Anchors of Resilience: Risk Financing and Social Protection on India’s Shores

Aditya Verghese, Head – Centre of Excellence, Public Finance at the Sustainable Environment and Ecological Development Society (SEEDS)

New Delhi [India], October 16: Coastal India supports millions of livelihoods, from fishing to farming, but these communities also face recurring challenges from cyclones, storm surges, and floods. As climate change intensifies, the frontline of these risks lies not only in the Global South broadly but also along India’s fragile coastlines, where an extreme weather event can disrupt local economies and strain public systems. In this context, disaster risk financing (DRF) emerges as a crucial element of extending social protection to communities living on the edge of the sea.

Lived Realities of Risk

During a recent visit to Cuddalore district in Tamil Nadu, conversations with fisherfolk, agricultural workers, and their families showed how closely their lives are tied to the sea and revealed both their resilience and their vulnerability. Although coastal households are adaptive and resourceful, they continue to encounter constraints in securing protection against disasters. Disasters affecting coastal areas, like cyclones, leave behind widespread damage. They destroy property, disrupt livelihoods, and exhaust household resources.

One could also observe the spread of formal banking in the region, with a majority of households having functional bank accounts. This has been crucial for enabling direct benefit transfers after disasters and delays persist in relief in the aftermath of disasters and until the relief arrives, families cope by leaning on two safety nets: food rations provided through the National Food Security Act (NFSA) and short-term borrowing from microfinance institutions. The former offers a lifeline against hunger. The latter often drives families into mounting debt. Experiences like these make it clear that the ability to bounce back is not built solely on technology or finance. It also depends on the ways communities are consulted, supported, and have confidence in institutions.

Gaps in Social Protection

Post-disaster assistance illustrates both the strengths and weaknesses of current systems. Relief assessments rely on the coordination of state line departments, such as revenue and fisheries. However, they tend to underestimate losses that are not easily measured. These include the unpaid care work of women or the solidarity networks within villages. Such gaps point to a deeper issue: disaster response systems frequently treat recovery as a matter of compensating loss rather than as part of a restoration process that can build coping strength for the future.

Community voices emphasised that any relief must be accurate, timely, and delivered. When these conditions are absent, recovery is not only slower but also unequal, deepening existing vulnerabilities.

Disaster Risk Financing as Social Protection

Against this backdrop, disaster risk financing (DRF) can transform how protection is provided. Financial tools such as insurance mechanisms are increasingly viewed as complementary to traditional relief programmes. Among these, parametric insurance has gained attention for its potential to speed up recovery. This form of insurance pays out when pre-agreed triggers, such as wind speed or rainfall levels, are exceeded. In doing so, it bypasses the long verification processes that typically slow down indemnity claims.

In Cuddalore, there was cautious curiosity about such products. The promise of faster payouts was appealing, especially when compared to existing relief delays. Some participants mentioned that they would use these insurance payout funds as collateral for loans from microfinance companies, pointing to the adaptability of community survival strategies in reducing debt burdens.

Yet communities also raised important concerns. Affordability looms large, since marginalised households already struggling with subsistence costs cannot be expected to shoulder premium payments. Questions about fairness also surfaced. How can thresholds be designed to reflect actual disruptions?

The Role of the State

These concerns highlight the irreplaceable role of the government in embedding DRF into social protection. Households on the economic margins cannot absorb the costs of premiums. Public support through subsidies, shared risk pools, and transparent oversight will be essential. Just as food security programmes like the NFSA prevent hunger during crises, government-backed DRF instruments can ensure timely and equitable financial assistance when disasters strike.

Importantly, government action must go beyond technical design. Inclusive consultations with communities are critical to building trust, identifying priorities, and ensuring that financial mechanisms mirror lived realities. Without this, even the most innovative schemes risk failing those they aim to protect.

Towards Resilient Futures

There is a simple lesson to be learned. Resilience in coastal India is not merely a function of better infrastructure or financial innovation. It is equally about building democratic participation and trust in public institutions.

Disaster risk financing has the potential to extend social protection in ways that are fast, fair, and forward-looking. Its success, however, depends on being shaped around the needs, vulnerabilities, and voices of communities themselves. For families living on the edge of the sea, the difference between climate resilience and vulnerability may well hinge on whether such systems are built in partnership with them. At SEEDS, we are working towards ensuring that resources reach communities directly, more quickly and with greater purpose. One step in this direction is Akshvi, which is designed as a digital public good similar to India’s Unified Payments Interface (UPI). Akshvi will enable communities to carry out rapid self-assessments of disaster losses. This can establish a reliable baseline of impact. In doing so, it strengthens the foundation for financing systems that are both responsive and equitable. If built in partnership with communities, disaster risk financing can become more than a social protection measure; it can be the anchor of resilient futures along India’s shores.

The article is authored by Aditya Verghese, Head – Centre of Excellence, Public Finance at the Sustainable Environment and Ecological Development Society (SEEDS)