Fiscal Pressures, Government Revenue and Expenditures

Natural disasters affect different sectors of the economy and increase the fiscal burden of the government by causing damage to public and private infrastructure and causing substantial damage to crops. Thus, in the aftermath of natural disasters, the fiscal pressure on the government increases because of spending on disaster relief, rehabilitation, and construction activities. In developed countries, natural disasters, such as floods and hurricanes, increase government spending. In developing economies like India, budgetary allocations from centre to state increase due to natural disasters, and the allocations are favorable if the same political party exists in both the centre and the state. Apart from fiscal pressure, natural disasters also adversely impact households.