Devastating floods in India not only cause an immediate loss of the human lives and property worth crores of rupees but also put the nation's economic output at risk, thereby worsening the growth of country's gross domestic product (GDP) due to such natural threats. The specialist insurance market lloyd's report has revealed that flood situation in India has over Rs2.25 lakh crore or $33.84-billion exposure to the GDP at risk, the second largest exposure after the pandemic risks in the country.
"The catastrophes caused by natural events, such as extreme weather, pandemics and plant epidemics account for over Rs6.51 lakh crore or $98.1 billion of GDP at risk in the 10 cities across India, while flood damage projects an exposure of around Rs2.25 lakh crore or $33.84-billion to the country's GDP at risk," said the data of lloyd's City Risk Index 2015-2025, released on Thursday.
Based on original research by the Cambridge Centre for Risk Studies at the University Of Cambridge Judge Business School, the index finds that a total of $4.6 trillion of projected GDP is at risk from man-made and natural disasters in these cities around the world. The index, which will be updated every two years, is aimed at stimulating further discussions between insurers, Governments and businesses on the need to improve resilience mitigate risk and protect infrastructure.
With such untoward calamities, country's infrastructure, including railways, power and communication are bound to suffer a huge loss of crores of rupees, impacting the GDP growth of the country. "Insurers, various Governments including the Centre, businesses and communities need to think about how they can improve the resilience of infrastructure and institutions. Insurance is a part of the solution," said Vincent Vandendael, Director of Global Markets, lloyd's.
However, Bhargav Dasgupta, Managing Director and CEO at ICICI lombard General Insurance said, "As per the lloyd's report, if we look at floods we have seen huge losses incurred due to such incidents in India every year. We had seen huge economic damage in Mumbai of Maharashtra, J&K, Uttarakhand and now in Assam where the flood situation has almost worsened the state economy."
last year, floods alone in four states in India - Odisha, Assam, Meghalaya, J&K - have cost the country over Rs18,612 crore till now. Killer floods in J&K also alone have caused an immediate loss of Rs5,400 to 5,700 crore to the state's economy, according to industry body ASSOCHAM's estimates.
According to the lloyd's, India's top 10 cities have $179.8 billion or Rs11.9 lakh crore GDP at risk which presents an analysis of economic output at risk or GDP at risk in 301 major cities from 18 man-made and natural threats over a ten-year period.
Mumbai has the largest total GDP at risk with a $47.38 billion or Rs3.13 lakh crore risk exposure. Almost one quarter of the city's potential losses are related to pandemic risk, followed by terrorism at 16.77 per cent, market crash at 12.94 per cent and flood at 12.89 per cent.
Globally, Mumbai has the largest GDP exposure to terrorism in the Index at almost $8 billion (Rs52,960 crore) and the second highest exposure to power outage with $1.92 billion (Rs12,710.4 crore) of GDP at risk.
In India, the index found the cities of Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kanpur, Kolkata, Mumbai, Pune and Surat together will generate an average annual GDP of $1.4 trillion in the coming decade. However, 12.6 per cent of this economic growth is at risk from the combination of all man-made and natural threats.