Counting people is not counting disaster risk

The controversy over the 16th Finance Commission's disaster funding formula highlights a crucial friction point in fiscal federalism. The Finance Commission, a constitutional body under Article 280, is tasked with recommending the distribution of financial resources between the Union and the States. This includes grants for specific purposes like disaster management, which are channeled through the State Disaster Response Fund (SDRF). The core issue is that the new formula rewards states with large populations over those with high hazard risk, undermining the principle of equitable and needs-based resource allocation. States like Odisha and Kerala argue this infringes on their ability to manage recurrent disasters, a key aspect of state governance. The proposed solution—involving the National Disaster Management Authority (NDMA) to create a standardized vulnerability index—points towards a need for more robust, evidence-based, and consultative mechanisms in Centre-State financial relations to ensure that allocation formulas do not create perverse incentives or penalize well-governed, albeit less populous, states.

The article critiques a fundamental shift in India's disaster management financing from a needs-based approach to a flawed quantitative model. The core of disaster management is risk reduction, which involves accurately assessing Hazard, Exposure, and Vulnerability. The 16th FC's formula, while theoretically sound (Risk = H x E x V), fails in its practical application. It defines 'Exposure' as total population, not the population residing in hazard-prone areas. This is a critical governance failure, as it misidentifies risk. A state like Odisha, despite exemplary work in reducing mortality through early warning systems and evacuation (a key goal of the Sendai Framework), is financially penalized. The article advocates for a more scientific approach to governance, using granular data from sources like the Building Materials and Technology Promotion Council (BMTPC) Vulnerability Atlas and various national surveys to create a multi-dimensional vulnerability index. This would institutionalize a more effective and just system for pre-disaster preparedness and mitigation, moving beyond mere post-disaster relief.

From an economic perspective, the allocation formula's flaws could create significant long-term fiscal stress for disaster-prone states. Using per capita Net State Domestic Product (NSDP) as the sole metric for vulnerability is misleading. While Kerala has a high per capita income, the 2018 floods caused damages estimated at ₹31,000 crore, demonstrating that wealth does not equate to invulnerability. The formula ignores the multidimensionality of vulnerability, which includes factors like the quality of housing (kutcha vs. pucca), dependence on climate-sensitive livelihoods like agriculture, and access to health infrastructure. For instance, low crop insurance penetration, which could be measured via the Pradhan Mantri Fasal Bima Yojana (PMFBY) database, is a key vulnerability indicator not captured by NSDP. By underfunding states with high actual risk, the Centre shifts the financial burden of climate adaptation and disaster recovery onto them, potentially straining their budgets, increasing inequality, and hampering their overall development trajectory.