The widespread destruction of property and infrastructure in Kerala due to the floods will likely lead to a long drawn out recovery process and is expected to have significant economic and financial costs, CARE Ratings said in a report.
The report estimated that the employment of nearly 4.13 million individuals of various districts of Kerala have been affected on account of the deluge and the resultant disruptions.
The report also estimated a wage loss of around Rs. 4,000 crore for the month of Aug’18 (based on the average wage rate of Rs. 400/- per day for Kerala as per the data from the annual report for 2017-18 of the Ministry of Labour).
According to the report the number of people in the relief camps has been estimated to be around 1 million and sustaining these families on a consistent basis would involve a minimum sum of around Rs 10 crore a day or Rs 300 crore a month.
As per the CARE Ratings report, Kerala’s outstanding bank credit stood at Rs 2.81 lakh crore as of Q4FY18 and the credit growth of Kerala Business will increase from an average of 14% to 17-21% as households and small units borrow more for rebuilding their homes or business. However, this growth will be shared with NBFCs.
Also the debt servicing ability of borrowers is likely to be impacted in the next 3-5 quarters.
The report also said that the government’s deficit will be affected if there is spending on relief which is not compensated by cuts elsewhere and the growth in revenue will also be affected when production levels become subdued.
Lower spending levels during the festival of Onam will impact the consumer goods industry (including auto) and gold. The growth in GSDP can be affected by up to 1%
On housing the report said that around 22,000 houses have been reportedly destroyed and the restoration of these houses would cost Rs 100-200 crore which will be in the form of loan interest subsidy.
The report also said that the state had witnessed a fall in MICE tourism due to the liquor ban imposed in FY18 as this led to a shift from Kerala to Sri Lanka and Thailand and a further fall in tourism is expected for around 6-7 months as the state recovers during the peak tourism season.
According to the report the gold consumption is expected to be subdued in FY19 because floods have muted the buying of gold.The report also said that there can be a fall in the total spending of consumer durables by Rs 1,000 crores due to the lack of spending during the festive season due to flood situation.