‘Disaster fund diversion is serious’: Supreme Court pulls up Andhra

The Supreme Court (SC) on Wednesday pulled up the Andhra Pradesh government over accusations that it diverted ₹1,100 crore from the state disaster response fund (SDRF) to finance a subsidy scheme for farmers.

It is a serious matter if funds meant for disaster relief are used for other purposes, said the top court while hearing an application filed by former Telugu Desam Party (TDP) MLA Palla Srinivasa Rao.

A bench of justices MR Shah and BV Nagarathna restrained the state from using the money if the amount had already been transferred. “This is a serious issue. The money meant for disaster relief cannot be used for any other purpose,” it remarked, while issuing notice to the state and placing the matter for hearing on April 28.

With the top court considering the issue of Covid ex-gratia payment of ₹50,000 to be made out of the SDRF accounts of each state, Rao stated in his application that the state government’s move to transfer funds amounted to diversion of funds meant for Covid-19 relief.

Rao relied on a March 12, 2022 letter written by Union minister of state for finance Pankaj Chaudhary to TDP MP Kinjarapu Ram Mohan Naidu, giving details of the alleged diversion that was flagged by the comptroller and auditor general (CAG) in its report on state finances for the year ending March 2020. The letter, issued by the finance ministry, stated that the Andhra Pradesh government received ₹324.15 crore as the central share of the SDRF and ₹570.91 crore under the National Disaster Response Fund (NDRF) from the Centre.

According to the letter, an amount of ₹1,100 crore was transferred from these funds to the personal deposit account of the commissioner, directorate of agriculture, towards payment of input subsidy to farmers for the kharif crop as a “gratuitous relief”, the letter said.

“The CAG report includes that the state government transferred ₹1,100 crore to personal deposit account by showing the expenditure as disaster relief and rehabilitation in violation of the appropriation act,” Rao’s application said. The CAG flagged the expenditure as “the state government has transferred the funds from SDRF to personal deposit account without spending on immediate relief”, he said.

The petitioner’s advocate Gaurav Kumar Bansal — who had filed the public interest litigation (PIL) that led to the orders on Covid ex-gratia payment — told the SC that this is also in violation of the Disaster Management Act (DMA) of 2005. “This shows how the state is using SDRF funds for issuing freebies,” he said, pleading the court to step in and seek a response from the state. Under Section 46 of the DMA, the NDRF cannot be used by state as it should be made available to national executive committee (NEC) for disaster-related purposes.

Additional solicitor general (ASG) Aishwarya Bhati, appearing for the Centre, supported the application. She assured the Court that she would get back on any further communication received from state on this aspect. “In the meantime, the state of Andhra Pradesh is hereby restrained from transferring funds from SDRF to personal deposit fund and if already transferred, the same shall not be utilized for any purpose other than the purpose mentioned in DMA, 2005,” the court said.

The application made all the states as parties but the Court issued notice to Andhra Pradesh only. The applicant said, “The respondents (states) are duty bound to utilize the said fund for emergency response, relief and rehabilitation and that too, in accordance with the guidelines laid down by Central Government in consultation with the National Authority…. by way of the letter dated March 12 issued by Minister of State for Finance, Government of India, it is crystal clear that state of Andhra Pradesh has acted not only in violation of DMA, 2005 but also acted against the provisions of Appropriation Act.”

Andhra Pradesh principal secretary (finance), S S Rawat, did not respond to calls and text seeking comment.