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THE IMPACT OF CATASTROPHES ON NATIONAL
AND REGIONAL ECONOMIES: A CASE STUDY
OF GUJARAT
Prepared by:• 130860131011
• 130860131012
• 130860131013
• 130860131014
• 130860131015
• 130860131016
• 130860131017
• 130860131018
• 130860131019
• 130860131020
• 130860131052
Guided by:• Sarita mam
SCHEME OF PARESENTATION
I.
GUJARAT : DISASTER ON A DAY OF CELEBRATION
II.
ECONOMIC CONSEQUENCES OF THE EARTHQUAKE
III. INDIA: NATURAL DISASTER MANAGEMENT
I. GUJARAT : DISASTER ON A DAY OF
CELEBRATION
51ST REPUBLIC DAY ON JANUARY 26, 2001
BACKGROUND
• GUJARAT: AN ADVANCED STATE ON THE WEST COAST OF INDIA.
• ON 26 JANUARY 2001, AN EARTHQUAKE STRUCK THE KUTCH
DISTRICT OF GUJARAT AT 8.46 AM.
• EPICENTRE 20 KM NORTH EAST OF BHUJ, THE HEADQUARTER OF
KUTCH.
• THE INDIAN METEOROLOGICAL DEPARTMENT ESTIMATED THE
INTENSITY OF THE EARTHQUAKE AT 6.9 RICHTER. ACCORDING TO
THE US GEOLOGICAL SURVEY, THE INTENSITY OF THE QUAKE
WAS 7.7 RICHTER.
• THE QUAKE WAS THE WORST IN INDIA IN THE LAST 180 YEARS.
WHAT EARTHQUAKES DO
CASUALTIES: LOSS OF LIFE AND INJURY.
LOSS OF HOUSING.
DAMAGE TO INFRASTRUCTURE.
DISRUPTION OF TRANSPORT AND
COMMUNICATIONS.
PANIC
LOOTING.
BREAKDOWN OF SOCIAL ORDER.
LOSS OF INDUSTRIAL OUTPUT.
LOSS OF BUSINESS.
DISRUPTION OF MARKETING SYSTEMS.
A SUMMARY
• THE EARTHQUAKE DEVASTATED KUTCH. PRACTICALLY ALL BUILDINGS AND
STRUCTURES OF KUTCH WERE BROUGHT DOWN.
• AHMEDABAD, RAJKOT, JAMNAGAR, SURENDARANAGAR AND PATAN
WERE HEAVILY DAMAGED.
• NEARLY 19,000 PEOPLE DIED. KUTCH ALONE REPORTED MORE THAN
17,000 DEATHS.
• 1.66 LAKH PEOPLE WERE INJURED. MOST WERE HANDICAPPED FOR THE
REST OF THEIR LIVES.
• THE DEAD INCLUDED 7,065 CHILDREN (0-14 YEARS) AND 9,110 WOMEN.
• THERE WERE 348 ORPHANS AND 826 WIDOWS.
LOSS CLASSIFICATION
• DEATHS AND INJURIES: DEMOGRAPHICS AND LABOUR MARKETS
• EFFECTS ON ASSETS AND GDP
• EFFECTS ON FISCAL ACCOUNTS
• FINANCIAL MARKETS
II. ECONOMIC CONSEQUENCES OF THE
EARTHQUAKE
DISASTER LOSS, RECONSTRUCTION COST
AND OUTPUT LOSS
• ADB AND WORLD BANK’S GUJARAT EARTHQUAKE ASSESSMENT MISSION
VISITED GUJARAT DURING FEBRUARY 11-22, 2001 FOR ASSESSING THE
ECONOMIC IMPACT OF THE EARTHQUAKE.
o THE DISASTER LOSS WAS ESTIMATED AT RS 99 BILLION.
o RECONSTRUCTION COSTS WERE ESTIMATED AT RS 106 BILLION.
o THE ANNUAL LOSS OF STATE DOMESTIC PRODUCT WAS ESTIMATED AT
AROUND RS 20 BILLION (ASSUMING AN ICOR OF 4) FOR THE FIRST 12
MONTHS.
