To make this framework a reality, the Commission has made three critical structural moves:
● Expanding the safety net: Recognising the changing climate, heatwaves and lightning have finally been added to the national list of notified disasters, allowing states to provide immediate relief through the State Disaster Response Fund (SDRF).
● Funding the “Before”: In a major logic shift, “Preparedness and Capacity Building” has been moved from response funds to Mitigation Funds (SDMF/NDMF). The rationale is acute and simple, identifying that readiness is a pre-disaster investment meant to reduce impact, not a post-disaster reaction.
● Empowering the Vulnerable: To ensure that geography is not a barrier to safety, Northeastern and Hilly (NEH) States will now bear a uniform 10 per cent cost-sharing burden for central assistance, regardless of the project’s size.
Challenges are multi-fold
Despite this historic allocation, the Commission warns of a persistent “capacity gap”. Even after four years of having dedicated mitigation funds, their utilisation remains limited. States are frequently bogged down by manual relief processes, and delays in formulating technical guidelines have left complex recovery and reconstruction projects stalled on the drawing board.
Furthermore, “huge unspent balances” in some state accounts have raised concerns. To enforce discipline, the Commission has mandated that if a State’s unspent balance exceeds the total of its last three years of allocation, further releases will be temporarily withheld.
The way ahead: Real-time resilience
The path forward relies on turning data into a weapon against disaster. The Commission recommends transforming the National Disaster Management Information System (NDMIS) into a real-time, transaction-level database. From the second year of the award period, complete data validation on this portal will be a necessary condition for states to claim their disaster grants.
By combining scientific risk mapping with a “whole of government” approach, the 16th Finance Commission is signaling that India can no longer afford to simply survive disasters. The shift from managing relief to managing risk is the only way to protect the hard-earned outcomes of a developing nation and actualise Viksit Bharat by 2047.
