India, Sri Lanka count the
cost By Jayanthi Iyengar
PUNE
- It is the saddest commentary that one of the world's
worst human tragedies may actually have limited economic
impact. Munich Re, the world's largest reinsurer,
announced late last week that it expected its damage
claims resulting from the tsunamis that hit Asia to be
less than US$135 million. In a press statement issued
last Tuesday, it said it did not expect claims related
to the world's strongest earthquake in 40 years to
change its forecast of 2004 profits of between $2.4
billion and $2.7 billion.
"Judging by the
information it has received so far, the Munich Re Group
expects its own burden to be limited, with a figure
currently under [$135 million]," Munich Re said in the
statement, adding that it needed more time for a better
estimate. "This means that at present there is no reason
to adjust the result forecast for the current business
year," it said.
Impact on India The
tsunami's effects are unlikely to have a major economic
impact on the Indian economy. The Indian government has
so far allocated about $220 million in relief measures
under various heads, half of which has come from the
National Calamity Relief Fund. This a contingency fund
from which all states can draw in case of a disaster.
The federal government has also announced that it will
provide compensation of $2,200 to the next of kin of the
victims from the Prime Minister's National Relief Fund.
India has thus far turned down external aid for
relief work, even while extending assistance to
neighboring Sri Lanka and Maldives. Simultaneously, the
Indian federal government has so far not made additional
budget allocations to meet relief activities.
Consequently, the tsunami is unlikely to have an impact
on India's fiscal position. Finance Minister P
Chidambaram has already issued statements to the effect
that the tsunami is unlikely to have an impact on
India's fiscal deficit.
The Indian areas hit
hardest by the tsunami are the southern coastal states
of Tamil Nadu, Pondicherry, Andhra Pradesh and Kerala,
and the Andaman and Nicobar Islands. Of these, the more
industrially developed Tamil Nadu and Andhra Pradesh are
the most important in economic terms, particularly
Chennai, a large port and the capital of Tamil Nadu. It
has been hit the hardest financially, though the tsunami
caused the most damage in the Andaman and Nicobar
Islands. The Indian government issued its report on the
Car Nicobar Islands on Sunday, where the military
general in charge of Southern Command said the
destruction of was "total". The Indian Air Force (IAF)
conceded on Sunday that more than 100 of its officials
had been washed away by the massive waves. After Air
Chief Marshal S Krishnaswamy toured the area, the air
force said its equipment and helicopters on the base
were safe. The IAF base at Car Nicobar plays a key role
in the operations of the tri-services command based in
the Andaman and Nicobar Islands, as well as for
search-and-rescue and surveillance missions. It is one
of the bases where family members are allowed to live
with IAF personnel. Commentators such as Rajesh
Chandaramouli have said in the Times of India that the
tsunami would punch a temporary hole in India's
national-security system. "The Car Nicobar base was a
strategic outpost of the IAF, used to keep an eye on
gun-runners and insurgents heading for Chittagong in
Bangladesh and enter India illegally," he said.
Chennai's importance stems from its position as
an important industrial and information-technology city.
It is home to several global auto manufacturers such as
Ford and Hyundai. Many global companies also have their
research and development centers in Chennai, while
global retail chains source material from the city,
particularly textiles.
In terms of tourism, the
beach town of Mamallapuram near Chennai is an important
destination for travelers, along with Rameshwaram and
Kanyakumari in the deep south. However, the east coast
of India boasts fewer tourist destinations compared with
the west coast, home to Mumbai, Goa and Tranquebar and
Tiruchendur in Kerala, which rank high on the
international tourist map.
According to the
Indian Ministry of Tourism, Chennai, Rameswaram and
Kanyakumari have been hit by the tsunami. However, even
within these cities, the impact varies. For instance,
the entire stretch of Marina Beach, along with its
pavements and other decorative structures erected along
the beach side, have been damaged in Chennai, while
places of interest such as Fort St George, Kapaleeswar
Temple, and the government museum remain intact.
On Thursday the Indian Tourism Office went to
great lengths to publicize the fact that the impact of
the tsunami was limited to Chennai and some parts of
southern India, stressing that Goa was totally safe.
Consequently, Goa, an already popular tourist
destination, has reported a spurt in arrivals since the
tsunami. "There has been some shift in tourist arrivals,
with some who had booked for Thailand, Sri Lanka and the
Andaman and Nicobar, opting for New Year celebrations in
Goa," said Surinder Singh, a tour operator.