DEMOGRAPHICS AND LABOUR MARKET
• GEOGRAPHIC PATTERN OF GROUND MOTION, SPATIAL ARRAY OF POPULATION
AND PROPERTIES AT RISK, AND THEIR RISK VULNERABILITIES.
• LOW POPULATION DENSITY WAS A SAVING GRACE.
• HOLIDAY
• EXTRA FATALITIES AMONG WOMEN
• EFFECT ON DEPENDENCY RATIO
• FARMING AND TEXTILES
SOCIAL SECURITY AND INSURANCE
• EX GRATIA PAYMENT: DEATH RELIEF AND MONETARY
BENEFITS TO THE INJURED
• MAJOR AND MINOR INJURIES
• CASH DOLES
• GOVERNMENT INSURANCE FUND
• GROUP INSURANCE SCHEMES
• CLAIM RATIO
DISASTER LOSS
•
•
•
•
•
•
•
INITIAL ESTIMATE RS. 200 BILLION.
CAME DOWN TO RS. 144 BILLION.
NO INVENTORY OF BUILDINGS
NON-ENGINEERED BUILDINGS
LAND AND BUILDINGS
STOCKS AND FLOWS
RECONSTRUCTION COSTS (RS. 106 BILLION) AND LOSS
ESTIMATES (RS. 99 BILLION) ARE DIFFERENT
• PUBLIC GOOD CONSIDERATIONS
IMPACT ON GDP
• APPLYING ICOR
• RS. 99 BILLION – DEDUCT A THIRD AS LOSS OF CURRENT
VALUE ADDED.
• ICOR OF 4
• GET GDP LOSS AS RS. 23 BILLION
• ADJUST FOR HETEROGENEOUS CAPITAL, EXCESS
CAPACITY, LOSS RS. 20 BILLION.
• RECONSTRUCTION EFFORTS.
• LIKELY TO HAVE BEEN RS. 15 BILLION.
FISCAL ACCOUNTS
• DIFFERENTIATE AMONG DIFFERENT TAXES: SALES TAX, STAMP DUTIES AND
REGISTRATION FEES, MOTOR VEHICLE TAX, ELECTRICITY DUTY, ENTERTAINMENT
TAX, PROFESSION TAX, STATE EXCISE AND OTHER TAXES. SHORTFALL OF RS. 9
BILLION OF WHICH ABOUT RS. 6 BILLION UNCONNECTED WITH EARTHQUAKE.
• EARTHQUAKE RELATED OTHER FLOWS.
• EXPENDITURE:RS. 8 BILLION ON RELIEF. RS. 87 BILLION ON REHABILITATION.
IMPACT ON REVENUE
• SALES TAX LOSSES FOR FEBRUARY AND MARCH 2001 WERE RS 115 CRORE. FOR
2001-02, THE LOSSES WERE EXPECTED TO BE RS 260 CRORE.
• ONLY 10% OF THE ESTIMATED STAMP DUTY AND REGISTRATION FEES WERE
EXPECTED TO BE REALISED IN FEBRUARY AND MARCH 2001, . FOR 2001-02,
COLLECTIONS WERE EXPECTED TO FALL BY 50%.
• MOTOR VEHICLE TAX COLLECTIONS WERE EXPECTED TO FALL SHORT OF
BUDGETED FIGURES BY ALMOST RS 600 CRORE.
• MONTHLY LOSSES OF RS 4 CRORE EACH WERE PROJECTED FOR ELECTRICITY DUTY
AND ENTERTAINMENT TAX
•.
• PROFESSIONAL TAXES WERE EXPECTED TO BE LOWER BY RS 5 CRORE IN THE
CURRENT YEAR.
IMPACT ON REVENUE (CONTD.)
• THE IMPACT ON TOTAL TAX REVENUES WAS ESTIMATED AT RS 286 CRORE, RS
345 CRORE, AND RS 436 CRORE, IN 2000-01, 2001-02, AND 2002-03
RESPECTIVELY.
