SDRF Utilisation Norms Relaxed For 1 Year Due to COVID-19 Crisis

In the view of the COVID-19 pandemic, the Centre is said to have announced relaxation to the State Disaster Response Fund (SDRF) usage norms for the next one year. This implies that the Centre has approved “flexibility” and allowed expenditure as per the guidelines of 2015-16.

The 15th Finance Commission recommended an allocation of Rs 28,983 crore to SDRF. Out of this amount, the Centre had recently released its first instalment of Rs 11,092 crore for FY 2020-21. SDRF funds can be utilised for cluster isolation, quarantine, and procurement of personal safety equipment for police, health, fire, and municipal authorities.

Nevertheless, in the absence of new guidelines on expenses, the Home Ministry told the states that they would continue with the orders issued post the recommendations received from the 14th Finance Commission. 

The contribution of SDRF will be 80%, and that of the State Disaster Mitigation Fund (SDMF) will be 20%—to constitute Rs 28,983 crore. Under the 80% allocation, there will be three sub-allocations—recovery and rehabilitation (30%), preparedness and capacity building (10%), and response and relief (40%).

The Home Ministry has mentioned in its correspondence to the state governments that “flexibility” will be provided in the sub-allocated funds’ usage for FY 2020-21, provided it is not more than 10% of that sub-window’s allocated number.

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Also, the Ministry has stated the decision to extend the existing guidelines for a further period of one year or till such time new guidelines or norms are framed. The pending finalisation of new guidelines is dependent on the award of the 15th Finance Commission, the constitution and administration of SDRMF/SDRF and SDMF, and the norms of assistance and expenditure.

The Home Ministry had said in an order dated 14 March 2020 that it had decided to view COVID-19 as a “notified disaster” for rendering help under SDRF.

The Centre gives 75% of the SDRF allocation to general category states and union territories; up to 90% is given to special category states (Sikkim, Himachal Pradesh, Northeast states, Uttarakhand, Jammu and Kashmir).

Maharashtra has been allocated with Rs 1,611 crore since it has the highest number of confirmed COVID cases as on today. Uttar Pradesh has been allocated with Rs 966 crore, Madhya Pradesh with Rs 910 crore, Rajasthan with Rs 740 crore, Bihar with Rs 708 crore, Odisha with Rs 802 crore, and Gujarat with Rs 662 crore.

Further, it is said that the fund can be used for expenses concerning activities, such as screening, sample collection, setting up of additional testing labs, purchase of ventilators, air purifiers, thermal scanners, and costs related to consumables. 

Also, states are extending relief to those individuals who are stranded due to the nation-wide lockdown. States have also launched mobile applications and helplines to assist.

For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in

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