Description

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Context:

According to a report by Swiss Re, the global insurance giant, natural disasters caused an estimated $12 billion in economic losses in 2023, well above the $8 billion annual average over the past decade.

Key events of 2023

Event	Affected Areas	Impact
Floods in North India and Sikkim	Himachal Pradesh (including Shimla), Delhi	Widespread damage due to heavy rains, disrupting daily life and infrastructure.
Tropical Cyclone Biparjoy	Kutch, Gujarat; Maharashtra; Rajasthan	High winds and heavy rains caused widespread damage; and shut down major ports like Kandla and Mundra.
Tropical Cyclone Michaung	Chennai, Tamil Nadu	Extreme rainfall led to significant economic losses and urban disruption.

India’s Unique Vulnerabilities

Monsoons caused by floods: Contribution to losses: Floods have accounted for an average of 63% of annual economic losses over the past two decades.
India's geography and climate expose it to heavy rains during:
Summer Monsoon (June–September): Causes severe flooding as seen in Kerala (2018) and Uttarakhand (2013).
Northeast Monsoon (October–December): Responsible for floods like Chennai (2015).

Economic and industrial exposure

States like Gujarat, Maharashtra, and Tamil Nadu are highly industrialized and contribute 36.8% to India's total industrial output. These states also face increased risks:
Gujarat: Prone to floods, tropical cyclones and earthquakes.
Maharashtra: Prone to floods and cyclones especially in Mumbai.
Tamil Nadu: Regularly affected by monsoon floods and cyclones especially in Chennai.

Earthquake risks

Urban centers such as Delhi and Ahmedabad face significant earthquake hazards.
A large earthquake in the Himalayas or near urban centers such as Mumbai could lead to catastrophic losses, potentially surpassing the devastation caused by the 2001 Bhuj earthquake in Gujarat.

Challenges

Impact	Description	Examples
Loss of Life and Property	Significant loss of human, agricultural, and animal life in densely populated areas.	Disasters in densely populated regions.
Economic Losses	Destruction of infrastructure burdens the national exchequer and disrupts economic activities like tourism.	Uninsured economic losses in India: $32.94 billion (2018–2022, Swiss Re).
Disruption of Business	Disasters disrupt transport, communication, and public services. Companies often lack IT disaster recovery plans.	Service and infrastructure disruptions.
Environmental Losses	Loss of natural resources, biodiversity, and habitat destruction due to events like forest fires, landslides, and cyclones.	Forest fires in Uttarakhand and the Amazon (2019–2020). Landslides affecting habitats.
Health Effects	Disasters cause health issues such as radiation syndrome, and neurological disorders, and contribute to poverty, hunger, and malnutrition.	Impact of nuclear accidents and oil spills.

Costliest floods

Mumbai floods (2005): Losses of $5.3 billion
Chennai floods (2015): $6.6 billion in losses

Building Resilience

Step	Description
Hotspot Identification	Identify high-risk regions like Ahmedabad, Mumbai and Chennai using detailed data for targeted mitigation.
Risk Assessment	Use advanced models with current data to accurately assess potential exposure and risk accumulation.
Providing a Solution	Design reinsurance programs to address protection gaps and promote affordable insurance options.

Conclusion

Investing in disaster preparedness, risk management and building resilience is not just a matter of protecting lives and livelihoods in the short term, but is also critical to ensuring the long-term sustainability and prosperity of communities in an increasingly uncertain world.

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Source:

https://indianexpress.com/article/business/india-economic-losses-natural-catastrophes-9779008/

PRACTICE QUESTION

Examine the major natural catastrophe risks faced by India and assess their economic impacts on various sectors. Suggest policy measures to mitigate these risks and enhance resilience. (150 words)