Sun Feb 16 17:53:52 UTC 2025: ## Karnataka Faces Huge Financial Losses from Floods and Droughts, World Bank Report Reveals
**Bengaluru, February 16, 2025** – A new World Bank report reveals that Karnataka has suffered massive financial losses due to recurring floods and droughts, with annual damage exceeding ₹10,000 crore in affected years and reaching as high as ₹33,000 crore in some instances. The report, titled “Environment and Social Systems Assessment,” supports a proposed loan for the Karnataka Water Security and Resilience Programme.
The study highlights a significant funding gap. Between 2008 and 2024, Union government funding, primarily through the National Disaster Response Fund, covered only 8% of drought losses and 6% of flood losses. The State Disaster Risk Management Fund, allocated ₹4,100 crore for 2021-2026, was largely depleted managing the 2021-2022 floods and the 2023 drought.
Karnataka Revenue Minister Krishna Byre Gowda criticized the insufficient compensation from the central government, stating that the state has faced “step-motherly treatment” and was even forced to seek Supreme Court intervention for compensation denied in 2023-2024. He attributed the increasing frequency and severity of these disasters to climate change.
The report further notes the alarmingly low private insurance penetration in Karnataka, with less than 10% of households and only 30% of farmers and agricultural land insured. This leaves a large segment of the population and businesses vulnerable to financial shocks from extreme weather.
The World Bank emphasizes the need for Karnataka to improve its disaster risk financing (DRF) by adopting advanced risk assessment models and exploring blended finance mechanisms, combining public and private investment. This, the report suggests, is crucial for achieving long-term financial sustainability and meeting climate adaptation and mitigation goals.
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