India needs a national disaster pool to hedge natural disaster risks

India’s vulnerability to natural disasters, including floods, cyclones, earthquakes, and droughts, is well-documented. These events not only result in loss of life and property but also have a severe impact on the country’s economy. The financial burden of rebuilding infrastructure, providing relief and rehabilitation, and compensating affected individuals often falls on the government and insurance companies.

A natural disaster pool would serve as a risk-sharing mechanism, pooling resources from various stakeholders, including the government, insurance companies, and international organisations. By spreading the financial burden across multiple entities, the pool would help alleviate the strain on any single organisation or sector.

The pool would be funded through contributions from participating entities, which would be based on their exposure to natural disaster risks. These funds would be used to provide immediate relief and support to affected regions, ensuring a swift response during times of crisis. Additionally, the pool could also facilitate the development of innovative insurance products specifically tailored to cover natural disaster risks.

Furthermore, the establishment of a natural disaster pool would enhance India’s resilience to future disasters. By pooling resources and expertise, the country would be better equipped to handle the aftermath of natural disasters, reducing the recovery time and minimising the long-term impact on affected communities.