• TOTAL OWN TAXES (AS % OF SDP) WERE EXPECTED TO FALL FROM BUDGETED
ESTIMATE OF 8.56% (2000-01) TO 7.85% AND FURTHER TO 7.46% IN 2001-02.
• TOTAL TAX REVENUE (AS% OF SDP) WAS EXPECTED TO DECLINE FROM
BUDGETED ESTIMATE OF NEARLY 10% (2000-01) TO 9.27% AND FURTHER TO
8.76% IN 2001-02
IMPACT ON EXPENDITURE
• TOTAL RELIEF EXPENDITURE (FOOD SUPPLIES, MEDICAL RELIEF, DEBRIS REMOVAL,
AND CASH COMPENSATION) WAS ESTIMATED AT AROUND RS 840 CRORE.
• TOTAL REHABILITATION EXPENSES WERE FIGURED AT RS 8665 CRORE. HOUSING
ACCOUNTED FOR THE HIGHEST EXPENDITURE (RS 5148 CRORE), FOLLOWED BY
EDUCATION (RS 837 CRORE) AND DRINKING WATER (RS 614 CRORE).
• TOTAL (RELIEF AND REHABILITATION) EXPENSES AMOUNTED TO RS 9,345
CRORE.
OTHER ECONOMIC IMPACTS
• NON-TAX REVENUES : INTEREST RECEIPTS, IRRIGATION RECEIPTS, AND ROYALTIES WERE EXPECTED
TO REMAIN LARGELY UNAFFECTED.
• MUNICIPAL FINANCES: ALMOST 10% OF MUNICIPAL REVENUES WERE EXPECTED TO BE LOST IN A
YEAR.
• BANKING : 68 COMMERCIAL BANK BRANCHES WERE FULLY DAMAGED AND 80 BRANCHES WERE
PARTIALLY DAMAGED.
• FINANCIAL MARKET: THE WEALTH LOSS WAS EXPECTED TO LEAD TO RESHUFFLING OF PEOPLES’
PORTFOLIOS AND AFFECT ASSET MARKET BEHAVIOUR.
• EMPLOYMENT: NEARLY 5 LAKH PEOPLE WERE EXPECTED TO BECOME UNEMPLOYED. EMPLOYMENT
IN SALT, CERAMIC, AND SMALL-SCALE INDUSTRIES (INCLUDING REFRACTORIES, POWERLOOMS,
COTTON GINNING ETC.) WAS WORST AFFECTED.
III. WHAT EARTHQUAKES DO
INDIA : VULNERABILITY TO EARTHQUAKES
56% OF THE TOTAL AREA OF THE INDIAN REPUBLIC IS VULNERABLE TO SEISMIC
ACTIVITY.
12% OF THE AREA COMES UNDER ZONE V (A&N ISLANDS, BIHAR, GUJARAT,
HIMACHAL PRADESH, J&K, N.E.STATES, UTTARANCHAL)
18% AREA IN ZONE IV (BIHAR, DELHI, GUJARAT, HARYANA, HIMACHAL
PRADESH, J&K, LAKSHADWEEP, MAHARASHTRA, PUNJAB, SIKKIM,
UTTARANCHAL, W. BENGAL)
26% AREA IN ZONE III (ANDHRA PRADESH, BIHAR, GOA, GUJARAT, HARYANA,
KERALA, MAHARASHTRA, ORISSA, PUNJAB, RAJASTHAN,
TAMIL NADU,
UTTARANCHAL, W. BENGAL)
IV. INDIA : NATURAL DISASTER
MANAGEMENT
A PARTICIPATORY APPROACH
• DISASTER MANAGEMENT
GOVERNMENTS.
IS
PRIMARILY
RESPONSIBILITY
OF
STATE
• THE GOVERNMENT OF INDIA SUPPLEMENTS STATE THROUGH POLICY AND
ADMINISTRATIVE RESPONSE.
• POLICY RESPONSE COMPRISES OF ACTIVATING ADMINISTRATIVE MACHINERY
FOR ASSISTING RELIEF MEASURES AND MONITORING PROGRESS.
• ADMINISTRATIVE RESPONSE COMPRISES OF PRIMARY AND SECONDARY
RELIEF FUNCTIONS.
