Odisha: Welfare promises, capex will need tightrope walk by government

State faces daunting task of provisioning for promises made by the BJP government, while ensuring fiscal prudence and sustainability.
Representative Image
Representative Image(Express Illustration | Amit Bandre)

BHUBANESWAR: As the Mohan Charan Majhi government prepares for budget 2024-25, funding of ambitious welfare schemes vis-a-vis capital expenditure will require a tightrope walk.

The state faces the daunting task of provisioning for promises made by the BJP government, while ensuring fiscal prudence and sustainability.

As approved in the first cabinet chaired by Majhi after he took oath as the chief minister, the government seeks to implement at least three major promises - Subhadra Yojana, support price of Rs 3,100 per quintal of paddy and pension of Rs 3,000 for all eligible beneficiaries.

Sources said the three components could require around Rs 1.03 lakh crore which include Rs 82,500 crore for Subhadra Yojana (if applicable for 1.65 crore women voters), Rs 7,000 crore for paddy support price and Rs 14,000 crore for pension.

The state’s own revenue stands around Rs 1.15 lakh crore, which comprises Rs 59,000 crore of own tax revenue and Rs 56,000 crore of non-tax revenue. Total transfer from the centre is expected at around Rs 89,000 crore which include the state’s share of Rs 55,231.76 crore in central tax and grant-in-aid of Rs 33,768.24 crore.

As per the vote-on-account (VoA) presented by the previous government before the elections, the rest Rs 51,000 crore were to be met from public loan (Rs 39,515 crore), public account net (Rs 11,000 crore) and recovery of loans and advances (Rs 485 crore).

Of the Rs 2.55 lakh crore budget estimate in the last VoA, state’s administrative expenditure stood around Rs 1.03 lakh crore while programme expenditure pegged at Rs 1.4 lakh crore which included state sector schemes, central sector schemes and centrally sponsored schemes.

The administrative expenditure is unlikely to be substituted as it includes salary component of Rs 32,571 crore, pension of Rs 22,591 crore, principal repayment of Rs 22,765 crore, establishment, operations and maintenance (EOM) expenditure of Rs 18,000 crore and Rs 7,566 crore towards interest servicing.

Budget experts say the new government is likely to make significant changes in programme expenditure which has a large component of around Rs 1.03 lakh crore of state sector schemes along with Rs 36,109 crore of centrally sponsored schemes. “The focus on Subhadra scheme demands careful financial planning. It will necessitate stringent fiscal management,” they said.

Amidst these commitments, the challenge lies in maintaining fiscal discipline while prioritising capital expenditure for infrastructure development and economic growth. As per VoA, the proportion of capital expenditure of around Rs 63,162 crore (6.8 pc of the GSDP) is the highest among all major states in the country.

Meanwhile, the Finance department has urged all other departments to submit revised estimates by June 30.

Sources said the revenue surplus for the current fiscal was projected at four per cent of GSDP and fiscal deficit was kept within the prescribed limit of three per cent. “The state’s own revenue contributes about 56 pc to the total revenue pool, thereby reducing the dependence of central transfers. The government is looking at all aspects while preparing the full-fledged budget,” the sources added.

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