The Naveen Patnaik administration’s glib talk about an economic growth above the national average, accelerated industrial activity and improved fiscal management notwithstanding, the State’s economy is precariously perched. Its penchant to follow the path of populism at the cost of economic prudence has bled the exchequer. Economic slowdown and reduced funds transfer from the Centre have compounded the problems. With the Centre abandoning assistance to schemes funded under Finance Commissions, the funds devolution has hit a plateau. In this year’s Budget, the allocations through scheme-related transfer is about 5.5 per cent more than what Odisha normally gets as annual Central assistance, which is roughly pegged at Rs 10,000 crore. By Patnaik’s own admission, this marginal increment will be offset if inflation is factored in.
The State, set to present its Budget shortly, expected provisions in the Union Budget to address the adverse impacts of demonetisation so that growth momentum could be revived through increased public spending in social and infrastructure sectors, but it has not happened. Further, against the revised target of Rs 35,950 crore for tax and non-tax revenue for 2016-17, generation so far has only been Rs 22,790 crore. Collection of the State’s tax revenue has risen only by 1.21 per cent, while non-tax revenue has gone down by 11 per cent over the last year.
A major slump in earnings from mining and fall in excise income have not helped Odisha’s finances, while a plethora of populist measures have been a drain on the exchequer. The scheme to convert kutcha houses to pucca houses alone will need Rs 4,000 crore, while Rs 5,000 crore more is required for implementation of the Seventh Pay Commission in 2017-18. So, the State may have to take recourse to market borrowing to keep its commitments. It is about time Patnaik adopted fiscal prudence instead of doling out freebies to win votes at the cost of posterity.