Do Infrastructural Facilities Reduce the Vulnerability to External Shocks? Evidence From Odisha, India

Economies are vulnerable to multiple socio-economic factors since they are frequently exposed to several kinds of external shocks. Exogenous shocks such as heat waves, cold waves, cyclones, floods, droughts and inundations have increased recently. Infrastructure plays an important role in reducing the economy’s vulnerability to external shocks. Odisha, being one of the of the coastal states of India, is vulnerable to various kinds of exogenous shocks. Therefore, this study attempts to assess the level of vulnerability of districts of Odisha to external shocks and identify the role of infrastructure in influencing the vulnerabilities. By using secondary data, a vulnerability standardized index is formulated from eighteen indicators and four major infrastructure indices have been constructed. Then, thirty districts are ranked accordingly. A linear regression model has been used to study the relationship between the development of infrastructure and the degree of vulnerability to exogenous shocks. Results indicate that both financial and physical infrastructure have statistically significant effects on reducing the economy’s vulnerability to external shocks. To address these vulnerability issues, an appropriate policy prescription is prescribed.