- Prelims: Current events of international importance, G20, Global south, Inflation etc.
- Mains GS Paper II & III: Significance of G20 countries, Bilateral, regional and global grouping and agreements involving India or affecting India’s interests.
- The G20 under India’s Presidency has endorsed a new working group on disaster risk reduction.
- India prioritizes disaster risk financing to achieve the targets set by the Sendai framework for 2030.
INSIGHTS ON THE ISSUE
- The G20 is an informal group:19 countries and the European Union, with representatives of the International Monetary Fund and the World Bank.
- The G20 Presidency rotates annually: according to a system that ensures a regional balance over time.
- For the selection of the presidency: 19 countries are divided into 5 groups, each having no more than 4 countries.
- The presidency rotates between each group.
- Every year the G20 selects a country from another group to be president.
- India is in Group 2 which also has Russia, South Africa, and Turkey.
- The G20 does not have a permanent secretariat or Headquarters.
Disaster and its impact :
- There has been an increase in both natural and human-made catastrophes across the globe.
- The 2021-22 Human Development Report shows that disasters exacerbate poverty and thwart development.
- It generates social polarization across nations and communities.
- The lack of competent financial risk management and insurance has provided a fertile breeding ground for risks to proliferate and intensify.
- Annual disaster losses account for a significant share of GDP in many low-income economies.
What needs to be done to counter disaster risks?
- States need to enhance their capacity to understand risks and integrate them into government planning and budget processes.
- The insurance industry needs better regulation, legislation, and supervision.
- Partnerships with the private sector need to be enabled to transfer sovereign risk to the capital markets
- Financing for response, recovery, and reconstruction needs to be improved by shifting from ex-post to ex-ante mechanisms.
- Scarcity of investment in a development-oriented approach that unites all parties into a transparent framework of action at the national level.
Common challenges with management of disaster risks:
- Significant difficulty in collecting and analyzing data on hazards and exposures
- The necessity of strengthening technical and institutional capacity for risk assessment and modeling
- Achieving comprehensive coverage of disaster risks.
G20’s new Disaster Risk Reduction Working Group (DRRWG):
- It has recognised the importance of prioritizing disaster risk financing.
- By emphasizing the importance of disaster risk financing, the G20 can help governments worldwide to manage risk more effectively and ensure sustainable development.
- The DRRWG will offer an extensive overview of disaster risk assessment and financing practices across a wide range of economies.
- It can support the harmonization of definitions and methodologies for data collection and analysis to improve access to international (re)insurance markets.
- The second DRRWG meeting in Mumbai will strive to create vital links between public and private actors’ investment and financial decision-making.
- It will encompass a wide range of hazards and identify strategies to address them.
- The DRRWG will strive to address all the key components of a comprehensive financial management strategy for disaster risks.
- These include:
- Encompassing disaster risk assessment and modeling
- Affordable and comprehensive insurance coverage of disaster risks
- Financial assistance and compensation for affected individuals and businesses
- Risk transfer mechanisms, including catastrophe bonds and insurance for management of fiscal risks.
- These include:
- The IPCC’s Sixth Assessment Report highlights that a significant number of people live in areas that are highly vulnerable to climate change
- The Sendai Framework for Disaster Risk Reduction calls for substantial reductions in disaster risk and losses.
- Bridging the gap between high-level objectives and practical investments remains a challenge.
- The deliberations and consensus generated at the G20 DRRWG could play a significant role in directing capital flow towards investments that make societies and economies more disaster resilient.
- The working group on disaster risk reduction’s addition in the Sherpa track of G20 will:
- Help issuers, investors, and other stakeholders to identify and classify disaster-resilient investments and assets, and entities in a more effective and evidence-based manner.
- By providing the screening criteria for investments in various areas — projects, assets, activities, entities.
- The DRRWG could channel more capital towards disaster risk reduction investments
- Creating new opportunities for innovation in sectors less commonly associated with disaster resilience, such as health, social protection, and natural capital.
- The industry must incorporate material disaster risk into its investment decisions.
- Move beyond treating disasters as singular events and adopt a multi-hazard approach, considering various emergencies and risks in financial decision-making.
- By prioritizing disaster risk financing for the first time, the G20, under India’s presidency can convert good intentions into opportunities for investment.
- India has extensive experience dealing with natural disasters and can lead in promoting awareness of the financial impacts of disasters.
- India can lead the way in establishing a regulatory framework to enhance the financial capacity of insurance companies to cover disaster losses.
- Through the DRRWG’s systematic and granular approach, the G20 will make a significant contribution to global efforts to manage disaster risks and build resilient economies and societies.
QUESTION FOR PRACTICE
- The long sustained image of India as a leader of the oppressed and marginalized nations has disappeared on account of its new found role in the emerging global order.’ Elaborate(UPSC 2019)
(200 WORDS, 10 MARKS)