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

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Financing Disaster Management

Options for the GST Council and the Fifteenth Finance Commission

The present arrangements for financing disaster management in the country do not provide for disaster mitigation. They are neither comprehensive nor adequate. There is a dichotomy between the guidelines issued by the Government of India on disaster management and the mandate of the Disaster Management Act. A national consensus is required on how to fund all the three components of disaster management–mitigation, response, and reconstruction. Other issues to be addressed include the scope of disaster management, the creation of mitigation funds, the financing of such funds, the procedure for states to draw from these funds and accepting foreign aid for disaster relief. This article examines these and related issues. It may not be desirable to complicate the GST structure by levying a cess on either state GST or central GST or integrated GST for funding disaster management. The option of increasing the yield of the present national calamity contingency duty or introducing a cess similar to the GST compensation cess may be preferable.

The authors are grateful to Indira Rajaraman, Mohan Kanda, S M Vijayanand and R K Jain for insightful comments on an earlier version of this paper.

Heavy rain fell over most of Kerala between July and August 2018. This and overflowing dams led to catastrophic floods which caused substantial loss of life, property, and infrastructure. The Government of Kerala (GoK) sought support from the centre. The Government of India (GoI) sanctioned interim support of 600 crore. Having successfully managed the task of providing immediate relief to its affected citizens, Kerala now faces the humongous challenge of rebuilding its destroyed infrastructure and its economy. This paper uses the disaster in Kerala as a peg to hang its analysis of the funding of disaster management in India today. The Goods and Services Tax (GST) Council has set up a Group of Ministers (Gom) to examine the proposal of the Gok to impose a cess on State Goods and Service Tax (SGST) for the reconstruction of flood-affected works.1 This article scrutinises some of the options before the Gom. The Fifteenth Finance Commission (15th FC) is required by its Terms of Reference to review the present arrangements for financing disaster management in India. This analysis throws up some suggestions they may need to consider.

The Present Framework for Funding Disaster Management

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Published On : 20th Jan, 2024

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