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India: Economy Shaken by Quake

by Ranjit DevrajInter Press Service
February 1st, 2001

NEW DELHI -- As the world rushes to help India tackle the aftermath of the country's most disastrous earthquake, the government has begun calculating the social and economic costs of the tragedy.

According to a top government leader, the Jan. 26 quake, which rated 7.9 on the Richter scale, destroyed property worth more than 100 billion rupees (about two billion U.S. dollars) in western coastal Gujarat state.

''We are still assessing the damage,'' Home Minister L.K. Advani said during a tour of the quake-hit region, when he told reporters that the economic losses amounted to 100 billion rupees.

However, earlier estimates by Indian business and industry chambers put the economic loss at more than twice this, with daily industrial production losses estimated to be up to 20 billion rupees.

''It is impossible to estimate how many people have been killed,'' the minister, who is the second most powerful government leader, was quoted as saying.

Varying estimates of the human toll have been made, with Defence Minister George Fernandes claiming that some 100,000 people could have been killed. But the Gujarat provinical government puts the death toll at between 20,000 to 25,000.

Few, however, dispute that the economic impact of the quake will be felt far beyond the state and will tell on the federal government's finances.

''Any disruption to the growth of Gujarat would naturally have an impact on the rest of the country,'' said India's usually optimistic Finance Minister Yashwant Sinha.

Gujarat is India's second most industrialised state and the hub of the country's petroleum industry. It is home to the private Reliance Industries, which runs India's biggest refinery. The government's Oil and Natural Gas Commission has major operations in the state.

Most of India's crude import comes to the Arabian Sea port of Kandla in the state, which has also been severely damaged, with most workers dead.

''Gujarat is one of India's most industrialised States, so the destruction there will naturally cause tremors in the rest of the economy,'' noted the national daily, 'The Hindu'.

''Still, with only two months to go before the end of the financial year, the earthquake is unlikely to have an impact on the growth of either the national GDP (gross domestic product) or the central government's finances in 2000-01,'' the daily added.

But economy analysts say the full financial costs of the quake will be felt in the coming financial year, which starts Apr. 1.

The immediate reconstruction priority is to rebuild basic services -- housing, roads, drinking water supply, health care, education.

Though the large industrial complexes in the state survived the quake, extensive damage has been caused to small-scale industrial units, according to reports.

The Indian government has asked the World Bank and the Asian Development Bank for urgent loans worth 1.5 billion dollars to support reconstruction and rehabilitation in Gujarat. The World Bank has announced an immediate release of 300 million dollars and promised a bigger reconstruction loan later.

Indian Prime Minister Atal Bihari Vajpayee has already warned citizens to be prepared for fresh taxes to ease the government's burden. Appealing for national support, Vajpayee said that while foreign financial assistance was welcome, most of it would have to be paid back with interest.

Foreign relief agencies working in Gujarat estimate that it would take at least four months to bring the region back to a semblance of normalcy.

Over 400 foreign rescuers -- from Britain, Germany, Israel, Italy, Russia, Turkey, Switzerland and the United States, among other nations -- are still trying to find survivors using sniffer dogs and state-of-the-art detection equipment.

The International Federation of the Red Cross and Red Crescent Societies has brought in 100 tonnes of relief supplies, including a 500-bed field hospital and machines to make 130,000 litres of safe drinking water every day.

Another 350-bed field hospital has arrived from Israel and Japanese mobile medical units are trying to reach remote areas of the quake hit region.

For more information on quake relief or to make a donation contact:

Disaster Mitigation Institute
411, Sakar - V, Near Nataraj Cinema
Ashram Road, Ahmedabad
380009, Gujarat, India
Phone : +91-79-6586234, 6583607
Fax : +91-79-6582962
E-mail :

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