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State Creates Stabilization Fund

Bhubaneswar: For the first time in the country, the State Government has announced to create a Budget Stabilisation Fund (BSF) of Rs 10,000 crore to meet unseen expenditure.

Finance Minister Niranjan Pujari made this announcement while presenting the Annual Budget for the year 2022-23. 

“Due to our proactive steps in renewal of the mining leases at the appropriate time, we had a substantially higher collection of mining revenue during previous two years, which had been instrumental in meeting the need of higher public expenditure in revamping health service delivery and creating livelihood opportunities during the pandemic period,” Mr.Pujari said.

However, as a best practice we have now been able to acknowledge the substantially higher realization of mining revenue as a positive fiscal shock. It may turn negative affecting the State Budget and public expenditure, since the international commodity prices are highly volatile, pointed out the Minister.

“As a mitigation measure to neutralize the risk of price shock of metals on the State Budget, we are going to set up a Budget Stabilization Fund (BSF), which is the first of its kind initiative in a State in the country,” he announced. 

Mr.Pujari said this Fund would help the Government to set aside certain surplus revenue for times of unexpected revenue shortfall or budget deficit.

He further said, “Our resource mobilization measures have yielded results with substantial increase in share of our contribution to total revenue receipt.”

In 2021-22 (RE), State’s own revenue constituted about 61 per cent of total revenue, resulting in reduced dependence on central transfers. To facilitate higher spending, the Finance Department has made relaxation in the procedure and enhanced delegation of financial power at all levels of Government, he added.

Speaking about transformative initiatives, the Finance Minister said Artificial Intelligence is now being used for Identification of the pensioners, which was launched by the Chief Minister on 29 December, 2021.

End-to-End Digital Transaction (e-voucher) is being piloted in 5 District Treasuries and all the Special Treasuries. The Finance Department is planning to rollout the initiative in all treasuries, he further announced.

“Development challenges are many, but resources are limited. In this Budget, we are affirming our commitment to meet these challenges with effective utilization of the available resources. We are putting in our best to meet the expectations of the people,” Pujari ended his speech dedicating this Budget to the people of Odisha.

According to Budget documents, the total outstanding public debt of the State as per the revised estimate for FY 2021-22 stands at Rs 1,00,813 crore which is 15.8pc of the State’s Gross Domestic Product (GSDP).

The Fifteenth Finance Commission and Odisha FRBM Act, 2005 prescribe for limiting the debt to GSDP ratio within 25pc. The current debt level of Odisha is within the stipulated debt limit, said an official.

For FY 2022-23, it is estimated that the total debt stock will be Rs. 112401 crore which is 15.6pc of GSDP.

In the medium term, the total debt to GSDP ratio of the State is projected to reach a level of 18.1pc in the financial year 2025-26, which will be within the stipulated limit of 25pc.

Similarly, the fiscal deficit stands at 0.4pc of GSDP and the interest payment to revenue receipts (IPRR) stands at 4.3pc for the financial year 2021-22, well within the 15pc set by the FRBM Act. As per the budget estimate for FY 2022-23, fiscal deficit and IPRR are estimated to be 3.0pc and 5.2pc respectively.