Meanwhile, the tsunami's impact on India's
fishery industry is likely to be strong, but it is
unlikely to impact the gross domestic product (GDP) of
the country. "The fishing industry, which has been a
very very strong exporter, it's going to be affected,”
said N Srinivasan, director general of the Confederation
of Indian Industries, one of three national industry
associations. However, experts agree that the
contribution of fisheries to the Indian GDP is limited
(1.3%), therefore it is unlikely to hit growth.
The concerns in Chennai, however, stem from
another quarter. The tsunami has hit the poor in large
numbers. If the direct death count was devastating,
experts expect the fallout of disease and want to be
even more severe. Some analysts predict that disease
could impact the ability of the people in cities such as
Chennai to work, which could affect the interests of
foreign companies, which have invested in India to take
advantage of its cost advantage. However, Sujatha
Rajagopalan, a microbiologist with Madras Medical
College, said, "The health service in Chennai is more
than adequate to tackle any epidemic." Further,
companies such as the San Francisco-based Levi Strauss
& Co that subcontract manufacturing to firms in
Indonesia, India and Sri Lanka, have made statements to
the effect that the tsunami's impact on its operations
would be minimal. "There was no impact to the
contractors that we work with in those three countries,"
Levi Strauss spokesman Jeff Beckman said. However, the
firm will have to adjust to shipping delays of three to
seven days for orders already scheduled from India and
Sri Lanka, he said.
Ironic as it is, the timing
of the tsunami - the day after Christmas - may have
worked to India's advantage. The holiday season has
helped ease the impact on businesses, particularly the
apparel industry, which schedules most shipments to
accommodate big sales before the holiday. India not
being as large a part of the global supply chain as
countries such as China, Indonesia, Thailand and
Malaysia has also helped, since the damages, if any, are
limited to India and are unlikely to spread the
contagion effect globally.
Significantly, while
the world is struggling to estimate the human dimensions
of the tsunami, experts are just beginning to estimate
the environmental impact. The Indian Ministry of Tribal
Affairs has released $459,000 for the rehabilitation of
the primitive tribal communities in Andaman and Nicobar
Islands who have been affected by the tsunami waves. The
ministry spokesperson said a team of two officers, one
of whom is an anthropologist, had been dispatched by the
Ministry of Tribal Affairs, who would visit the
habitation of these primitive tribal communities to
assess the damage first hand so that a proper relief
package may be prepared for them. Responding to reports
that some of the ancient tribes have been wiped out, the
spokesperson clarified that the five primitive tribal
communities, including the Sentinelese, with whom there
is no contact and who live in North Sentinel Island,
were safe. The ministry's assessment is based on aerial
surveys, during which people from these tribes were
spotted. Entry to these Islands is still restricted,
with only defense personnel and select non-governmental
organizations being allowed to go the islands. This is
in part due to the strategic positioning of the island
and partly because another round of tsunami onslaught is
feared. The islands are considered unsafe as they are
low-lying.
The debate on putting in place an
advance warning system is also beginning to gain root.
Incidentally, environmentalists are taking the view that
the tsunami caused less damage in states such as
Pondicherry because the environmental degradation there
has been limited. Dr V Rajamani, a well-known scientist,
explained that there were not many casualties in
Pondicherry, "because the coastal region was reasonably
protected unlike places like Nagapattinam, Cuddalore,
where the river mouth adjoining the sea is occupied by a
large number of people". The river mouths are generally
low-lying areas. A tsunami would sweep thorough these
areas, resulting in greater loss of life in areas where
the population is denser than those in the less densely
populated areas.
Sri Lanka The human
devastation of the tsunami in Sri Lanka has been severe.
It has rendered a large number of people homeless,
displacing adults and children in a country, which is
already troubled by a decade-long civil war involving
the Liberation Tigers of Tamil Eelam (LTTE). The maximum
damage seems to be in the Batticoloa area, though there
are very few reports of the actual damage in the areas
controlled by the Tigers such as Kilinochchi and
Mullaitivu.
"The larger countries like India,
Malaysia and Thailand will still be able to weather the
shock, backed by their strong economies. The problem is
the smaller ones, like Sri Lanka and the Maldives, which
lack the economic strength to weather this onslaught,"
said R Srinivasan, resident editor at Times of India.
