Group President, Group Managing Director & Editor In Chief: Dr.Shelly Ahmed

Monday, July 08, 2013

Why Rebuilding Uttarakhand Will Cost 600,000 Crores?

By Sumitra Vahi / Dehradun

What did the cloudburst on 16 June take away from Uttarakhand, apart from the lives of 10,000 people? It snapped the backbone of a state – its infrastructure – into several pieces and literally turned it into a ghost state that needs to be re-civilised painstakingly over several years to come. You can trust India’s predilection for religion and all things holy to see tourists returning to the state, but a lot needs to be done to make it visit-worthy again. A PHDCCI survey pegs the tourism industry’s losses at a staggering Rs 12,000 crore. 
“Uttarakhand was expected to generate Rs 25,000 crore from tourism in 2013-14. Although Rs 5,000-6,000 crore have been generated from the first three months alone, the state is expected to realise only Rs 5,000-6,000 in the coming months as major tourism destinations have been washed away by recent floods,” SP Sharma, Chief Economist at the PHD Chamber said quoting the survey.

Given that tourism drives the state’s GDP and contributes 25-30 percent of its growth, Uttarakhand’s development plans have been thrown off balance quite severely.

Uttarakhand’s economy rests mostly on small industries with no big manufacturing industry to drive its growth. Thousands of these industrial units have been washed away by the floods, leading to widespread desperation among the small time entrepreneurs and their families. 

The average size of Uttarakhand’s small and medium businesses is around Rs 4 lakh in annual turnover, according to data released by the Industries Association of Uttarakhand (IAU). And there are about 42,000 of them, most of which exist in scattered clusters of hotels, resorts, tourist services, food processing units and automobile workshops.  The state is gasping for a fresh infusion of economic activity.  According to IAU, about 19,590 business units have been devastated. This translates to a total investment loss of over Rs 530 crore.

Small and medium industries in Uttarkashi, Rudraprayag, Chamoli, Tehri, Pauri, Almora and Pithoragarh have taken the worst hit, the report says. Almost 1,000 small weaving unites have been washed away leaving more than 40,000 people without work. Struck by tragedy, the SMEs have demanded the Centre take up strong rehabilitation efforts and help small entrepreneurs set up new business. With lending rates running to 14-15 percent the SMEs have also asked the government to regulate lending rates.

The government has pressed the switched gears and plunged into the economic rebuilding process, but this will be a task more uphill than any  they have undertaken in the recent times. A finance ministry statement has declared that they will seek funds from the World Bank and the ADB for reconstruction and rehabilitation purposes.

A team of experts from World Bank is slated to visit Uttarakhand to assess the extent of losses and hence draw up a financial assistance proposal. Right now, according to unconfirmed reports, this is what the government will have to rebuild:

 Around 150 bridges, over 2,000 houses and around 1,000 drinking water sources have been destroyed or damaged, they say, adding that hundreds of villages’ electricity and telecommunications services have been cut.

A Reuters report says that at least 1650 roads, including National Highways have been damaged beyond recognition.

The magnitude of losses is such that t will be years before the state is back on its feet and will be dependent on financial help from the Centre and foreign banks for a long time to come. One of the few schemes that the government has been able to come up with is a MGNREGA plan proposed by Jairam Ramesh. 

Meanwhile, Union Rural Development Minister Jairam Ramesh has pitched in with increasing the number of man-days under the Mahatma Gandhi Rural Employment Guarantee Act (MGNREGA) from 100 to 150. The cost for MGNREGA work in the state was increased from around Rs 450 crore to 700 crore last year. But a substantial part of the overall aid will go towards early warning systems in a state that is prone to both floods and quakes

The rebuilding of thousands of roads, villages and bridges in a difficult terrain like Uttarakhand’s will add up to financial figures that are sure to have the government reeling under their effect for a long time to come.