Effect of Flood and Fire Accidents on Economic Growth in Odisha, India: District Level Analysis

Natural disasters are a recurrent phenomenon in Odisha. Frequent natural disasters not only affect different sectors of the economy but also disturb different aspects of human life. The natural disasters also increase fiscal pressure of the government. Every year, government of Odisha (GoO) spends around 1.3% of GSDP for flood control and irrigation purpose, and 0.44% of GSDP is spent on relief on account of natural calamities. We employ Pooled Mean Group (PMG) to examine the effect of natural disasters such as flood, lightning and fire accidents on per capita real Gross District Domestic Product (GDDP) growth using district-level panel data for 30 districts of Odisha over the period 2001–2011. The findings of the study are as follows. First, PMG estimate confirms that flood is positively related with per capita real GDDP growth which implies that 10% increase in the number of floods at their mean lead to an increase in per capita real GDDP growth by 0.0011% in the long-run. Second, population killed due to lightning has negative impact on the same. The results confirm that 10% increase in population death due to lightning at their mean leads to a decline in the per capita real GDDP growth by 0.0001% in the long-run. Third, further result shows that property lost by fire is negatively correlated with per capita real GDDP growth which implies that property lost by fire accidents increase by 10% at their mean leading to a decline in per capita real GDDP growth by 0.0008% in the long-run. Finally, results also confirm that districts with better financial markets and higher level of literacy, experience higher per capita real GDDP growth in the long-run. In view of these results, the empirical finding concludes that long-term disaster management policy is essential to mitigate the adverse impact of natural disasters on per capita GDDP growth in Odisha.