RELIEF FUNCTIONS: PRIMARY AND SECONDARY
PRIMARY:
OPERATE WARNING SYSTEMS.
RESTORE
AND
MAINTAIN
UNINTERRUPTED
COMMUNICATION.
MAINTAIN
TRANSPORTATION
FOR
EVACUATION
&
MOVEMENT
OF
ESSENTIAL
COMMODITIES.
ENSURE
AVAILABILITY
OF
DRUGS & MEDICINES.
MOBILISE
FINANCIAL
RESOURCES.
SECONDARY :
REHABILITATION THROUGH
MILITARY AID TO CIVIL
AUTHORITIES
COORDINATING ACTIVITIES OF
STATE AND VOLUNTARY
AGENCIES
PREPARING CONTINGENCY
PLANS FOR CROPS, CATTLE
PRESERVATION, NUTRITION AND
HEALTH MEASURES.
PROVIDING TECHNICAL AND
TECHNOLOGICAL INPUTS FOR
DRINKING WATER.
FINANCIAL ARRANGEMENTS
• CALAMITY RELIEF FUND (CRF) IN EACH STATE.
• THE CRF ALLOCATION DURING THE PERIOD 2000-05 HAS BEEN INCREASED
TO RS 11007.56 CRORE AS COMPARED WITH RS 6304.27 CRORE DURING
1995-2000.
• THE EFFORTS ARE SUPPLEMENTED BY PROVISION OF ADDITIONAL
ASSISTANCE FROM NATIONAL CALAMITY CONTINGENCY FUND (NCCF)
DURING SEVERE CALAMITIES.
CALAMITY RELIEF FUND (CRF)
• CAME INTO FORCE FROM APRIL 1990.
• SET UP BY EACH STATE FOR FINANCING NATURAL CALAMITY RELIEF
ASSISTANCE (EARTHQUAKE, CYCLONE, FLOOD ETC.).
• FINANCIAL SHARE OF 3:1 BETWEEN THE GOVERNMENT OF INDIA AND
STATES.
• THE GOVERNMENT OF INDIA’S SHARE COMES IN AS GRANT-IN-AID.
• A STATE-LEVEL COMMITTEE HEADED BY THE CHIEF SECRETARY OF THE STATE
ADMINISTERS THE FUND.
NATIONAL CALAMITY CONTINGENCY FUND
(NCCF)
• CAME INTO FORCE FROM 2000-01.
• AIMS TO ASSIST NATURAL CALAMITIES (EARTHQUAKE, FLOOD, DROUGHT ETC.)
WHEN THE MAGNITUDE OF THE DISASTERS REQUIRE MORE SUPPORT THAN WHAT
THE STATE CAN PROVIDE.
• THE INITIAL CORPUS OF NCCF WAS RS 500 CRORE.
• THE NATIONAL CENTRE FOR CALAMITY MANAGEMENT (NCCM) UNDER THE M/O
HOME AFFAIRS ADMINISTERS THE FUND.
• ASSISTANCE PROVIDED BY THE CENTRE TO STATES FROM NCCF IS FINANCED BY
LEVY OF SPECIAL SURCHARGE ON CENTRAL TAXES FOR A LIMITED PERIOD.
EXPENDITURE NORMS UNDER NCCF AND CRF
• EX-GRATIA PAYMENT TO FAMILIES OF DECEASED PERSONS: RS
50,000/- PER PERSON.
• EX-GRATIA PAYMENT FOR LOSS OF LIMBS/EYES: RS 25,000/- PER
PERSON.
• INJURY LEADING TO HOSPITALISATION FOR MORE THAN ONE WEEK:
RS 5,000/ PER PERSON.
• RELIEF FOR OLD, INFIRM AND DESTITUTE CHILDREN: ADULTS- RS 20/PER DAY; CHILDREN- RS 10/- PER DAY.
