Report on Kerala floods: how it will affect the states ppc
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floods affected the south Indian state of Kerala, due to unusually high rainfall during the monsoon season. It was the worst flood in Kerala in nearly a century. Over 483 people died, and 14 are missing.
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The incessant rains and floods that have ravaged Kerala since the beginning of August have led to widespread destruction of property and displacement, the extent of which is yet to unravel fully.
The impact of the floods on Kerala is quite sharp and the economic consequences significant. This is beyond the suffering caused to the families affected by the flood.
As per primary estimates, rebuilding and reconstruction of most affected districts is likely to have a sizeable economic and financial costs attached to it, says a research report.
In the report, CARE Ratings Ltd says, "An assessment of the destruction, the economic costs and impact of reconstruction is a challenge given the scale and extent of the damages. The rebuilding and reconstruction of the five most affected districts and of the infrastructure destroyed is likely to be a long drawn out process, one which is likely to have a sizeable economic and financial costs attached to it."
The five worst-affected districts of the state’s 14 districts, including Idduki, Ernakulam, Kollam, Kottayam and Pathanamthitta have an estimated population of 11.09 million, which accounts for nearly 30% of the state’s total population.
The ratings agency estimate that the employment of nearly 4.13 million individuals of these districts have been affected because of the deluge and the resultant disruptions.
Of the total working age population in the five districts, around 19% comprise agriculture workers and household industry workers account for only 2%. Labourers in the district of Ernakulam are estimated to be the most affected followed by Kollam and Kottayam.
Talking about relief camps, the report says, at present, number of people in the relief camps has been estimated to be around 1 million.
It says, "Sustaining these families on a consistent basis would involve a minimum sum of around Rs10 crore a day or Rs300 crore a month. This would have to be financed from either relief grants from the central government or contributions by other states. The medical costs which go with the resulting disease control would be dependent on the extent to which there could be epidemics."
Rehabilitation-led Economic Activity To Increase
Following the temporary disruption in business and economic activity, CARE Ratings says, reconstruction and rehabilitation of the flood affected regions infrastructure and businesses would result in an increase in economic activity.
"The increased activity, however, is likely to be centred on rebuilding efforts and may not lead to an overall increase in economic activity given the huge loss to property and infrastructure, the reconstruction of which would be time consuming given the shortages of skilled manpower and financial resources in the state," it added.
The Kerala government has projected an improvement for the state’s GDP for 2018-19. At current prices, the ratings agency says, state GDP is slated to grow by 12.6%, 1.3% higher than year ago, adding, "this could translate to a growth of 7.6% in real terms taking inflation to be 5%. In light of the recent development and the impact of the same we expect the state’s economy could be affected by up to 1% depending on the time taken at rehabilitation and reconstruction especially for tourism and recreation activity. Agricultural output would definitely be affected and growth can be negative."
Kerala’s financial position has been strained over the years. The state has been sustaining a high revenue deficit and has been unable to maintain its fiscal deficit within the 3% target of GSDP. It also carries a high debt burden with outstanding debt at Rs2.1 lakh crore (2017-18) or 31% of GSDP.
The state has been unable to adhere to the fiscal consolidation guidelines stipulated by the Finance Commission. The revenue expenditure of the state has been accounting for over 80% of the state’s total expenditure, constraining the state’s ability to undertake expenditure for capital creation and thereby the future economic and revenue generation capability of the state.