Flaws in 16th Finance Commission's disaster funding formula: Odisha underserved
Odisha, despite being India's most disaster-prone state with significant investments in preparedness, received the single largest reduction in disaster funding share from the 16th Finance Commission. This paradox stems from the Commission's multiplicative Disaster Risk Index (DRI = Hazard X Exposure X Vulnerability) formula, which uses total population as the exposure metric, rewarding demographic size over actual hazard exposure. Similarly, vulnerability is measured by per capita Net State Domestic Product (NSDP), which reflects fiscal capacity rather than true disaster vulnerability. The article argues for redefining exposure as population within hazard zones and vulnerability as a composite index including housing quality, health infrastructure, and early warning effectiveness, to ensure equitable disaster finance.
Key Points
- Odisha, a highly disaster-prone state, experienced the largest reduction in disaster funding share from the 16th Finance Commission.
- The 16th Finance Commission's Disaster Risk Index (DRI) formula, which is multiplicative, disproportionately rewards states with larger populations.
- The formula's definition of 'Exposure' as total population rather than population in hazard zones is scientifically indefensible.
- 'Vulnerability' is measured by per capita NSDP, which reflects fiscal capacity but not actual disaster vulnerability, disadvantaging states like Kerala.
- The article advocates for a revised methodology using population within defined hazard zones for exposure and a composite index for vulnerability.
Exam Facts
- 16th Finance Commission allocated ₹2,04,401 crore to State Disaster Response Funds (SDRF).
- The Commission adopted a multiplicative Disaster Risk Index (DRI = Hazard X Exposure X Vulnerability) formula.
- Odisha's hazard score is 12, the highest in the country.
- Author: Aswathy Rachel Varughese, Assistant Professor, Gulati Institute of Finance and Taxation.
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