focus on outdated, reactive SDRF-NDRF procedures and delays exposed during the Wayanad disaster. It reinforces the need for proactive, rules-based, science-triggered disaster financing and stronger federal coordination.

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