A Study of Global Practices on Financial Resilience Against Natural Disasters and its Relevance to Andhra Pradesh
Keywords:
Disaster Management, Financial Resilience, Insurance, Reserve Funds Catastrophe BondsAbstract
Financial resilience is an important component of disaster management process as it allows the governments, individuals and businesses to recover from the effects of a disaster in a timely and efficient manner. It comprises internal and external funds to buffer against disaster shocks. In India, the State government is primarily responsible for disaster management in the State and relief expenditure is met from State Disaster Relief Fund. The State government faces huge financing gap post disaster as available financial resources are not enough to overcome this gap. Various reports indicate that the frequency and magnitude of natural hazards have increased in recent decades and the associated financial and economic losses are increasing at a rapid pace.
In order to mitigate the impacts of natural disasters and achieve financial resilience, the countries around the world have employed various innovative financial risk reduction measures and tools. These tools include reserve funds, insurance, catastrophe bonds, credit liabilities, microfinance/ microcredit arrangements etc which can be classified into immediate/ emergency response, recovery and reconstruction/ rehabilitation measures. The Indian state of Andhra Pradesh is exposed to various natural disasters like cyclones, storm surges, floods, droughts of which cyclones are more common because of its geographical location and has repercussions on the state’s economy, its development policies and life of millions of people. The global practices in various parts of the world provide good examples for financial resilience and the relevant practices can be emulated to augment financial resilience in the state of Andhra Pradesh.
The paper explores how various relevant global practices on financial resilience including the recent innovations can be emulated to augment the financial resilience of the State of Andhra Pradesh against hydro-meteorological disasters.
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