Mumbai floods

Floods in Mumbai are an annual affair. I know this may hurt some people but the day I visited Mumbai for the first time, it was raining cats and dogs, and exactly 21 days later, a major flooding of the financial capital took place. Financial Times reported this last year – the headline points to a historic high – and we are back again with those headlines this week. Mumbai is under water and things are worse than previous years, reports scream.

Environment researchers point to the extreme precipitation events that have been occurring with great frequency in India, led by a combination of rising temperatures and changes in the monsoon. Add to these poor civic planning, unfettered growth in population in the cities, and resultant environmental degradation. Every year, millions across India are displaced from their homes due to floods and Mumbai is no exception. Copious rains even bring the buildings and landfills down on people in the city.

But, contradictions abound. We are aware of the risks of climate‐induced flooding and yet, development plans continue to ignore these risks. Mumbai, one of India’s largest coastal cities, is the hub of both planned and unplanned developments and the adaptive resilience frameworks that prepare cities for climate induced calamities are in short supply here too, which continue to endanger lives.

Here are the economic effects of the floods that are likely to occur based on past experience:

Poor families will become poorer

They already have low incomes and housing in low-lying and flood-prone areas. During the 2005 floods in Mumbai, families living below the poverty line in Mumbai faced damage costs amounting to 1,480 percent of their average monthly incomes.

Direct and indirect impacts on low-income households

Housing structures, households assets, vehicles and work tools on which their livelihood depends may be damaged. They may own little but when compared with their earnings, even their low damage costs will be higher than economically well-off families, endangering their critical asset base. They will also face the indirect impacts of floods, such as shortages of food, water, and fuel, and disruption of services. Workdays and even jobs will be lost.

Social protection will be partial

In Mumbai, during the 2005 floods, the government offered some households a fixed amount to assist with food and clothing. However, this was less than 10% of the total losses suffered by the households. Many migrant households were excluded from this. Many used their savings or borrowed from informal sources to rebuild their lives. This pushed them into indebtedness and poverty.

Insurance coverage will be negligible or none

More than 90% of the affected families during the 2005 Mumbai floods had no insurance of any kind.

Small businesses will incur losses and lose customer confidence

Physical structures of the business units will be destroyed leading to losses of finished products, inventory, and raw materials. Businesses would also have to cover the expenses of cleaning premises, restarting operations, or shifting production elsewhere. During the 2005 floods, businesses took longer to recover and lost customer confidence.

Compensation and insurance will not help rebuild

Profit-making ventures will likely find themselves using their own resources to cope up with the damages. Post the Mumbai floods in 2005, a few SMEs that had opted for flood insurance received less than the claimed amount after months of delay.

Business recovery will take time

After the Mumbai floods, business recovery time averaged 3–4 days, with maximum recovery time stretching to 1–2 weeks. Several SMEs remained without power, water, and other basic services for 10–15 days. Many businesses could not repay loans. Loss of credit and clients aggravated financial distress, and some businesses closed operations.

A look at the table below outlines the extent of the damage costs faced by retail businesses in Mumbai in the aftermath of the 2005 floods: