India faces growing fiscal risks from disasters, with over 300 major events between 2000 and 2019 affecting 1.2 billion people and causing nearly 80,000 fatalities.
This report assesses how disasters impact public finances, particularly in the power and transport sectors, and evaluates India’s disaster risk financing framework. Economic modelling shows disasters increase government expenditure by about 0.17% of GDP, while catastrophic events can add more than INR 200 billion in debt and nearly INR 100 billion in expenditure. Floods, cyclones, landslides, and earthquakes pose the greatest risks to critical infrastructure, with climate change expected to intensify losses. While India has strengthened financing through the NDRF and SDRF, future disaster losses could exceed available funds.
The report recommends investing in resilient infrastructure, expanding pre-arranged financing, improving risk data and modelling, strengthening insurance and risk-transfer mechanisms, and integrating disaster risks into fiscal planning.
Key points
- Disasters significantly increase public expenditure and fiscal vulnerability nationwide.
- Floods and cyclones pose the greatest threats to critical infrastructure.
- Climate change is expected to amplify disaster-related economic losses.
- Existing disaster funds may prove insufficient during extreme events.
- Resilient infrastructure investments reduce long-term recovery and reconstruction costs.
- Enhanced risk financing mechanisms strengthen preparedness and fiscal resilience.
