The Hindu Business Line : Tsunami has spared AP economy, says study

THERE is no adverse fiscal impact of the December 26, 2004, Sumatra earthquake-induced tsunami on Andhra Pradesh, according to a study by the Asian Development Bank, United Nations and the World Bank.

The revenues are completely unaffected, and the additional expenditure in 2005-06 is estimated to be less than 0.1 per cent of the Gross State Domestic Product (GSDP). This could be offset by the unspent balances in the calamity relief fund.

The Andhra Pradesh Government has received Rs 100 crore under the National Calamity Relief Fund to meet temporary and immediate relief needs. In its memorandum to the Centre, the AP Government had estimated the total cost of reconstruction as Rs 315 crore, which works out to about 0.2 per cent of the GSDP.

The short-term reconstruction is estimated to be about Rs 114 crore, which is 0.1 per cent of the GSDP.

The estimated medium-term reconstruction cost is Rs 201 crore, which also works out to 0.1 per cent of the GSDP. The short-term reconstruction is expected to be borne in 2005-06, while the medium-term reconstruction costs could be bridged during 2006-07.

The study titled `India - Post-tsunami recovery programme: Preliminary damage and needs assessment', felt that it may also be the case that unspent amounts under the calamity relief fund would be able to meet part of the short-term costs. There is also no impact on the State growth rate, it said.

During fiscal 2006-07, the additional expenditure due to tsunami is estimated to widen the deficit by 0.1 percentage points of GSDP. The additional expenditure is expected to have only a marginal impact on the State's medium-term fiscal plan projection for 2005-06 and 2006-07.

Unlike Tamil Nadu and Kerala, there would be no spiral effect of the additional expenditures in subsequent years.

Hence, the study concluded that there was no need to develop status quo and new scenarios for Andhra Pradesh.

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