ECONOMIC LOSS AND COST INVOLVEMENT DUE TO Road Traffic Accidents in India

To estimate the costs of road crashes, several practical techniques are available. The different approaches of Hills and Johnes are presented in figure below.

The cost of road related injuries and accidents can be assessed in terms of following factors:

a) Medical costs

b) Other costs related to administrative, legal and police expenditure

c) Collateral damage in terms of damage to property and motor vehicle

d) Loss due to income foregone arising out of absence from work or impairment/disability or untimely death.

Besides, accident survivors often live poor quality of life and have to live with pain and suffering which are difficult to estimate. In developing countries with very little asset ownership and lack of credible social safety net, accidents adversely impact the welfare of dependents of accident victims.

In economic terms, the cost of road crash injuries is estimated at roughly one percent of gross national product (GNP) in low-income countries, 1.5 percent in middle-income countries and two percent in high-income countries. The direct economic costs of global road crashes have been estimated at US$ 518 billion, with the costs in low income countries estimated at US $ 65 billion (World Report on Road Traffic Injury Prevention, page 5, WHO, 2004). These estimates take account only of the direct economic costs – mainly lost productivity – rather than the full social costs often recognized by industrialized countries. For India, the socio-economic cost of road accidents in 1999-2000 was estimated at 3% of GDP (Twelve Five Year Plan). One of the most well known approaches to determine road crash costs in developing countries could be the Human Capital method. Therefore, this technique is employed to determine road crash costs in this study.

Human Capital Method

Human Capital or Gross Output method is the conservative approach considering the output that individuals can produce over their productive life period. The costs of a road crash are divided into two categories: first, the costs of current resources including costs of property damage, medical treatment and administrative costs, and second, the costs of future resources that the casualty might have lived to earn which have to be discounted to the present values.

To apply the human capital technique, seven cost components are integrated to determine the total national economic losses due to road crashes. These costs are: Hospital and medical cost; Lost output; Property damage cost; Insurance administrative cost; Emergency medical service cost; Police administrative cost and Human cost.

The Planning Commission of India had assessed the social cost at `55,000Cr on account of road accidents in India (2008).

To complete the estimation of economic losses in road crashes, two main datasets are classified: road crash data and unit cost data.:

• The number of casualties, which is classified into three levels of severity as fatality, serious injury, and slight injury, were acquired from the Ministry of Public Health. While road crash data, which are classified into four levels of severity as fatal, serious, slight, and property damage only crashes were estimated by using police data.
• Unit cost data consists of seven components

The writers found sufficient evidence in support of a high incidence of day-time casualties. This can be explained by greater traffic volume during the day resulting in greater risk of accident involvement as people travel to work, children go to school, and commercial enterprises are open for business. The relative decline in traffic casualties at night may be explained by less night-time activity and travel. Simple interventions, such as painting bicycles yellow instead of black or wearing reflector bands may be cost- effective and decrease traffic injuries.