Bhubaneswar: Despite natural calamities and political instability around the globe, the State Economy remains in its path of growth and scaling up high.
Vishal Dev, Principal Secretary Finance is regularly monitoring GSDP Growth and the GSDP of the State at current prices in 2023-24 (Annual Estimate) is estimated at Rs 8,32,790 crore with a growth of 10.57 per cent over 2022-23 (Revised Estimate).
The annual average growth of nominal GSDP over the last ten years stands at 11.34 percent. The GSDP is expected to grow at 11% in nominal terms during 2024-25.
The real GSDP or GSDP at constant (2011-12) prices stands at Rs 5,03,870 crore for the year 2023-24(AE) as per the advance estimates with a growth of 8.46 percent over the year 2022-23. The annual average growth of GSDP in real terms over last ten years stands at 7 percent, it said.
At the macroeconomic level, over the last 10 years, Odisha has registered an annual average growth of about 7 percent of Gross State domestic product (GSDP) except during 2020-21. The GSDP contracted by 2.11% during 2020-21, according to State Budget documents.
As per the advance estimate for the year 2023-24, GSDP is projected to grow at 8.46%, which is higher than the average growth rate in the last 10 years, said a senior official in Department of Finance.
As per the reports, higher commodity price, interest rate and political instability around the globe have resulted in higher inflation and volatility in economic growth. However, the State Government’s focus on capital investment and private sector investment in industries, MSME sector, social and economic sector is likely to help the domestic economy to grow at about 8 percent in real terms and about 11 percent in nominal terms during 2024-25.
Similarly, there has been impressive growth in State’s own revenue from 1999-2000 onwards. State Own revenue has reached an all-time high of 14.88% of GSDP during FY 2021-22 mostly due to higher collection from the mining sector.
During the year 2023-24(RE), the Own Revenue has been estimated to be 12.8% of GSDP and it is projected at a level of 12.4% in the 2024-25 fiscal. The reduction in the own revenue to GSDP ratio is mostly due to reduction in mining revenue and higher GSDP growth in nominal terms.
State’s own tax to GSDP ratio has increased from 3.6% in FY 1999-2000 to 6.5% in FY 2023-24. Similarly, non-tax revenue as a percentage of GSDP has increased from 1.5 percent in 1999-2000 to 8.2 percent in FY 2021-22 due to higher collection of mining revenue.
The non-tax/GSDP ratio is estimated at 6.3 percent in 2023-24 (RE) and it is projected to remain above 6 percent during 2024-25. Thus, the total own revenue as percentage of GSDP has increased from 5.1 percent in 1999-2000 to 14.8 percent in 2021-22 and is estimated at 12.4 percent in 2024-25.
At the same time, the State also followed a proper policy to make expenditures. The State Government has identified health, education, agriculture, tourism, drinking water, connectivity, urban sanitation, MSME and provision of social security as the focused area of expenditure.
The expenditure policy of the State Government is to contain the rise in salary expenditure, interest payment and pension payment in the coming financial years and enhance the program expenditure particularly Capital Expenditure (CAPEX).
The capital outlay in the financial year 2024-25 is estimated at 6.8% of the GSDP. Odisha’s expenditure has risen substantially, registering double-digit growth almost every year since 2011-12
Reduction of debt servicing liabilities through borrowing from low-cost sources like CAMPA, OMBADC and NABARD which are charging less rate of interest is the strategy for FY 2024-25. The broad objective of the expenditure policy is to improve the quality of public expenditure in order to ensure better output and outcome, the Finance Department said in a report.
Moreover, the debt stock of the Government is also under control and in compliance with the FRBM Act.
The State had one of the highest debts to GSDP ratios among all States of India at 50.7% as on 31st March, 2003 compared to all States average of 34.2% as worked out by the 12th Finance Commission. It is estimated that the debt- GSDP ratio in FY 2023-24 will be 12.4%.
The ratio of interest payment to revenue receipt should be brought down to 15 percent as per 12th Finance Commission recommendations. Odisha has been able to achieve the target during the year 2007-08 and the ratio has been brought down to 4.3 percent in 2015-16. It is estimated to remain at 3.3% in 2023-24.
The policy of the State Government has been to reduce the burden of interest payment through prepayment of high-cost market loans and also through debt swap, it said.
The total revenue expenditure is estimated at Rs 1,58,015 crore during the financial year 2023-24. After achieving revenue balance, a surplus of Rs 24,484 crore has been projected in the Budget Estimates for 2023-24 which is 2.84 percent of GSDP. The Fiscal Deficit is projected at Rs 25844 crore which is 3.0 per cent of GSDP well within the limit prescribed by Odisha FRBM Act, 2005.
The year-end debt stock for the financial year 2023-24 is estimated at Rs 1,12,882 crore which is 13.1 percent of GSDP, less than the stipulated 25% limit. The Interest Payment to Revenue Receipts (IPRR) for the Budget Estimates of 2023-24 is estimated to be 3.92 percent, well below the prescribed limit of 15%.