BHUBANESWAR: Though the Centre has allowed additional borrowing of two per cent of the projected Gross State Domestic Product (GSDP) amid stress in revenue due to Covid-induced lockdown, Odisha Government has begun fiscal prudence measures while finalising the Supplementary Budget 2020-21.
Since making substantive provision under any sector in absence of adequate resource back-up except for the priority sectors is not possible, the Supplementary Statement of Expenditure is set to be an exercise for re-prioritisation and Administrative departments would be allowed to augment the provision on actual need. Principal Secretary of Finance department Ashok K Meena said even if the Centre has allowed additional borrowing, the contraction of the GSDP along-with availing higher borrowing can jeopardise the debt sustainability unless a prudent fiscal path is adopted in medium term.
Administrative departments have been asked to make realistic assessment of requirement for the Supplementary Budget to be presented during the winter session of the Assembly in November-December so that scarce resources can be utilised in a prudent manner. The departments will have to submit the proposals to Finance department by October 12.
“It has been observed that supplementary provision, more so programme expenditure is often made without due care and caution which results in surrender of funds. In previous years, the total amount surrendered is substantial, even more than the supplementary provision in some years. Therefore, departments have been asked not to make the supplementary proposals in a routine manner,” Meena’s letter to all Departments said.
With the strategic lockdown/shutdown adversely affecting the economic activities and revenue realisation, the State has been suffering from resource shortfall both on account of Central transfer as well as own revenue. While it has been decided to discourage capital expenditure with long gestation period, the State Government would continue to focus health sector as a priority.
Social security transfers, generating employment, creation of livelihood opportunities for people, protecting the vulnerable sections, promoting agriculture, reviving MSMEs as well as industries and boosting tourism and transforming rural and urban Odisha would also be given importance. Among several measures for better fiscal management, cash management stipulations have been put on hold for 2020-21 for the departments coming under Cash Management System.
Odisha on path of fiscal prudence
The steps initiated for effective management of Covid-19, social security transfers, farm sector as well as generating employment would be fully funded. However, no new State schemes/ projects will be taken up except by Health and Family Welfare department unless it is essentially for emergent public service.
“The Covid-19 has posed challenges in every sphere of our life. The State is fighting the pandemic with all its resources with life above rest approach. Saving lives and providing livelihoods is our priority during the pandemic,” he said.