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Calamity Relief Funds (CRF)

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Calamity Relief Funds are dedicated funds used by the state governments to meet the expenditure for providing immediate relief to victims of cyclone, drought, earthquake, fire, flood, tsunami, hailstorm, landslide, avalanche, cloud burst and pest attack.

It targets immediate relief measures and excludes measures for mitigation or post-calamity reconstruction.

The CRF has been merged with State Disaster Response Fund (SDRF) with effect from 1 April 2010 and has ceased to exist at present.


Features of CRF

The essential features of the CRFs are as follows:


Background

The Calamity Relief Funds were set up based on the recommendations of Finance Commission (FC)-IX.

Prior to CRF, the Finance Commissions set apart specific amounts under the 'margin money' scheme (which envisaged setting apart specific amounts by states in order to meet the expenditure on relief measures), recommended by the FC-II to meet expenditures on relief measures.

The Second Finance Commission (FC-II; submitted its report in 1957), while assessing the revenue expenditure of the states, acknowledged that financing expenditure on relief was an unforeseen item that affected their finances in a significant manner. The Commission, in the estimate of the states’ committed expenditure, included a ‘margin for enabling them to set apart annually from their revenues, sizeable sums to be accumulated in a fund for meeting expenditure on natural calamities’. The state-wise amounts were based on the average expenditure on relief in the past decade. The Commission also advised that the amounts be kept in a fund and invested in marketable government securities so as to be available for relief expenditure without putting undue pressure on the states’ finances. Concurrently, the Central Government had a scheme to assist the states in financing relief expenditure over and above the amounts indicated by the Finance Commission. Subsequent Commissions till the Eighth, including the Sixth to the Eighth which had a specific term of reference regarding financing of relief expenditure, continued this arrangement originally instituted by FC-II.

FC-IX (report submitted in 1990) examined the then existing scheme of margin money and acknowledged the need for replacing the ‘existing arrangements of financing relief expenditure involving the provision of margin money, preparation of States’ memoranda, visits of central teams, etc. by a scheme which is qualitatively different in the sense that generous funds are placed at the disposal of the states and they are expected to look after themselves in almost all situations’. FC-IX recommended the establishment of a Calamity Relief Fund (CRF) for each state, the size of which was decided on the basis of the average of the actual ceiling of expenditure approved for a state over a 10-year period ending 1988-89; 75 per cent of the fund was to be contributed by the Centre and 25 per cent by the states.

FC-X (report submitted in 1995) recommended putting in place certain operational arrangements for the CRF. It also recommended the setting up of a National Fund for Calamity Relief (NFCR) with Rs.700 crore to assist any state affected by a calamity of rare severity. It suggested that such calamities would have to be adjudged on a case-by-case basis. Management of this fund was to be under a National Calamity Relief Committee chaired by the Union Minister for Agriculture. Both the Centre and the states would contribute to this fund (75:25).

FC-XI (submitted in 2000) continued with the prevailing system of the Calamity Relief Fund, while further refining the administrative arrangements in this respect. It also reviewed the functioning of the National Fund for Calamity Relief and found that not only had the entire corpus of the fund been exhausted in three years, but also that it had failed to make adequate funds available for meeting the requirements of calamities of rare severity. FC-XI recommended the setting up of a National Calamity Contingency Fund (NCCF) in place of National Calamity Relief Fund with an initial corpus of Rs. 500 crore which was to be recouped through the levy of a special surcharge on central taxes.

FC-XII (Submitted in 2004) observed that the CRF scheme had, by and large, fulfilled the objective of meeting the immediate relief needs of the states. It ‘found considerable justification in widening the list of calamities’ and added a few events to the list covered under the scheme. The Commission also recommended continuation of the scheme of NCCF in its existing form.

A 2002 guideline issued with respect to CRF may be seen here.


Present Status

With the enactment of the Disaster Management Act in 2005 and consequent changes in the design and structure of disaster management, the FC-XIII (submitted report in 2009) recommended the merger and transfer of NCCF balances, as on 31 March 2010, to the National Disaster Response Fund (NDRF) which was accepted and notified by the Union Government.

On the same lines, the CRF has been renamed as State Disaster Response Fund (SDRF) by 13th Finance Commission. On 1 April 2010, based on the recommendations of the FC-XIII, the available balances in the CRF were merged with the SDRF.

Later, the SDRF was reconstituted on the basis of 14th Finance Commission's (submitted the report in Feb 2015) recommendations on 30 July 2015. The revised norms for assistance from SDRF were issued on 8 April 2015.


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