
Natural disasters, climate change have long-term impact on state finances: IIT Bombay
Live MintNew Delhi, January 30 : India experiences five to six tropical cyclones every year, with two or three being severe. A study by the Indian Institute of Technology Bombay said that these disasters cause not only immediate loss of life and property but also put a significant financial strain on the government. The state government bears much of the disaster response cost after natural disasters such as floods and cyclones which substantially impacts its budget.The findings from the study show that disasters put a heavy financial burden on affected states.It increased the state's expenditure. The IIT-B study highlighted a cycle in which increased expenditures and falling revenues lead to more significant budget deficits.The study suggests that public-private partnerships are essential for building a climate-resilient economy and the government can offer tax incentives for businesses to invest in climate resilience infrastructure and enforce sustainable regulations.The research published in the International Journal of Disaster Risk Reduction pointed out that the implementation of disaster risk financing mechanisms is challenging due to a lack of awareness and understanding among stakeholders, including governments and the public, about the benefits of such instruments.The study emphasised the need for proactive disaster risk financing mechanisms such as resilience bonds, disaster insurance, and catastrophe bonds. Mechanisms such as resilience bonds encourage investments in disaster prevention projects and offer incentives for reducing the effects of disasters.
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