A ‘black swan’ event is one that deviates extremely widely from the normal and therefore is almost impossible to predict. By definition, black swan events are incredibly rare. Yet, Chennai has suffered two black swan natural disasters in just a decade — a tsunami in December 2004 and catastrophic rains, the heaviest in over a century, this year. If black swans are to be the new normal, then a radical review of our disaster management plans is called for.
Chennai’s nightmare is still ongoing, but the disaster that has unfolded so far has already exposed many chinks in the government’s disaster preparedness at all levels, Central, State and local. What is more worrying is the lack of any kind of plan to deal with the aftermath. Chennai is one of the key engines of the economy, contributing an estimated 3 per cent to the national GDP. The city had over 86,000 micro, small and medium enterprises as of 2011-12 (the last year for which data is available), employing over 2.9 lakh persons. It is home to one of India’s biggest automotive manufacturing centres and is India’s fourth largest IT/ITES hub. Almost all of them have suffered major damage. Estimates of losses have ranged from ₹15,000 crore to over ₹1 lakh crore. The real loss could be higher, as many people have suffered severe damage not only to their homes, but everything in it. More importantly, many have lost both their accumulated capital and their future livelihoods. Credit ratings agency SMERA has estimated that the average Chennai citizen stands to lose an income of ₹2,350 a week, which amounts to ₹1,200 crore for the city as a whole. MSMEs are losing an estimated ₹840 crore a week. On a national scale, the loss incurred by Chennai’s industries can potentially knock 0.07 per cent off the Indian Industrial Gross Value Added every week.
No regional economy can recover from a body blow of this kind without sustained, coherent and targeted help, aimed at putting businesses back on their feet and restoring the livelihoods of those affected. Measures, such as the State government’s ₹10,000 to hutment dwellers who have lost their homes, or ₹2 lakh from the Prime Minister’s Relief Fund to the kin of those killed, or even banks waiving penalties for non-payment of EMIs, are mere palliatives which can at best provide temporary succour. What is needed is a comprehensive response aimed at not merely compensating for losses, but enabling Chennai’s economy to rebuild itself. Damaged infrastructure needs to be restored on a war-footing. Banks need to come up with special packages for both capital and working capital needs of industries, particularly the vulnerable MSME and self-employed sectors. Home insurance packages need to be drastically restructured to make them more accessible to home-owners — the current penetration in this sector is under 1 per cent. Above all, governments at all levels need to come up with cogent post-disaster management plans to deal with the aftermath of future calamities.