Twin calamities may cripple economy

By Manas Dasgupta

GANDHINAGAR, MARCH 25. The twin natural calamities, devastating earthquake on January 26 and the third consecutive severe drought staring the State in the face, may cripple Gujarat's economy in the coming years.

The claims of the Chief Minister, Mr. Keshubhai Patel, and the Finance Minister, Mr. Vajubhai Vala, notwithstanding, the relief measures for the earthquake and drought-affected people are certain to hit other developmental projects and even the ambitious and long-awaited Narmada dam project might get further delayed.

Even as the State was looking to the Centre for assistance to meet the severe drought conditions for which it had prepared a Rs. 1,800 crores master plan, the earthquake on Republic Day has thrown all calculations haywire. In addition, the State has suffered Rs. 21,000 crores damages to public and private property besides the production loss in industrial as well as agricultural sectors due to the earthquake.

While the reconstruction of the earthquake-affected areas excluding the worst-hit towns of Bhuj, Bhachau, and Anjar has been put at over Rs. 4,000 crores, an equivalent amount would be required for the towns if the reconstruction was carried out at the existing sites. About Rs. 1,000 crores would be consumed as the additional administrative cost for the reconstruction programme.

The State Government has prepared a Rs. 1,000 crores industrial package for assisting the industries affected by the earthquake while the agricultural sector would require another about Rs. 750 crores for rehabilitation. The sectoral damages including about Rs. 150 crores loss to the Railways, about Rs. 100 crores to the Telecommunication Department, about Rs. 100 crores to the Kandla Port Trust and similar losses to the Indian Farmers Fertilisers' Co-operative and several other major industrial units, however, would be borne by the concerned departments.

While funding the reconstruction programme might not be difficult as many national and international agencies have committed financial assistance to the State to meet the situation, debt servicing would cause a severe strain on the State's economy in the coming years.

The World Bank and the Asian Development Bank have already sanctioned a loan of about Rs. 4,000 crores to the State and another about Rs. 5,000 crores is in the pipeline for which negotiations are still in progress. The National Housing Bank has committed a loan of Rs. 1,000 crores, the Housing and Urban Development Corporation (HUDCO) about Rs. 1,500 crores and banking sector for assistance to the trade and industry including small artisans another Rs. 1,000 crores. In addition, the Life Insurance Corporation, the banks and other institutions extending loans for personal housing schemes are expected to provide another Rs. 1,000 crores.

The two per cent surcharge on the income and corporate tax is expected to net about Rs. 1,300 crores if the entire proceeding is transferred to Gujarat though the Union Finance Minister, Mr. Yashwant Sinha, has not given any such firm commitment in his budget proposals. But except for Rs. 500 crores grants sanctioned by the Prime Minister, Mr. A.B. Vajpayee, from the National Calamity Fund, and another about Rs. 500 crores committed by various Union Ministries including Rs. 150 crores by the Human Resources Development Ministry for repairing of the earthquake- damaged school and college buildings and Rs. 100 crores by the Rural Development Ministry, almost the entire remaining amount would come in forms of short-term and long-term loans carrying an average of 10 per cent interest even though the banks have promised to provide the loans at the Prime Lending Rate (PLR).

Reconstruction from April

The State Government today announced the launch of the first phase of a massive reconstruction effort from April 2, 2001 to provide over eight lakh houses for the quake-affected in the State.

Over eight Lakh houses-one room shelters-will be reconstructed by the affected people themselves before the onset of the monsoons, a Government statement said.

It said the Government would provide financial assistance and availability of building materials and this would be supplemented by NGOs and the corporate sector. The focus, it said, was now on ensuring that the people whose houses have been reduced to rubble have a roof over their heads and a shelter before the monsoon.

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