The Hindu Business Line : Tsunami may worsen fiscal deficit: ADB

THE Asian Development Bank (ADB) has said that the tsunami will adversely impact India's fiscal deficit through large spending on rehabilitation and reconstruction operations that will be initiated as soon as the relief phase draws to an end.

The Bank said the impact on manufacturing and services is negligible, and the adverse impact on fisheries highly localised. Therefore, it is not expected that the tsunami will have any noticeable impact on GDP growth.

Due to the size of India's economy, the macro impact will be minimal. The port city of Chennai was hit, but the city's industrial and port infrastructure have not been affected. The economy should be in a strong position to recover from the tragedy.

The tsunami would not expectedly have any major long-term impact on tourism in India though tourism has been temporarily disrupted in coastal areas.

However, poverty impacts may be substantial, especially at local level. In the affected States, initial estimates indicate that number of poor people could increase by 6.45 lakh.

The tsunami affected 2,260 km of the mainland coastline besides the entire Andamans. In the mainland States, the Bank said quoting reports, 162 km of national highways, 462 km of State/district highways, seven bridges, 34 culverts and a huge number of private homes and government buildings have been damaged. Total financial loss for the mainland States is estimated to be $1.5 billion as of January 10.

The Bank identified the immediate key priorities are the disposal of dead bodies, which have become a major health hazard; prevention of epidemics; provision of fresh water; oral re-hydration kits; food; medicines; plastic sheets for shelter and clothes to the displaced persons.

The extensive damage caused to private homes, public property (infrastructure) and farmlands (due to flooding of sea water, three to four km inland) is still being assessed, the Bank said. The worst affected State is Tamil Nadu, although Kerala, Pondicherry and Andhra Pradesh have also been affected. The Andaman and Nicobar Islands, which are nearest to the epicentre of the earthquake, have been badly hit.

Coastal fisheries and agriculture are the worst affected economic activities. Apart from the loss of human life among the fisherfolk, fishing boats and nets have been extensively damaged. Moreover, fishing harbours and landing centres have also suffered heavy damage. Agriculture has been hit due to levelling of fields, destruction of irrigation, loss of land due to massive erosion and deposition of non-fertile sediments.

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