Bhubaneswar: From a debt-ridden State in 1999, Odisha has now emerged as the number one State in the country in fiscal management during past 23 years under the dynamic leadership of Chief Minister Naveen Patnaik, said Veteran Financial Analyst, Rajib Sekhar Sahoo.
Shri Sahoo talked to Media on Financial Management of the State Government over last 23 years and said that Odisha was considered one of the most fiscally-stressed among all general category States in late 1990’s and early 2000’s.
When Naveen Patnaik was sworn in as the Chief Minister, the State was in a very bad shape. The Super Cyclone of 1999 not only created devastation in the State but also ruined the economy of Odisha, said he.
But the Chief Minister Shri Patnaik had promised the people to bring financial stability back in Odisha. The State government took a number of strong fiscal correction measures both on resource as well as expenditure side during the early part of the century to bring the state finances back to stability.
Now, the State has emerged as the ‘Number One’ State in the country in fiscal management, which is the biggest success of Odisha, Ace Analyst Shri Sahoo said.
Revenue augmentation measures were taken which included introduction of taxes on profession in 2000; introduction of VAT in 2005; use of IT-based tools in tax administration for improving compliance, periodic revision of rates of various tax and non-tax revenues; monthly review of revenue collection etc. Successful mining leases through auction in recent years also added to the stability of the State’s finances.
The State has gone forward in its performance in Own Tax Revenue collection, Debt Management, Capital Expenditure and bringing new investments, he said.
As per Fiscal Responsibility and Budget Management Act (FRBM Act), 2005, the debt stock should remain below 25 percent of GSDP and in Odisha, it stood at about 17 to 18 percent while debt stock of many other States crossed the limit, the Top Economic Analyst said.
Odisha has the unique distinction of adherence to all the parameters envisaged in FRBM Act every year since enactment.
Considering the financial risks associated with the mining revenue, the State Government has created a Budget Stabilisation Fund which will act as a buffer fund to ensure financial stability during the period of negative shocks from the mining sector.
Collection of Mining Revenue has been unprecedented during the last two years. The contribution of non-tax revenue from the mining sector has substantially gone up from 25 percent of own revenue in 2020-21 to 51 percent in 2021-22. It has come down to 43 percent of total own revenue in FY 2022-23(RE). Revenue from the mining sector is sensitive to price fluctuation in the international market and demand for metals in national and international markets. So, the Fund was created, said Shri Sahoo.
The key focus of the State Government is quality spending on capital expenditure for asset creation and Programme Expenditure which mainly constitutes expenditure on various schemes and programmes. Spending in these two sectors will give long-term benefit to the State, he said.
Notably, the total capital expenditure is estimated to be around 8.4 percent of GSDP in FY 2023-24. The programme expenditure is set to increase from the revised estimate of Rs. 1 lakh crore in FY 2022-23 to 1.25 lakh crore in FY 2023-24 which is a growth of about 25 percent.
Shri Sahoo said the performance of the State Government in the infrastructure development sector is also praiseworthy. The State has undertaken a lot of projects for construction of roads, bridges, dams, railway lines, etc.
Odisha became a top state in per capita GST collection, which shows development in trade & commerce sector while State’s Industry Policy and industry-friendly environment has been able to attract large-scale investments to Odisha, he pointed out.
Besides, he said, the State Government has been taking measures to make each district an industrial district. The State is also giving much emphasis to skill development, which not only creates employment but also helps to create a strong and progressive State. Apart from the above, the steps taken by the Odisha government in management of mineral resources is also praise worthy, the Veteran Financial Analyst said.