Act Fast, Forcefully



Until recently Odisha was unstoppable. For years Odisha got richer with its Gross State Domestic Product (GSDP) on the rise. While in 2000 GSDP was quite modest, it is now estimated to have reached Rs.6 lakh crore with an uninterrupted upward mobility in economic growth.
When compared to the national economy and that of other States, there is significant positive differential trend in Odisha’s growth rate. Would this fast growth be coming to an end? There are reasons to worry, the foremost being the rising spread of Covid-19 infection.

While Odisha has faced natural disasters time and again, it has handled the crises efficiently, earning laurels. However, the pandemic seems intent to put Odisha’s economy in serious trouble. Early indications of April and May show that there is 60 percent reduction in revenue generation of the State Government, officials admit. Naturally, there is indication of contraction by 40 percent.
Own tax and non-tax revenue collection are falling due to lockdown and shutdown. In fact in order to flatten the curve of COVID-19, Odisha initiated lockdown process before the nation enforced it. And lockdown has come with a cost.

Take for an example the mineral revenue, which in the mineral rich Odisha has shockingly gone down from over Rs.3000 crore in April 2019 to Rs.1100 crore in April 2020. Collection from mining sector of over Rs.3600 crore in May 2019 has gone down to Rs.1200 crore in May 2020.

Similar is Excise, which was Rs.350 crore in April 2019, reduced to Rs.12 crore in April 2020. And in May 2019 it was Rs.320 crore, was Rs.20 crore in May 2020.

Other sectors are also facing similar crunch and Odisha is in for difficult times as the fight against COVID-19 pandemic appears to be a long drawn process.

While revenue generation in contraction mode, requirement of funds for Corona control is on rise with rising number of positive cases. Though a late entrant COVID-19 has taken toll of 10 people and infected over 3800.

The lockdown exit process is marred by uncertainty. While there was a move to unlock, the shutdown of 11 coastal districts on Saturdays and Sundays in June has halted the process of unlocking. It seems policy makers are more worried to flatten curve of Corona than to strengthen the economy.
Extension of lockdown and shutdown to an indefinite period will prove economically disastrous. In fact, while the State Government has started feeling the pinch of its own decision, people in the state are no less worried.
Impact of lockdown is likely to dry down the State Exchequer as it is not likely to be over by the end of this year, experts feel.
To begin with, the State Government will have to revisit the State Budget as requirements are different now and in view of the drastic slowdown of trade, business and industry, revenue generation is disrupted.
In the existing fiscal space State Government will have to plan for development and going for more market borrowing is not the answer as it will lead to ‘Debt Trap’, which Odisha experienced in late 90’s.
Administrative expenditure is needed to be curtailed and austerity measures are required, which will help the State in saving resources for bad times. But there is no sign of such steps by the Government.
Finding cheap sources for loans and mobilizing additional resources are the needs of the hour, which will minimize market borrowings.
Liquid cash lying idle in various banks are needed to be withdrawn and it should be done in a time bound manner.
Key revenue earning sectors like Mining and Metallurgy, Real Estate, Excise and Transport require relook.
With new entrants in mining sector expected to face difficulties to restart, the operations need to be taken care of, experts feel.
Dormant mining activities need intervention of the State Government as there is short supply of labor and hurdles in transportation of minerals.

Restoring normalcy in the agriculture sector, which is the mainstay of Odisha’s economy with over 65 percent people dependent on it, seems to be a priority. Lockdowns have badly hit the sector as it has seriously impacted agricultural operations, though in lockdown 2.0 this sector has been unlocked.
Disconnect between farmers, traders and market has seriously impacted the primary sector and corrections are needed on week and month bases. Absence of proper marketing facilities is hitting the farmers hard, said Agadhu Pradhan of Bahanaga in Balasore who failed to sale over 6000 pumpkins from his farm as there was hardly any transport to carry products to the market. Now, most of the pumpkins are left in the field itself and Pradhan is in penury.
Farmers were expecting KALIA Funds as promised by the Chief Minister Naveen Patnaik during poll of 2019. Lockdown and its fallout have left the farmers in dire straits. So some cash is needed and farmers are expecting a helping hand through KALIA.
Unemployment will be the major side effect of the lockdown and shutdown in the coming days.  Those who were engaged in various sectors in the State are losing their jobs very fast and returning migrants have started gaping to a grim future in absence of any opportunity in the State.
So, creation of job opportunities is now the principal task of the State Government. While Chief Minister has announced hiking the target of mandays creation by 20 crore, jobs required in urban zones need to be mapped.
Nano and micro level planning to create entrepreneurship is required and the State Government will have to take the migrants into consideration as reverse migration has forced many unskilled, semi-skilled and skilled workers back to the State.
Now the State Government needs to work out a comprehensive strategy to improve the deteriorating situation and it has to act fast and forcefully. This is because the state’s interventions should be no less powerful than the crisis itself, as it is all set to flatten the State Economically.

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