• otv
Prasanna Mishra

News Highlights

  • Public debt of Odisha is sustainable, which means government can service its debts without difficulty.
  • AE Review of state government for 2019-20 revealed that about 2 lakh government posts remained vacant.
  • Many critical areas of development in Odisha remain starved of funds.

Some concern has been expressed recently over the rising per capita debt burden due to increasing borrowings of Odisha government. In the current year Government will pay 13.84% of its total expenditure towards repayment of loan and spend Rs 23,521 crore towards this, whereas it will spend just a little higher amount, Rs 25,788 crore (15.17%), on building capital assets, like building roads, bridges, irrigation facilities etc. It proposes to incur fresh loan of Rs 40,986 crore that is more than what it would collect through own Taxes—Rs 37,500 crore. The current year will end up with a fiscal deficit of Rs 20,465 crore (3.49 % of the GSDP). Total loan of the Government by the end of the current year would be Rs 1.25 lakh crore as against the projected Gross State Domestic Product (GSDP) of Rs 5.86 lakh crore (21.3%). Total outstanding public debt of the State as on 31st March 2020 stood at Rs.92,775.18 crore; that was 17.8 percent of GSDP.

Total stock of debts, however, is increasing over time and would double between 2016-17 and 2021-22 (Rs 62,135 crore to Rs 1,25,000 crore). Though it is a matter of concern, public debt of Odisha is still sustainable, meaning the Government can service its debts without difficulty. The state is performing within the limits of 25% prescribed under the Fiscal Responsibility and Budget Management (FRBM) Act, 2005 for the Debt to GSDP ratio.

Government feels that future debt outlook of the State is also reasonably comfortable despite difficulties arising out of the pandemic. In the medium term, the total debt to GSDP ratio of the State, Government expects to reach a level of 22.46 per cent in 2023‐24. The ratio of total interest payment to total revenue receipts (IPRR) under the FRBM Act is 15%. It is estimated at 6.37% in 2021-22.

Expenditure on Salary, Pension and Interest payment is the major component of revenue expenditure. This has first charge on the resources of the government. It contributes the major share of the State’s total expenditure. It also includes expenditure on different programmes of the government which are not of capital nature. In 2018-19, it was Rs 85,356.41 crore and increased to Rs 99,137 crore in 2019-20, Rs 104,864 crore in 2020-21 and estimated to be Rs 119,567 crore this year. The total expenditure has been 74.9%, 79.2%, 77.67% and 70.3% respectively. In the current year’s Budget of Rs 170,000 crore, capital expenditure related to creation of capital assets is only 13.84% - a mere Rs 23,521 crore.

The Annual Establishment Review of the state government for 2019-20 revealed that about 2 lakh (1,99,957) government posts remained vacant. There are also thousands of employees who are engaged not on regular scale of pay but on payment of a consolidated amount. 

These avoidable measures seem to have been adopted to keep fiscal deficit at a manageable level. This has, however, been at great cost to quality of governance. There are not enough teachers, medical staff and not even enough policemen. Crime against women and children are numerous and the track-record of the state is a matter of grave concern and shame. Many critical areas of development remain starved of funds.

During 2015-21, average spending on Education by states has been 15.9% of their Budget. Delhi spent the highest at 26.1%, whereas Odisha spent 15%. In Agriculture and Allied sectors, the average spending was 6.4%, with Chhattisgarh spending the highest at 18.1% against Odisha’s 8.1%. In Health sector the average spending was 5.3% and Odisha spent that much while Delhi spent the highest at 12.8%. In Housing and Urban development, Odisha spent much less than the average.

A sound Budget ensures holistic development of the economy through equitable funding of critical sectors. Populist schemes don’t strengthen economy, it depletes scarce resources for short term gains. In case of Tamil Nadu, Revenue deficit has been a recurring feature since 2013, and, in 2020-21 it stood at 3.16% of the GSDP while the fiscal deficit was 4.43% of the GSDP. Odisha is Revenue surplus but the fiscal deficit projected at 3.49% of the GSDP is a wakeup call.

(DISCLAIMER: This is an opinion piece. The views expressed are the author’s own and have nothing to do with OTV’s charter or views. OTV does not assume any responsibility or liability for the same. The author can be reached at lonewalker.1942@gmail.com)

More From The Author | Transforming Schools: Odisha Can Succeed Only Through Quality Teaching By Qualified Teachers

Other Stories