Maha government may join hands with other states for drought relief

  • Kunal Purohit, Hindustan Times, Mumbai
  • Updated: Oct 17, 2015 00:46 IST

The cash-strapped state government may now be looking at a unique way of bailing itself out of natural disasters — tying up with other states for a private risk cover.

It is toying with the idea of availing a disaster risk financing and insurance, a concept seldom employed in the local context.

Senior government officials, including officials from the chief minister’s office and the relief and rehabilitation department, recently held a meeting with World Bank officials on the issue.

For now, the government may employ this concept only for agricultural losses owing to natural disasters such as drought, hailstorms or unseasonal rainfall.

What makes this model different is its federal structure. An official from the relief and rehabilitation department said, “A few states would be included under one insurance cover, which will benefit the agency and the states. While this will reduce the premium the states have to pay, the risks the agency faces will be diversified.”

The official added that one such risk cover would include states with diverse risks - drought-hit states, those with heavy rainfall and others prone to cyclones. “The states do not have to be neighbouring. Diverse the risks, the better it is for the agency,” he said.

This year, the state had earmarked Rs920 crore for drought-relief measures in August, an amount which is most likely to go up. In addition, the Cabinet had allocated Rs200 crore for damage to crops owing to unseasonal rains and hailstorms early this year.

The state government has also allocated Rs364 crore for losses suffered by farmers in Nashik, Pune, Aurangabad and Nagpur divisions during rabi farming.

Last year, the government had announced a package of Rs4,980 crore for crop losses suffered by farmers.

“One of the aspects of natural disaster is the financial liability it causes. The state government often suffers huge debts owing to such disasters as these are unavoidable costs. With a risk cover like this, we can facilitate relief as well as exercise financial prudence,” said Suhas Divse, the director of the state disaster management cell.

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