The appraisal of the government compensation scheme for citizens of Azad Jammu & Kashmir affected by the October 8 earthquake

INTRODUCTION
Within weeks after the devastating 8th October 2005 earthquake that struck the northern areas of Pakistan, the Government of Pakistan (GOP) and the Federal Relief Commission (FRC) on the account of impending winter decided that shelter was the number one priority. In addition to the provision of tents and tin sheet for those who had lost their homes, the GOP, under an expedited process, began to provide monetary compensation for deaths, injuries, and house damage. These categories are not mutually exclusive, meaning thereby that a household may receive compensation under one or more categories as listed, depending upon the nature of loss suffered.

The process of compensation began with deaths, the GOP providing one lakh (100,000 PKR or $1,667) per death but only compensating for one death per family. Those who suffered injuries were given one-time payments of 50,000 PKR ($833) for permanent disability (including amputation or paralysis), 25,000 PKR ($417) for fractures, minor amputations such as finger/toes, abdominal injuries or injuries requiring hospitalization of more than two weeks, and 15, 000 PKR ($250) for injuries requiring less than two weeks of hospitalization. (1) The GOP also announced that it will pay total compensation of one lakh seventy-five thousand (175,000 PKR or $2,917) for houses damaged by the earthquake, with an initial payment of 25,000 PKR or $417.(2) The first phase of compensation for deaths, injuries and house damage has been completed as of March 31, 2006, and a substantial portion of the initially earmarked amount of 20 Billion PKR ($333 Million) has been distributed to the victims of the earthquake in AJ&K and NWFP.(3)

This report reviews the eligibility determination and compensation process in AJ&K and offers policy recommendations for the second phase of the scheme, which began on 7th April 2006.

I. Overview of the Compensation Scheme

Compensation is provided under the Azad Jammu and Kashmir Distressed Persons Relief Act, 1985 and the Azad Jammu and Kashmir Distressed Persons Relief Rules, 1982 to those who have suffered a physical or financial loss in any 'accident, epidemic, rains, or any other calamity.'(§) In the past, compensation has been paid to the dependants of those who have lost lives in road accidents involving public transportation or have suffered property loss in flash floods during rainy seasons or in landslides. Therefore, the district administrations as well as the people in AJ&K are familiar with and understand the rationale, as well as the process, of compensation.

As per the Schedule attached to the Act, the amount of compensation normally payable for loss of life is 20,000 PKR; for grievous hurt/injury as defined in the §320 of the AJ&K Penal Code of 10,000 PKR; and for property damage it ranges from 3,000 - 5,000 PKR as follows:

The above-stated amounts are the maximum allowed for any category of property damage rather than fixed determinations. Accordingly, compensation may not be paid if the person suffering from property damage 'has got a sound financial position' and if paid can range from 1% to 10% of the total loss suffered, 'keeping in view the financial position of the distressed person.'**

After the earthquake, the Government of Pakistan decided to provide compensation and as such the Rules were accordingly amended via the Distressed Persons Relief Rules, 2005 and adopted by the AJ&K Board of Revenue on 24 October 2005.

The GOP has never clearly articulated its rationales for starting the compensation process. As clearly laid out in this brief, compensation is historically given in the aftermath of natural disasters and affected people claim it as a matter of legal right. At the time of announcing the compensation scheme, the GOP was struggling to provide the affectees with adequate shelter for the winter on account of the shortage of winterized tents and CGI sheets. The apparent rationale for the determination of compensation scheme was that an infusion of cash would allow those who have suffered to supplement their survival and care through the winter.†† Other benefits of the compensation were that it would stimulate the local economies or provide the affectees with the means to move their families out of the affected areas. However, since economic rehabilitation was not a high priority agenda item, compensation for destroyed shops and/or other means of livelihood was not included in the first stage of the plan. Rehabilitation of the economy continues to occupy an unduly low position on the GOP's lists of priorities and thus far no plans have been unveiled to compensate for the affected means of livelihood.

Footnotes:

(1) For actual breakdown, see http://www.earthquakepakistan.com/Compensation_Policy.htm and Appendix A. This website, maintained by the Federal Relief Commission, fails to provide any statistics on the distribution of compensation or the details of the compensation scheme.

(2) Initially, compensation for destroyed/damaged houses was set as 25,000 PKR. Subsequently it was decided that a total compensation of 175,000 PKR would be paid for all those structures that meet certain structural requirements. See, for example, http://www.jang.com.pk/thenews/nov2005-daily/22-11-2005/main/main1.htm.

(3) See, Ibid. The total amount earmarked for compensation was initially set at 20 Billion PKR but was later increased to 80 Billion PKR.

(§) 2(b)(i) of Azad Jammu and Kashmir Distressed Persons Relief Act, 1985.

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