Mumbai: A study by researchers from the Indian Institute of Technology Bombay (IIT-B) has highlighted inefficiencies in the existing disaster relief mechanisms, particularly in the allocation of funds through the National and State Disaster Response Funds (NDRF and SDRF).
The research, conducted by Nandini Suresh, Prof Trupti Mishra, and Prof D Parthasarathy, stresses that procedural delays and restrictive regulations hinder the timely disbursal of relief, exacerbating financial distress. The study suggested that simplifying fund allocation processes is essential to enhancing disaster response efficiency and mitigating long-term economic damage.
Natural disasters such as floods and cyclones cause significant financial strain on the government. India’s geographical location and monsoon climate make it highly vulnerable to extreme weather events, with five to six tropical cyclones occurring annually, at least two of which are severe.
While these disasters cause immediate destruction, the IIT-B study emphasised the prolonged economic burden they place on state budgets.
The research pointed to a significant increase in state expenditure due to emergency response efforts, infrastructure rebuilding, rehabilitation, as well as revenue losses due to disruption in agriculture, trade, and business activities.
To mitigate these financial risks, the research advocated for proactive disaster financing measures such as resilience bonds, catastrophe bonds, and disaster insurance. These financial instruments can provide quick access to funds, reducing reliance on external loans and minimising long-term economic damage, according to the research.
However, their adoption in India remains limited due to a lack of awareness, high insurance costs, and the absence of a clear regulatory framework, the researchers observed.
To measure the economic impact of disasters accurately, the researchers developed a Disaster Intensity Index (DII), which relies on meteorological data such as wind speeds for cyclones and unusual rainfall levels for floods. This approach ensures a more objective assessment compared to traditional methods that rely on reported economic losses, which are often inconsistent.
The study found that the financial impact of disasters varies by region. Coastal states such as Odisha, Andhra Pradesh, and West Bengal, which frequently experience cyclones and floods, face greater economic challenges.
Their recovery expenses are high, and they often require external funding, leading to increased state debt and budget deficits. In contrast, states like Madhya Pradesh and Chhattisgarh, which experience less severe disasters, can typically manage relief efforts with their own resources and suffer less economic disruption.
The study underscored the importance of investing in early warning systems, climate-resilient infrastructure, and sustainable urban planning to reduce economic vulnerabilities. According to the study, several Indian states have already made progress in this direction—Tamil Nadu has implemented advanced cyclone monitoring systems, Kerala has embraced climate-adaptive urban planning, and Odisha has introduced budget tracking for climate-related expenditures.
