The Union Cabinet will meet on Thursday to discuss a proposal, moved by the Home Ministry, to sanction additional financial assistance to Bihar for Kosi flood relief — over and above the norms of the Calamity Relief Fund (CRF) and National Calamity and Contingency Fund (NCCF).

The proposal comes in the backdrop of Bihar Chief Minister Nitish Kumar’s demand for putting Rs 1,000 crore Kosi relief amount outside the ambit of these funds. Sources said the proposal might also lead to additional funds for the state. The issue had sparked off a war of words between the Centre and Bihar before the Lok Sabha elections when Prime Minister Manmohan Singh had called up the Bihar CM to “assure” him a “re-look” into the controversy over the Centre’s reported demand for refund of Rs 1,000 crore it gave to Bihar for relief to Kosi flood victims.

The controversy over the relief money started after a letter dated April 27 from the Disaster Management Division of the Ministry of Home Affairs sought recovery of Rs 1,000 crore ad hoc grant made to the state to battle the Kosi floods of 2008. Citing norms and guidelines for expenditure and opening balance of the state’s CRF as cited by the State Accountant General, the letter concluded that the “net outgo from the NCCF will be nil and the entire amount of Rs 1,000 crore released from NCCF on an account basis is required to be recovered”.

The Bihar government went public with it and charged the Centre with doing “injustice” to the state. Scrutiny thereafter, as claimed by the state government, showed that the state AG’s office was to be blamed for giving wrong “opening balance” figures of the state’s CRF as on April 1, 2008. Thereafter, Bihar Chief Secretary R J M Pillai had sent a letter to the Centre clarifying that the state government’s CRF balance on April 1, 2008, was minus Rs 820 crore and not Rs 906.24 crore as was “wrongly” worked by the state AG office.

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