New Delhi: Kerala will receive ₹2,580 crore as the Centre’s share for disaster management over the next five years, in line with the recommendations of the 16th Finance Commission. During the tenure of the 15th Finance Commission, the allocation stood at ₹2,316 crore.

Of the total amount, ₹2,064 crore will be credited to the State Disaster Response Fund (SDRF), while ₹516 crore will go to the State Disaster Mitigation Fund (SDMF). In the coming financial year, Kerala is slated to receive ₹374 crore for the SDRF and ₹93 crore for the SDMF.

Under the 15th Finance Commission, the Centre’s contribution to the SDRF was fixed at 75%. The 16th Finance Commission has raised this share to 80%, reducing the States’ contribution to 20%.

The allocation for each State is determined by the Finance Commission based on factors such as average utilisation in previous years, geographical area, population and the disaster risk index.

States told to avoid off-budget borrowings
Meanwhile, the Finance Commission has directed States to refrain from resorting to off-budget borrowings.

The directive serves as a warning to States such as Kerala, which raise funds through agencies like the Kerala Infrastructure Investment Fund Board (KIIFB) and various pension companies. Such borrowings had earlier come under criticism from the Comptroller and Auditor General. The Centre’s decision to treat these liabilities as State debt and reduce the overall borrowing limit had previously triggered protests.

The Commission has recommended that all borrowings be routed through the budget. It has also proposed a mechanism to ensure the reporting of off-budget borrowings. In addition, it has suggested that total fiscal borrowing by each State be capped at 3% of its Gross State Domestic Product (GSDP).

Urban, rural local bodies to get ₹19,991 crore
The 16th Finance Commission has approved grants of ₹16,683 crore for urban local bodies and ₹3,308 crore for rural local bodies in Kerala over the next five years. In the coming financial year, the respective allocations will be ₹2,143 crore and ₹425 crore.

Of the ₹3,308 crore earmarked for rural local bodies, ₹661 crore will be disbursed based on project execution, while the remaining ₹2,647 crore will be provided as basic grants. Grants to urban local bodies will comprise basic and performance-linked components, in addition to allocations for special infrastructure and an urbanisation premium.

The urbanisation premium will be extended when adjoining urban areas are merged with municipalities, with the grant intended to offset disruptions in tax collection immediately following such mergers. However, critics point out that grant distribution based on multiple criteria could adversely affect several local bodies.

To qualify for these grants, local bodies will be required to publish their financial accounts online.