The Sri Lankan government has declared a state
of emergency and, along with the government of Maldives,
has requested international aid and assistance. The
United Nations' Office for the Coordination of
Humanitarian Affairs, which is involved in the relief
coordination process, has helped sensitize the rich
nations to the plight of Sri Lanka, as a result of which
the United States has pledged $350 million in aid, while
the other Group of Seven (G7) nations are debating the
waiving of outstanding loans to developing countries.
The main problem facing Sri Lanka is that the
destruction has been so widespread that information is
only beginning to trickle from the island nation.
Neighboring India and Bangladesh have rushed
relief to Sri Lanka. Russian medical-relief teams are
also on the island and Sri Lankan President Chandrika
Kumaratunga has asked international ceasefire monitors
to prevail upon the LTTE to allow the Russian relief
teams to deliver aid to people in the LTTE-controlled
areas.
The tourism industry, which was limping
back to normalcy, has been hit afresh. Many prominent
persons in the public eye and government have been
killed. As a result, chaos prevails when it comes to
managing the relief operations. Sri Lanka's biggest
concern currently is to get food and fresh water to
people in the tsunami-affected areas and to control an
epidemic if it were arise on account of the mixing of
fresh and polluted waters. However, there are reports of
the relief operations being hampered by the separatist
groups, who fear the presence of foreigners on the
island in such large numbers. Tim Costello, head of
World Vision Australia, recently told Channel Seven
Television in Colombo that major international
organizations had requested police escorts to speed the
delivery of aid to tsunami-stricken areas, as blocked
roads and other problems were hindering aid convoys. It
took as much as eight hours to carry emergency supplies
the 120 kilometers from the capital Colombo to the
southern city of Galle. "We've now got a promise from
the government that we'll have police escorts with our
lorries [trucks] because the aid is only trickling when
it takes that long - it needs to be flooding," Costello
said. He pointed out that because so many government
officials had died because of the tsunami, it was taking
time for organized activity to prevail over the
confusion. "The truth is that the Sri Lankan government,
I think, is in shock too," because of which real
organized control over the chaos was "very, very slow".
Interestingly, many experts now see a positive
side to the tragedy. They point out that the calamity
could bring to an end to the separatist wars in the
region, as the Tamil Tigers would now be forced to work
with the government to deliver relief to the dead, dying
and the displaced. "The silver lining in this tragedy is
that we may not go back to war anytime soon," retired
air force chief Harry Gunatillake told a Sri Lankan
daily. "The common grief also gives an opportunity for
mending fences."
Meanwhile, the United Nations
Environment Program (UNEP) has decided to create a task
force in Geneva to coordinate all inputs from the UNEP
system to identify and alleviate the environmental
impact of the disaster and to support the efforts of the
affected countries and the UN.
UNEP has
mobilized $1 million to respond to the immediate needs
identified by the region's governments. "Our support
echoes directly the requests from national authorities
for environmental experts to assess and mitigate the
urgent problems. Therefore we are sending experts to
work with the governments and the UN country teams,"
Klaus Toepfer, executive director of UNEP, said in a
statement. The agency has also strengthened its office
in Bangkok, which is responsible for activities in the
Asia-Pacific region.
"While the focus is to save
lives and fight diseases, it is also important to
address underlying risks, such as solid and liquid
waste, industrial chemicals, sewage treatment and the
salinization of drinking water. The damage to ports and
industrial infrastructure may be severe, with untold
risks to human health. Likewise, revitalizing local
communities and their livelihoods will require
rehabilitating and protecting vital natural ecosystems,
in particular mangrove forests and coral reefs," Toepfer
said.
He added that UNEP was mobilizing its
remote-sensing and geographic-information system
capacities, in collaboration with other UN agencies, to
help identify impact and make relevant information
available to relief efforts. All in all, a number of
grave environmental concerns must be taken into account
as the reconstruction plans are drawn up.
Several governments in the region have stressed
to UNEP the importance of developing effective
early-warning systems. This issue will be high on the
agenda of an international meeting on the Sustainable
Development of Small Island Developing States, scheduled
to take place in Mauritius from January 10-14, and at
the World Conference on Disaster Reduction, scheduled to
take place in Kobe, Japan, from January 18-22. UNEP will
be a main contributor to these conferences.
Jayanthi Iyengar is a senior business
journalist from India who writes on a range of subjects
for several publications in Asia, Britain and the United
States. She can be contacted atjayanthiiyengar1@hotmail.com.
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