Government Intervention for Flood Recovery of Small Businesses

In December 2015, heavy rains hit the Cuddalore District, causing flooding in several villages. Due to the monsoon rains and floods, seven Taluks - namely Cuddalore, Kurinjipadi, Panruti, Annagramam, Kammapuram, Keerapalayam and Port Nova - left 108 panchayats underwater.

In the region:

• 199 lakes reached their full capacity and overflowed, washing away many hamlets and villages.
• Approximately 450km of village roads were damaged.
• 85,000 people were evacuated from low lying areas
• The death toll reached 94 at the final count.

Small businesses were particularly impacted by these floods. Most were not able to open their business for over a month. While their houses were inundated, many of them were shifted to relief camps and driven away from their daily livelihood. Their business places were surrounded by water, stocks were lost (by damage and expiration), their tent, tin sheet and other materials were washed away. When they did try to open the cost of raw materials to rebuild had gone up. Even when they were able to open, customers were missing due to the rain.

Understanding the impact of the floods and the best response to give, the project team advocated the need to provide support to flood affected small informal businesses to the district and state administration. The government of Tamil Nadu also took part in the discussion.

Small businesses, as we've previously discussed, are prone to take out loans often provided by private parties with high interest rates. Small business owners are at risk of falling into debt because of the floods. Disaster risk reduction strategies for small business vendors were discussed with the principal secretary and the advisors to the government of Tamil Nadu. This discussion was fruitful as the government issued a few financial measures for the small businesses.

In January 201, the government of Tamil Nadu nannounced that vendors and small shop owners would receive an interest free loan of up to 5000 INR each. Those affected by the floods would repay the loans within 25 weeks. Ten day camps were conducted by the cooperative banks and potential beneficiaries were identified. The Government also declared that those repaying the loan on time would be eligible for further loan of the same amount at an interest rate of four percent.