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Friday 14 January 2005

The 'Other' Cost of Tsunami - 13th January

Tsunami adds to India's poverty woes
Source: IANS. (Website: MSN India)

The wall of water that ripped across Asia last month killing more than 150,000 could throw nearly 645,000 additional people in India into poverty, according to the Asian Development Bank (ADB).
"The poverty impact of the tsunami will be enormous," Ifzal Ali, chief economist with the Manila-based multilateral development bank, said in a report. "Poverty is potentially the most important effect of this natural disaster."In Asia as a whole, the number of poor could increase by two million because of the disaster, the bank said, adding in Indonesia alone some one million people could be thrown into poverty by the lingering effects.In Sri Lanka, the figure is estimated at about 250,000 while in the Maldives - where about half of the country's houses were affected - more than 50 percent of the population, or 23,500 people, could fall below the poverty line. As devastating as the disaster is to the people in affected areas, Asia's resilience to external shocks will play a role in minimizing the impact the tragedy will have on the region's overall economic growth, Ali said.

"This is a profoundly tragic event for the region and for the millions who are suffering," said Ali. "But the economies of the affected countries except Sri Lanka and the Maldives should emerge with minimal damage." In India, Thailand and Indonesia, the damage is largely confined to rural areas rather than key economic and densely populated urban centres and industrial hubs that drive the region's economic growth, according to the report.In India, too, the economic impact should be minimal given the huge size of the country's economy and the damage. The macroeconomic impact is also expected to be minimal in Bangladesh, Malaysia and Myanmar. "Following strong growth from 2001 to 2004, the economies of India, Indonesia, Malaysia and Thailand should be in a strong position to overcome the tragedy," the ADB report said."For these countries, recent growth has been strong, fiscal positions have improved and external reserves are high, with the shock absorber of the disaster coming from the government's fiscal position."From an economic standpoint, the tsunami disaster should be seen in the context of other disasters that have hit Asia. Historically, Asia has been subjected to regular shocks, and countries have always responded swiftly and pragmatically. "Asia has always been characterized by resilience in the face of turbulence," said Ali. "With the passage of time, the wounds from the tsunami disaster will heal and the affected countries will emerge stronger to face future challenges."
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