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The Indian Government’s Flood Insurance Packages Can Do Better. This Is How.

The Indian Government’s Flood Insurance Packages Can Do Better. This Is How.

Flood mitigation has always been a very expensive proposition, yet flood losses have continued undeterred. According to an estimate by the World Resources Institute, in turn according to 2010 GDP data, the damage caused by inland flooding in several parts of India is about 0.84% of its GDP. Central Water Commission data indicates that total economic losses (crops, houses and other property damages) due to floods in the last 65 years – from 1952 to 2018 – has been a whopping Rs 4,690 crore.

Eastern India is particularly vulnerable to regular flooding. The unique geography of the region, consisting of flat, fertile plains well-drained by silt-laden rivers of the Ganga-Brahmaputra-Meghna (GBM) system, is also densely inhabited by a population that depends mostly on agrarian incomes. So recurrent flooding in parts of eastern Uttar Pradesh, Bihar, West Bengal and Assam cripples the economies of these states, and remains a thorn in Eastern India’s development story. Expenses accrue not just for mitigating floods but also for post-disaster recovery. Disaster relief funds with the states and the Centre are almost routinely earmarked every year to be released towards flood relief and rehabilitation in the country, primarily for Eastern India.

Flood proportional economic losses in South Asia. Source: Data Basin/Authors provided

The Indian government mostly prefers to construct embankments and create storage infrastructure as part of its flood-control strategy. The former entails a technological lock-in – meaning a vicious cycle of investment in ever more advanced technology to keep the water out. This translates to an added and increasing investment of public funds to construct and maintain embankments. Globally, there has been a marked shift away from ‘hard’ engineering solutions and towards non-structural ‘soft’ measures that are flexible enough to accommodate a range of future options, including ‘hard’ elements if required. This makes a non-structural measure like flood insurance a desirable tool for flood adaptation.

Flood relief and insurance packages also continue to overlook the gendered impact of floods. In India, the construct of gender has been understudied in the light of recurrent floods, resulting in large – but potentially avoidable – losses of financial, physical and human capital.

Also read: Fighting Flood and Drought, Millions in Bihar Lose Livelihoods

During floods, male family members receive pre-occurrence awareness plus access to post-occurrence insurance benefits. Even so, only male members have access to the option of migration; the women, due to their restricted mobility, are unable to migrate nor do they receive the benefits that are due those who have decided to stay and deal with the crisis. Without legal ownership of farmlands and assets, they are unable to avail flood insurance, and incur financial and physical losses.

Gender inequalities and social exclusions challenge a community’s coping capacity, and we can’t boost livelihoods and build resilience while ignoring it. Women are left behind to manage flooded homes, fetch unclean drinking water from untreated wells, endure double work burden within and outside homes and survive on subsistence farming. This hampers their productivity and remittances they receive from the male members often prove inadequate. Healthcare costs for flood-induced illnesses, which fall beyond the ambit of most flood-insurance packages, pile on the misery. Additional burdens like food-price hike, delayed or no insurance payments and meagre relief compensation compel women to slash expenses on healthcare and education.

Not internalising gender differences in designing a flood-insurance package means the costs will remain high in every flood season. This creates a vicious cycle that impedes resilience-building exercises.

Gender mainstreaming helps identify the gender inequalities that deprive a village or hamlet of its hardiness. A study in Andhra Pradesh in 2009 found that crop loss due to disaster and a lack of holistic insurance schemes together nearly doubled the workload among adolescent girls and women. Existing half-measures of flood insurance don’t create productive capacity and are not cost-effective in the long run. Apart from empowering women, gender inclusivity will help foster resilience, increasing adaptability and make insurance packages more efficient.

From risk to resilience

Flood insurance in India is not an alien concept. The earliest evidence of such a scheme is the Comprehensive Crop Insurance Scheme of the 1980s. Since then, the government has crafted three more schemes. But despite the early start in using flood insurance as a non-structural measure to reduce flood risk, the focus has remained on providing a safety-net to farmers in case of flood loss.

It took the Unified Package Insurance Scheme (UPIS), implemented from the kharif season of 2016, to truly widen the scope of flood insurance in India, by providing a more comprehensive coverage for flood losses. Under this scheme, crop insurance (Pradhan Mantri Fasal Bima Yojna) is mandatory while farmers can choose two more out of the six remaining schemes. These others relate to personal accident insurance, life insurance, building and contents insurance, agriculture pump-set insurance, student safety insurance and agriculture tractor insurance.

There are some concerns with UPIS. For starters, the penetration of catastrophic insurance is quite low in the country. According to a September 2019 report by the Indian Council for Research on International Economic Relations, only 1% of losses due to floods in Andhra Pradesh and Karnataka in September 2013 had been insured. The economic losses suffered during severe monsoon floods in September 2014 across Uttar Pradesh, Bihar, West Bengal, Assam and Meghalaya amounted to $6.1 billion (Rs 44,839 crore, 2019), of which only 4% was insured.

A long-established truth is that the more distressing socio-economic effects of floods fall most heavily on those at the bottom of the pyramid, especially those who don’t have permanent housing or documents entitling them to a house or land.

Another crucial aspect that the state often overlooks is the emphasis on building resilience. Resilience is, technically, the ability of a community to resist, absorb, accommodate, adapt to, transform and recover from the effects of a flood in a timely and efficient manner. However, the people who receive compensation from the government often invested it on the same assets or inputs that had failed in the previous year. This is one reason why farmers are slow to shift to cultivating flood-resistant crops. Similarly, the government has kept its focus area-based rather than individual-based while assessing impact. This effectively means that the pay-out will not be provided if only a part of an area was affected by floods. As a result, flood insurance becomes both inadequate and inefficient as a non-structural measure to improve resilience.

Also read: Backstory: How Not to Cover a Flood


Holistically designed and effectively implemented flood-insurance programs are the way forward. A revamped UPIS does broaden the scope of insurance beyond crops, but limits itself to risk management instead of building resilience. Studies have shown that for flood-related risk reduction, development and recovery activities, women are more noteworthy than male counterparts. Despite these specificities, flood-insurance packages continue to discount the socio-economic realities in which they are used. Gender-sensitive and all-encompassing adaptive revisions in the formulation and implementation of flood insurance are the need of the hour.

Poulomi Roy teaches economics in Seth Anandram Jaipuria College, Calcutta University. Sayanangshu Modak is a research assistant at the Observer Research Foundation, Kolkata.

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