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THE ASIAN WALL STREET JOURNAL
November 10, 1999
 
NEW DELHI – Twelve days after a supercyclone hit the state of Orissa, India is still grappling with the enormity of the tragedy.  Over 10,000 people are feared dead, and millions of hectares of cropland damaged.  Meanwhile, in Vietnam a horrendous flood has been causing more misery.  Reading these headlines of massive casualties, it seems natural to ask the question: Does nature discriminate against poorer people and countries?
 
The answer is no, but there’s a reason it seems that way.  Even a cursory analysis of various natural disasters, whether floods, earthquakes or hurricanes, shows that economically developed countries are better able to withstand these same calamities and so suffer fewer casualties (although the dollar value of property damage is higher, as one would expect).  This is in sharp contrast to the fate of people in developing countries, where the cost in terms of human life is enormous.
 
The obvious explanation – that citizens of developed countries have greater resources to protect themselves – is correct as far as it goes, but the problem goes deeper than that.  Governments of many developing countries make fundamental mistakes in protecting and bettering the lives of their citizens.  They pursue statist policies that hamper economic development and perpetuate poverty, and they also misuse the power concentrated in the hands of the bureaucracy.
 
The events leading up to the Orissa cyclone clearly show this.  While the storm was a natural calamity, the tragedy itself was the handiwork of man.
 
Economic development can substantially lower the danger of living close to nature.  In India, this lack of development is the result of 50 years of state control over the economy.  Orissa is rich in natural resource, but its people are among the poorest in the world.  Central and state government policies have ensured that much of these resources are underutilized.  As a result, there is little funding available to cope with calamities like the cyclone.
 
A major reason the casualty rate was so high was inadequate warning.  The problem is partly the Indian government’s tight control over all kinds of communications, from telecoms to broadcasting.  As a result, the infrastructure is totally inadequate, and before the cyclone hit little warning was given to people to take precautions.  Instead of a wide range of media, from local radio and television to telephone continuously informing the people of the impending disaster, for many the storm came as a surprise.  Many coastal fishermen ventured out to sea to face the full brunt of the storm, never to return.
 
This is unforgivable, since for over two days meteorologists in India and around the world were tracking the storm and warning about its impact.  But nothing was done to utilize even this basic information.  It is not enough to lay the blame at the door of the bureaucracy for their callousness and indifference.  It is not enough to blame the politicians who now swarm the disaster area trying to score political points.
 
If we Indians are really moved to action by this massive human tragedy, we must reconsider the institutional arrangements and the incentive structures of the present system and compare them with possible alternatives.  For instance, a private and widespread network of communication channels would have ensured not only better flow of information before the storm, but also greatly increased the chances of some of these channels surviving the storm and therefore readily assess the damage and direct relief measures immediately.
 
In many parts of the world, weather forecasting is an attractive business proposition.  Linked with the insurance sector, this is the most efficient tool for dissemination of such information to rural communities and fisher-folks.  In a competitive marketplace, there would be a premium on quality of such information.  And the incentive structure would be such that it would make business sense to provide advance information about such an event to ensure that adequate precautions are taken to minimize the loss, and to institute relief and rebuilding process at the earliest.
 
None of these exists today.  In the present political and administrative environment, the only incentive is to extract political mileage out of human tragedy.  It is no coincidence that we make a huge fuss about allowing 26% foreign equity in insurance, while barely 5% of the population is under any kind of cover, and neglect the interests of one billion people to protect the 250,000 public sector insurance employees.  Insurance and self-help organizations are one of the best tools capable of dealing with such events, motivated not so much out of charity but by self-interest.  By taking over the insurance sector, the state has deprived the people of one of the most effective instruments, and left them open to face the forces of nature without any protection.
 
Indian talk of encouraging IT and telecommunication and broadcasting.  But in practice the government stifles new technological advances in cable TV, DTH broadcasting, and cellular and satellite telephony that may help improve the condition of our own people by providing them access to information.  With just 15 million telephones and 50 million televisions, and less than one million personal computers, it’s clear the country will never enter the information age if this sector is left under state control.
 
The tragedy of Orissa is the latest manifestation of the ills affecting our institutions.  We need rapid and massive reforms – political, economic, judicial and administrative – to have any chance of breaking free of poverty.  Rather than looking up to the state for doing out relief, we must squarely hold it responsible for creating the environment that made people so helpless in the face of such natural fury.  We must get the state out f the people’s hair, and give their enterprising spirits a free rein, allow them to harness the potential of the market place, especially in information and insurance.
 
Richer is safer – economically and environmentally.  The richer the people, the greater their ability to choose, and the wider the range of choices in the marketplace.  The people in developing countries pay with their lives when government takes on the responsibility of deciding for them.  This is the lesson that we must draw from the tragedy of Orissa.  It may not be possible to avoid natural calamities, but it is possible to minimize the losses.
 
[Mr Mitra is the founder of the Liberty Institute, an independent think tank based in New Delhi.]


Copyright: The Asian Wall Street Journal, 1999.