BHUBANESWAR: Odisha’s fiscal performance in the first three quarters of the 2025-26 financial year is a paradox as the capital expenditure dropped by around 15 per cent as compared to the estimate, the highest in recent years, despite the state recording a sharp increase in non-tax revenue.
Official sources said Odisha generated Rs 83,229 crore in its own revenue during the April-December period, registering a 6.41 per cent year-on-year growth. The increase in revenue collection was driven predominantly by non-tax sources instead of the core tax mobilisation.
Own tax revenue stood at Rs 40,094 crore, up by only 0.3 per cent over the corresponding period of the previous financial year. The stagnation has been attributed to weak performance in SGST, VAT and state excise, sectors that are closely linked to consumption trends and compliance behaviour.
In contrast, the non-tax revenue rose sharply to Rs 43,135 crore, posting a growth of 12.79 per cent year-on-year. Finance department sources said the surge was primarily on account of higher interest and dividend receipts, while mining revenue showed signs of recovery last month after a prolonged slowdown.
However, total revenue receipts during the April-December period touched Rs 1,40,062 crore with a growth of 7.82 per cent over the previous year. This growth, the sources said, was supported by a 9.95 per cent rise in central transfers. The improvement in non-tax revenue played a stabilising role, helping the state maintain overall revenue growth despite tax under-performance, they said.
According to the budget statement, own tax revenue has been pegged at Rs 66,000 crore while the non-tax revenue is estimated at Rs 60,000 crore, apart from the central share of Rs 64,408 crore and Rs 41,591 crore of grant-in-aid from the Centre for 2025-26.
What has left the economists surprised is that the improvement in receipts did not translate into higher public investment, as the capex registered a significant contraction. They warned that delays in construction of roads, bridges and rural infrastructure could constrain broader economic momentum if not addressed swiftly.
“The growth in non-tax revenue was basically due to higher mining royalty. But the state must focus on the pace of capital expenditure and accelerate it sharply in the last quarter. Infrastructure creation will have a strong multiplier effect and delays can impact medium-term growth,” said Amarendra Das, secretary of Odisha Economics Association.
Acknowledging the need for tighter fiscal monitoring, the state government has asked all revenue-earning departments to take steps to achieve their targets in the remaining quarter of the fiscal. Departments implementing centrally-sponsored schemes (CSS) have also been asked to intensify follow-up with Union ministries to ensure timely release of central assistance.