Bhopal: A growing economy stalled by gas tragedy

  • Rahul Noronha, Hindustan Times, Bhopal
  • Updated: Nov 29, 2014 22:39 IST

Thirty years ago this week, Bhopal was on the cusp of a prosperous future until the gas leak at Union Carbide released tones of poisonous gas, killing thousands and maiming tens of thousands.

Not only the city but the entire state was growing when the leak, considered as the worst industrial accident knocked the city’s economy by years and now decades, causing widespread and long-lasting poverty well beyond the areas affected by the initial gas cloud, say economic analysts and activists.

The presence of a large multinational — Union Carbide — in the 1970s had a profound effect on the nascent economy of the town as did the compensation amount that was distributed to the victims in the aftermath of the Bhopal gas tragedy, they said.

While the union carbide plant was a source of employment for almost a thousand families and also generated livelihoods for others who were its suppliers, the compensation amount distributed to victims also eventually found itself back into the economy.

The compensation amount, $470 million (Rs 715 crore) at the time of the settlement in 1989 was distributed among the kin of 5,345 deceased persons and 5.74 lakh others who were considered affected.

"The compensation money was for a lot of people more than their annual income and was spent on improving comforts, on repairing the house, buying furniture, electronics, beds, two wheelers etc," said economic analyst Rajendra Kothari.

"However, it did not help the local economy in a long term."

"The compensating agency should have instead thought of creating employment or something more sustainable," he added.

The money, distributed over nine years in the first installment and a similar amount was added following a Supreme Court order after completion of first round of compensation payment on a pro rata basis.

Subsequently, the apex court ordered another payment of Rs 2 lakhs to about 42,000 people who had suffered critical injuries.

What would be the impact of distribution of a Rs 3,000 crore compensation have on a small economy like Bhopal?

"93% of beneficiaries got Rs 50,000 as compensation while 7% got between Rs 2 to 8 lakhs which means the amount of money held individually was not very big," said Satinath Shadangi of the Bhopal group for information and action.

"I agree that the compensation money must have had an impact on the local economy."

"Whenever compensation like this is distributed, an entire ancillary industry of corruption comes up…The amount that is left with beneficiaries is paltry," he added.

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