The amount was diverted by the Centre from Rs 1,602 crore given to Jammu and Kashmir as part of the State Disaster Response Fund.
300 people died and over 1.5 million were affected in the floods that devastated large parts of Kashmir, especially Srinagar, in September. Over two lakh people, including tourists, were rescued and essential supplies like food, water and medicine were air-dropped in what the armed forces called "Operation Megh Rahat."
Documents accessed exclusively by NDTV show that the operation came with a large bill for services rendered.
A letter dated February 6 from the home ministry to the state government on central assistance, lists "payment of Air Bills for airdropping of essential supplies and rescue (tentative Rs 500 crore) as per actual, based on the bills raised by the ministry of defence."
The home ministry letter says that the money has been taken from the "State Disaster Response Fund account of the states for instant disasters."
The Defence Ministry says it is routine after any such relief operation to raise costs because the government needs to account for material, man hours and cost incurred by the Indian Air Force in sorties.
"This is general deducted from the relief package that is subsequently announced," a defence ministry official said.
"This is a book debit, there is no cash transfer. During disaster relief operations, the forces incur huge expenses, which needs to be refunded," the official explained.
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