Bhubaneswar: State Government has estimated that total debt stock by 31 March 2023 will be Rs.1, 12,401 Crore, which was Rs.1,00,813 as on 31 March, 2022.
While total outstanding public debt of the State will raise but future debt stock outlook of the State looks to be within the sustainable level.
And in Medium Term, the total debt to State’s Gross Domestic Product (GSDP) ratio of the state is projected to reach a level of 18.1 Percent in the Financial Year 2025-26, which will be also within the stipulated limit of 25 Percent.
Latest Status on Public Debt reveals that as the State Government is fully utilizing public debt for capital investment, it turns out sustainable and the Government will be well within its limit to service its debt without any difficulty.
Officials say that strong revenue growth is helping the State Government to keep interest payments manageable, and within the limits of Fiscal Responsibility and Budget management (FRBM) Act.
While the low percentage of foreign currency debts has lowered Odisha’s vulnerability to any exchange rate depreciation, and Odisha’s Debt to GSDP Ratio of 15.8 Percent is considerably lower than for India as a whole 61 Percent of Gross Domestic Product (GDP).
Chief Minister Naveen Patnaik decision not to go for high cost borrowing from Market has been helping the State and transition from high cost borrowing to low cost borrowing is helping the State to keep its debt stock at a manageable limit, officials admit.
Think of the days of 2000, when Odisha used to go for overdraft for 364 days in a year, and now situation is totally different, where State is within its stipulated debt limit.
State Government is borrowing from Odisha Mineral Bearing Area Development Corporation (OMBADC) Fund and the Compensatory Afforestation (CAMPA) Fund, which are low cost debts.
Open Market Borrowings during 2021-22 is ‘Zero’ and during FY 2022-23 it will be at the same level as cheaper sources of loan are available for the State Government to finance capital projects.
The total loan guarantees to State Public Sector Undertakings, Urban Local Bodies and Co-operative Institutions as on 31 March 2022 is Rs.6140.91 Crore. This amount is 0.96 Percent of GSDP and guarantees do not constitute a part of the State Government’s loan portfolio.
Now almost all borrowing are utilized in socially beneficial capital projects that spurs economic activities, creating jobs and improving lives of the people of the state and adding to GSDP.
Accordingly it has been decided to identify good projects and selected for investment of borrowed funds, officials say.
So the lower level of debt stock, reduced cost of borrowing, lower level of fiscal risks exposure and low level of outstanding government guarantees have made the fiscal condition of the State sustainable, said he.