BHUBANESWAR: The debt burden on the state is expected to rise to Rs 1.34 lakh crore in 2025-26 as per revised estimates, which at 13.6 per cent of the GSDP is well within the limit prescribed by the Odisha FRBM Act.
According to the Odisha Economic Survey 2025-26 placed in the Assembly on Thursday, the total debt stock has increased from Rs 1.1 lakh crore in the previous financial year 2024-25. The debt incurred by the state government is well below the ceiling fixed by the Centre on Odisha. For FY 2025-26, the Centre has fixed the net borrowing ceiling at 3.5 per cent of the projected GSDP.
For Odisha, the limit has been set at Rs 37,137,97 crore. This ceiling covers all borrowing sources, such as market borrowings, institutional loans, national small saving fund loans, loan from the Centre and liabilities from public accounts like small savings and provident funds.
In a statement, Chief Minister Mohan Charan Majhi praised the financial management of the state for which the debt stock could be limited to 13.6 per cent of the GSDP despite the rapid development of the state during the last 20 months. Odisha’s debt to GSDP ratio is the lowest among major states. Besides, the interest payment to revenue receipt (IPRR) ratio stands at 2.8 per cent, well within the prescribed 15 per cent threshold ensuring the state’s debt remains sustainable.
As per the 2025-26 Budget estimates, Odisha’s public debt stood at Rs 1,21,571 crore, consisting of internal debt amounting to Rs 94,095 crore and loans and advances from the Centre totalling Rs 27,476 crore.
According to the Survey, the total public debt is projected to increase from 13.6 per cent of GSDP in 2025-26 to nearly 15.7 per cent of GSDP by 2029-30 but remain within the permissible limit. This increase is likely to be driven by fiscal deficits resulting from higher capital expenditures across various government programmes, it added.
Additionally, borrowing costs are anticipated to be relatively low during this period due to the availability of low-cost financial sources, which will also keep principal repayments comparatively manageable. The Survey maintained that the state’s future debt outlook appears stable, although it remains subject to the government’s policy priorities.
The Survey has also commended the government’s increased spending on social services like education and health demonstrating its commitment to improving citizens’ quality of life, particularly for marginalised and vulnerable population.
Odisha’s social sector expenditure for 2025-26 Budget estimate stood at Rs 1.21 lakh crore marking an 8.1 per cent increase over 2024-25. Between 2016-17 and 2025-26, social sector expenditure grew at a compound annual growth rate of 15 per cent.