Bhubaneswar: Considering the projected growth rate for GDP, inflation, and buoyancy of the direct and indirect taxes at national and State level, total revenue receipt of the State has been estimated to grow at about 12 per cent in FY 2024-25 over the current year’s revised estimates.
Team Finance headed by Vishal Dev, Principal Secretary Finance is constantly monitoring the revenue growth and looking at the trends available, it is expected that revenue generation will be on growth path.
According to official sources, the total revenue receipt of the State during the financial year 2022-23 was Rs 1.50 lakh crore while it was estimated that the revenue receipt will increase to Rs 1.84 lakh crore during the current financial year.
Till October end of the FY 2023-24, the total revenue receipt from all sources was Rs 90,559.69 crore, which is 17.54 per cent more than the receipt of Rs 77,043.03 crore during April to October of 2022. It was also 49 percent of the budget estimation made for the year.
Though the State’s revenue receipt is estimated to grow by 12 per cent in next year, major shocks to the revenue receipt may arise due to fluctuation of the mineral prices at international level and unpredictability in flow of Central Assistance under Centrally Sponsored Schemes, the sources said.
The RBI has projected India’s economy to grow around 6.5% during the current as well as ensuing fiscal year. However, weak external demand, geo-economic fragmentation, and protracted geopolitical tensions in Europe and Middle East would pose risks to the growth outlook, they said.
The State economy is poised to grow at 8 per cent to 8.5 per cent in real terms in 2023-24 by harnessing human, natural, and financial resources and strengthening the productive base of the economy and the momentum is expected to continue in 2024-25.
At the macroeconomic level, over the last ten years, Odisha has registered an annual average growth of about 6.5 percent of Gross State domestic product (GSDP) except during FY 2020-21 in which the GSDP contracted by 5.35 percent due to Covid-19 pandemic.
The rising inflation due to the geopolitical war between Russia and Ukraine is causing stress on many economies across the world. Price fluctuation of iron and steel goods at international level is another factor affecting the economic growth, mainly in the mining sector. Through effective resource mobilization and expenditure rationalization, the State has been able to generate investible fiscal space over the last ten years.
The fiscal space created has been effectively employed for creation of physical, social as well as human capital.
During the last two fiscal years, Own Revenue has performed exceedingly well mainly driven by mining revenue. The State Government has been consistent in maintaining the fiscal discipline requirements enshrined in its Fiscal Responsibility and Budget Management (FRBM) Act, 2005 by keeping its fiscal deficit below the 3 percent of GSDP and debt to GSDP ratio below the 25 percent and Interest Payment (Debt Servicing Cost) to Revenue Receipts (IPRR) ratio below the stipulated limit of 15 percent.
The Odisha FRBM Act, 2005 mandates to maintain revenue balance and contain the fiscal deficit within 3 percent of GSDP. Additional annual borrowing space of 0.5 percent of GSDP would be available during the four-year period from 2021-22 to 2024-25 as per recommendation of 15th Finance Commission subject to fulfillment of sectoral reforms prescribed by Government of India from time to time.
The requirement of higher Capital Expenditure is contingent upon generation of higher revenue surplus by rationalization and prioritization of revenue expenditure. Thus, the State Government would try to adhere to FRBM requirements for Revised Estimates, 2023-24 and Budget Estimates, 2024-25, said a senior Financial Department official.