Risk management for vibrant economic growth and sustained development

Abstract

PurposeThe paper seeks to makes a correlation between poverty; and disaster‐induced losses and to clearly put forth a hypothesis for deepening poverty in India; the disaster – poverty cycle, and to suggest that India would perpetually remain a developing nation unless attempts are made to reduce the burden of disasters on the public exchequer. A practical strategy is put forth for disrupting the disaster – poverty cycle through appropriate risk management measures. This is envisaged to better compensate the disaster victims besides significantly reducing the burden upon public exchequer. The paper thus aims at contributing to economic growth and development of India.Design/methodology/approachBased on the review of the practices in other nations as also in India a strategy is proposed for disrupting the disaster – poverty cycle so as to accelerate economic growth and development of the nation.FindingsExperience the world over suggests that risk management is the key for reducing the burden on the public exchequer as also for minimising the misery and trauma of the masses exposed to disasters. Risk management has been split into two parts; risk reduction and risk transfer. The former aims at reducing the misery of the masses apart from lessening the burden of post‐disaster reconstruction while the latter aims at significantly reducing the burden on the public exchequer as also the trauma of the disaster victims by way of introducing compulsory insurance cover for all residential units.Research limitations/implicationsThe paper attempts to put forth a blue print of a strategy for disrupting the disaster – poverty cycle. Open debate on this important issue is intended to be initiated so as to improvise the strategy in view of the ground realities and past experiences so as to evolve a practically applicable strategy. Together with this the financial implications and practical constrains in implementation have to be probed in detail before putting the same into actual practice.Practical implicationsBesides highlighting the need for reducing the burden of disasters on the public exchequer the paper highlights the shortcomings in the relief package at present being offered by the state to the disaster victims in India. The state should come forward with instruments that better compensate for the individual losses of the disaster victims. Public opinion would at the same time force the state to devise ways of minimising the burden of disasters on the public exchequer and the ensuing enactments would pave way for vibrant economic growth and development of India. This debate would also lead to refinement of the strategy proposed in this paper so as to make it practically applicable and acceptable.Originality/valueBased on experience in the field of disaster management the paper has innovatively put forth a sound correlation between increasing frequency and toll of disasters and the deepening poverty of India. This economic correlation (disaster – poverty cycle) is sure to invoke the interest of the various stakeholders on this important issue. The paper thus reflects the author's understanding of the issues related to disaster management.