• REPAIR/RESTORATION OF DAMAGED HOUSES: FULLY DAMAGED – RS
10,000/- (RS 6,000/- FOR KUCCHA); SEVERELY DAMAGED – RS
2,000/- (RS. 1,000/- FOR KUCCHA)
• ASSISTANCE TO ARTISANS (AS SUBSIDY) FOR REPAIR/REPLACEMENT
OF DAMAGED EQUIPMENT : TRADITIONAL CRAFT – RS 1,000/- PER
PERSON; HANDLOOM WEAVERS – RS 1,000/- PER LOOM.
GUJARAT : ASSISTANCE PROVIDED
• IMMEDIATE RELIEF OF RS 500 CRORE FROM THE NCCF.
• NCCF AUGMENTED BY IMPOSING A 2% SURCHARGE ON PERSONAL AND CORPORATE
INCOME TAX IN UNION BUDGET (2001-02) FOR ASSISTING GUJARAT.
• RS 110 CRORE PROVIDED FROM PM’S RELIEF FUND.
• ASSISTANCE WAS PROVIDED UNDER VARIOUS CENTRALLY SPONSORED SCHEMES FOR
RECONSTRUCTION OF SOCIAL AND PHYSICAL INFRASTRUCTURE.
• ARRANGEMENTS WERE TIED UP WITH ADB AND WORLD BANK FOR CREDIT WORTH US $800
MILLION.
• NHB AND HUDCO SET APART ADEQUATE FUNDS FOR HOUSING RECONSTRUCTION.
• RBI INSTRUCTED BANKS TO FREEZE RECOVERIES AND EXTEND LIBERAL LOANS.
• GUJARAT GOVERNMENT WAS ENABLED TO FLOAT TAX-FREE EARTHQUAKE BONDS.
MEASUREMENT OF POVERTY
(PERCENTAGE OF POOR)
• TWO BASIC INGREDIENTS IN MEASURING POVERTY:
• (1)POVERTY LINE: DEFINITION OF THRESHOLD INCOME OR CONSUMPTION
LEVEL
• (2)DATA ON SIZE DISTRIBUTION OF INCOME OR CONSUMPTION
(COLLECTED BY A SAMPLE SURVEY REPRESENTATIVE OF THE POPULATION)
Poverty Line (PL): Absolute vs. Relative
Relative PL defined in relative terms with reference to level of living of
another person; or, in relation to an income distribution parameter.
Examples: 50% of mean income or median, mean minus one standard
deviation.
Absolute PL refers to a threshold income (consumption) level defined in
absolute terms. Persons below a pre-defined threshold income are called
poor.
Indian Poverty Line
• A minimum level of living necessary for physical and
• social development of a person.
•
• Estimated as: total consumption expenditure level that meets energy (calorie)
need of an average person.
• PL comprises of both
consumption.
food and non-food components of
• Considers non-food expenditure actually incurred corresponding to this total
expenditure.
• Difficult to consider minimum non-food needs entirely on an objective basis
Relationship Between Calorie Intake and
Per Capita Expenditure
Per Capita Calorie Intake per day
3500
3000
2500
2000
1500
1000
500
0
0
100
200
300
400
500
600
700
800
Per Capita Consumption Expenditure per Month
(Rupees)
900
1000
AN EXAMPLE OF SIZE DISTRIBUTION OF
CONSUMPTION EXPENDITURE
MPCE
%Population
0-150
150-200
200-250
250-300
300-340
340-400
400-450
450-500
500-550
550-650
650-800
800-1000
Above 1000
All classes
3.2
4.0
6.5
8.6
10.0 (half of 10% are below poverty line 320)
11.3
8.6
9.2
9.3
11.4
8.9
5.0
4.0
100.0
MPCE: Monthly Per Capita Consumption Expenditure
Poverty Line: Rs. 320 per capita per month
HCR= 3.2+4.0+6.5+8.6+5.0 = 27.3%
Incidence of poverty Vs. Under-nutrition
Classification of Population by Poverty Line and
Calorie Norm - Rural India, 1977-78
Below
Poverty
Line
45.32
Above
Poverty
Line
12.47
57.79
Above
Calorie Norm
12.31
29.21
42.21
Total
57.63
42.37
100.00
Below Calorie
Norm
Total