Odisha's fiscal health: Of prudence and paradox

Over the past decade, it has consistently remained among revenue-surplus states, allowing the Naveen Patnaik- led govt to invest in asset generation and introduce welfare schemes. But its socio-economic indicators leave much to be desired. INDIVJAL DHASMANA & RAMANI RANJAN MOHAPATRA explain

- INDIVJAL DHASMANA & RAMANI RANJAN MOHAPATRA

For at least a decade of the past 24 years, Odisha under the governance of Naveen Patnaik (pictured) and his Biju Janata Dal (BJD) has maintained a consistent revenue surplus. This fiscal health has allowed the government to invest in asset generation and roll out social welfare schemes, despite its own tax revenues (OTR) accounting for at best a third of its revenue receipts during the past 10 years.

The state kept its fiscal deficit within the permissible limit, even during the Covid-impacted year of 2020-21. It did not resort to the enhanced fiscal deficit limit permitted by the Centre during this period.

Odisha took fiscal consolidation a step further by achieving a surplus position during the second wave of Covid-19 and the Omicron-hit year of 2021-22, when most states struggled to contain their fiscal deficit within even the enhanced permissible ceiling. The debt never exceeded 19.2 per cent of its gross state domestic product (GSDP) in any of these 10 years. This fiscal discipline meant that the state did not overstretch its resources, even on capital outlays, which at times constituted up to a quarter of total expenditure and 4-6 per cent of GSDP.

However, this is only one side of the story. Critics of the BJD government argue that it has neglected to fill crucial vacancies and incur only necessary expenditures to maintain its revenue surplus position. Despite some positive indicators, such as the gender ratio and total fertility rate, the state's socio-economic indicators leave much to be desired. For instance, the state's unemployment rate remained higher than the national average in the past six years (for which data is available), though the gap narrowed in 2022-23.