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Wednesday, Dec 08, 2021
Outlook.com
Aftershock

Rupee, the Fourth R

Even World Bank's aid will be at the expense of other states. Is it right to expect the Indian poor to finance affluent lifestyles in Gujarat?

Rupee, the Fourth R
Rupee, the Fourth R
outlookindia.com
-0001-11-30T00:00:00+05:53

The two important analytical questions are: what resources are needed and how are these going to be delivered and financed? The Indian government has already promised Rs 500 crore directly and intends collecting Rs 1,300 crore through direct tax surcharges. International agencies, ngos et al should collectively provide a multiple of that amount. Even the World Bank has offered a large loan (yes, a loan even if a very soft one—the money goes right back to Washington, eventually).

How is the money to be spent? Disaster expenditures involve spending on three Rs: Relief, Rehabilitation and Reconstruction. Relief spending is consumption expenditure. So is the bulk of rehabilitation expenditure. Once affected people are in a situation where their capacity to look after themselves improves, these expenditures taper off. Reconstruction spending, however, is like investment spending. It replaces assets like roads, bridges and power lines, and benefits the region—in this case northern Gujarat.

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