Impact of Floods and Cyclones on Indian States' Financial Health
Overview of the Study
A research study from IIT Bombay investigates the financial repercussions of floods and cyclones across 25 Indian states, analyzing data from 1995 to 2018. The study, published in the International Journal of Disaster Risk Reduction, aims to improve disaster preparedness and financial protection strategies.
Traditional Disaster Assessment and Limitations
Conventionally, disaster response funding depends on economic loss evaluations, casualty numbers, and people affected, which often result in bias. The study introduces a Disaster Intensity Index (DII) using unbiased weather data for more accurate assessments.
Methodology
- Data sourced from IBTrACS and India Meteorological Department.
- Used panel Vector Auto Regression (VAR) model to study financial impacts on state budgets.
Key Findings
- Disasters significantly increase state expenditure and decrease revenue, leading to budget deficits.
- States like Odisha, Andhra Pradesh, and West Bengal, being more disaster-prone, face higher costs and revenue losses compared to less affected states like Madhya Pradesh.
Challenges and Recommendations
- Current disaster response funds, NDRF and SDRF, are hindered by regulatory caps and procedural delays.
- Proposes proactive financial strategies like resilience bonds, disaster insurance, and catastrophe bonds for quicker financial recovery.
- Highlights need for more awareness and understanding of such financial instruments.
Public-Private Partnerships and Government Roles
Emphasizes the importance of public-private partnerships and calls for tax incentives for businesses to invest in climate resilience infrastructure. Suggests flexible budgeting and quick fund allocation during emergencies.
State Initiatives and Future Outlook
- Tamil Nadu, Kerala, and Odisha are noted for implementing advanced climate strategies.
- With increasing climate change-driven disasters, the study stresses the need for enhanced measures to mitigate long-term financial risks.
