ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Disaster Relief Financing

A Journey from Margin Money to State Disaster Response Funds

Over the years, finance commissions have provided guidelines to the central government on assisting the state governments in providing relief to disaster-affected communities. It began with the margin money prescription by the Second Finance Commission, which was modified into the Calamity Relief Fund by the Ninth Finance Commission, and further evolved into the current State Disaster Response Fund. However, the mode of computing the quantum of allocation to SDRFs, which has led to some states receiving less than their deserved allocations, needs to be reviewed in the wake of the constitution of the Fifteenth Finance Commission.

The federal structure envisaged by the Indian Constitution ensures that taxation is mostly controlled by the central government, while spending is largely done by state governments. Hence, the seamless transfer of resources from the centre to the states is vital. The Constitution provides for the periodic setting up of finance commissions (FCs), whose recommendations are valid for a period of five years, in order to guide the sharing of central tax collections with the states. The First FC was established in 1951, while the Fifteenth FC—the most recent one—was constituted in 2017 to come up with recommendations to be adopted for a period of five years from 2020 to 2025. FCs also lay down the rules by which the centre provides grants-in-aid to the states from the Consolidated Fund of India. They are also required to suggest measures to augment the resources of states and ways to supplement the resources of panchayats and municipalities.ToR) given to an FC reflects the demands of the circumstances prevailing at the time of its constitution.

Financing Disaster Relief

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Updated On : 19th Apr, 2019
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