Money matters

Only when the extent of a `natural calamity' is determined independent of the Government can politics be kept out of sanctioning aid, says ALOK MUKHERJEE.

FINANCIAL ASSISTANCE to the States facing natural calamities is governed through the awards of the successive Finance Commissions which decree the proportion of sharing of all resources between the Centre and the States every five years. The process started with the `margin money scheme' proposed by the Second Finance Commission which allocated sums ranging from Rs. 10 lakhs to Rs. 1 crore as margin money for meeting the expenditure on natural calamities. The size of the Calamity Relief Fund, as it has now come to be called, stands at Rs. 11,007.59 crores for 2000-2005 with the Centre contributing 75 per cent and the States 25 per cent. The Eleventh Finance Commission (EFC), which fixed this corpus, has also worked out the State-wise distribution of this fund.

More than that, the EFC has also taken note of the controversy that erupted during the super-cyclone in Orissa in October 1999 when political meaning was read into the Centre's reluctance to declare the situation a national calamity. In 1999, the recommendations of the Tenth Finance Commission were in operation and it had suggested a separate corpus of Rs. 700 crores in the form of a National Fund for Calamity Relief (NFCR) to take care of a `calamity of rare severity'. However, the Commission did not define a `calamity of rare severity', thereby giving ample scope to the Centre to make its own assessments.

The EFC has now suggested discontinuation of the NFCR on the ground that a calamity of rare severity was conceptually of such a nature that the intensity and magnitude could not be anticipated and provided for in advance as was evident from the fact that against the Rs. 700-crore corpus, the Centre released Rs. 2,555 crores from the NFCR during 1995-2000.

Instead, the EFC has recommended that additional Central assistance to States facing calamities should be financed by levy of special surcharge on Central taxes for a limited period to create a National Calamity Contingency Fund (NCCF). It also recommended that the Centre should provide Rs. 500 crores to get the NCCF off the ground and that drawals from the fund should be accompanied by imposition of the special surcharge so that it is immediately recouped.

The Commission has also attempted to do away with the vagueness associated with the term `national calamity' by suggesting the creation of a National Centre for Calamity Management under the Ministry of Agriculture to monitor all types of natural calamities, including calamities of rare severity, without any specific reference from the Central or State Governments. And this centre should be empowered to make recommendations as to whether a calamity was of such a nature that financial aid to the affected State over and above what is available in the Calamity Relief Fund or from other Plan and non-Plan resources was called for.

Only when the extent of a natural calamity is determined independent of the Government can politics be kept out of sanctioning aid.

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