IIT Madras estimates financial impact of road accidents on economy

IIT Madras researchers have called for increased government investment in road safety to reduce the impact of accidents on the economy.

The report titled ‘Socio-Economic Costs of Road Crashes in Tamil Nadu’ was released by Thiru. Ma Subramanian, the Tamil Nadu minister for health, medical education and family welfare.

The study was undertaken by the Centre of Excellence for Road Safety (CoERS) in the Rehabilitation Bioengineering Group (RBG Labs) in the Engineering Design Department of IIT Madras.

RBG Labs is an interdisciplinary group working on various problems of societal demand to enhance the quality and productivity of people, processes and products.

The financial impact has been arrived at using the hybrid human capital approach method, which uses the present value of the accident victim’s potential earnings. A sensitivity test is also conducted using established WTP value transfer methodology and the iRAP method in the calculation of human costs. Wherever possible, this study has also considered other studies across the globe and in India.

The estimates have been calculated considering medical costs, loss of taxation revenue, which is also considered as production loss, human costs, damages to the vehicle, civil damages, and administrative costs such as police, insurance and legal.

One of the highlights of the study is that it includes travel delay costs because of road crashes and efficiency tax, which are costs that the government may have to impose on society to revive the economy after incurring these huge costs.

“The hidden truth in all accidents is the cost involved and this study by the Centre of Excellence for Road Safety at IIT Madras can sensitise the government and public about that. The government can use this study to identify the implicit cost of an accident, use it towards improved financial planning and appropriately invest on initiatives to strengthen road safety in the state,” minister Subramanian said.

“RBG Labs has been working very closely with the government of Tamil Nadu’s health department in developing and implementing various pioneering schemes which are being replicated across the country. He also encouraged the research team to perform similar analyses across the country to improve road safety,” he said.

The key outcomes of this study based on the Tamil Nadu State Crime Records Bureau (SCRB) Data from 2019 include:

· Tamil Nadu’s socio-economic cost of road traffic crashes for the year 2019 was in the range of Rs 21,078.83 crore to Rs 56,543.29 crore

· This amounts to 0.94 per cent to 2.5 per cent of the state’s GDP

· The economic cost of each road fatality in Tamil Nadu was estimated as Rs 87,45,154.79

· The cost for a grievous injury associated with a road crash was Rs 1,69,544.82

· The direct cost of road traffic crashes to the government of Tamil Nadu is over Rs 12,912.13 crore

· The additional health services required account for 2.34 per cent of this cost

· The entire health, welfare and family budget can be strained by these costs from road crashes

V. Kamakoti, the director of IIT Madras, said, “Road accidents cause the maximum trauma for victims and their families. The study performed here not only tries to quantify them but also points to ways to reduce them.”