The Department of Bhopal Gas Tragedy Relief and Rehabilitation was set up by the Madhya Pradesh Government on August 29, 1985, in view of the longterm medical, social, economic and environmental relief and rehabilitation needs of the survivors of the disaster. In the last 16 years the department has spent well over Rs. 400 crores. Of this about Rs. 200 crores have been spent on medical relief, Rs. 60 crores on economic rehabilitation, Rs. 70 crores on social rehabilitation and Rs. 70 crores on environmental rehabilitation.

Responsibility for the funds for the rehabilitation of survivors is meant to be shared between this Department and the Department of Chemicals and Petrochemicals, Government of India in a ratio of 1:3. Under the First Action Plan (1990 to 1995) the Department received a sum of Rs. 193.50 crores from the Union Government. While work under the First Action Plan remains to be completed, an application for grant of Rs. 316.54 crores for a Second Action Plan has been pending before the Union Government since 1996. The Union Government has refused to grant this and, alleging misuse of funds, in June 2000 announced the institution of a high level investigation into expenditures made by this Department. Uncertainty regarding availability of funds has remained a constant problem. In 1998-99 serious official consideration was given to winding up the Department altogether.

The Department has frequently been in the news with condemnatory reports on corruption and inefficiency. The March 1999 report of the Comptroller and Auditor General is a damning indictment of the Department's administration of funds. This official audit highlights over payments, cost inflation and unauthorised expenditure as some of the instances of maladministration involving over Rs. 20 crores. Currently, due to lack of funds, provision of health care is almost the only activity of this Department. For administrative purposes the whole of the gas affected area has been made into a separate Medical District under the control of a Chief Medical Officer.

A 60-member State Advisory Committee was formed in 1987 to "prevent over-governmentalisation (sic) of the Bhopal Relief and Rehabilitation Programme by involving non-officials in the decision-making process". In practice, the Committee (which has the Chief Minister as its Chairman) has one meeting per year (in a good year) and very few, if any, of its decisions are implemented. A writ petition against the Department alleging violation of the right to life of the survivors filed by the Bhopal Gas Peedit Mahila Udyog Sangathan and the Bhopal Group for Information and Action is currently being heard by the Supreme Court of India.