Odisha maintains fiscal stability with moderate debt and deficit: Report

Odisha has emerged as one of the relatively better placed states in terms of fiscal performance, with manageable levels of debt and deficit, according to a latest report by CareEdge Ratings. 

The assessment places the state alongside Gujarat in maintaining a stable fiscal landscape, even as several other states face mounting financial pressures.

The report underlines that Odisha’s fiscal position is supported by moderate debt levels and contained fiscal deficits, coupled with low interest payments as a proportion of revenue receipts.

Manageable Debt

CareEdge Ratings noted that Odisha has maintained manageable debt and deficit levels while keeping its interest payments-to-revenue receipts ratio low, as reported by ANI. This indicates a relatively stable fiscal structure compared to states grappling with elevated liabilities.

Significantly, Odisha also has a high share of capital outlay in its total expenditure. This suggests a stronger emphasis on asset creation and long-term development, reflecting a focus on infrastructure and productive investment.

However, the report cautioned that in FY25, announcements of freebies in states including Odisha, Maharashtra and Jharkhand could exert some pressure on their finances, despite their relatively encouraging fiscal position.

Contrast With Other States

While Odisha remains relatively well-positioned, the report pointed out that Punjab continues to face fiscal strain due to high debt, deficits and interest burden, along with a substantial share of non-developmental revenue expenditure.

Debt and deficit levels also remain elevated in Bihar, though its interest payments-to-revenue receipts ratio is lower owing to a relatively high share in the Centre’s tax devolution.

Meanwhile, Telangana and Andhra Pradesh have already exhausted their full-year budgeted fiscal deficit in the first nine months of FY26, while Kerala has utilised nearly 84 per cent of its annual target.

At the aggregate level, state government borrowing stands at Rs 12.5 trillion this year, 16.6 per cent higher than Rs 10.7 trillion in FY25. Higher redemptions until FY31 are expected to keep borrowings elevated.

Overall, the report indicates that Odisha remains fiscally stable, even as broader state-level financial pressures persist across the country.