Odisha Budget:

           Impeded by   Resources Crunch

Dr. Santosh Kumar Mahapatra

      On July 25, Chief Minister Mohan Charan Majhi, who also holds the Finance portfolio, presented the BJP government’s first Annual Budget 2024-25.  He said that his maiden budget focuses on transformation, development, governance and Odia Asmita to realise the dream of a developed Odisha by its centenary year in 2036. BJD supremo Naveen Patnaik criticised the budget by stating that it was the double engine, double disappointment.

  Normally, the budgetary outlay is decided in tandem with an expected rise in nominal Gross State Domestic product (GSDP) rise. For working out all fiscal indicators, the nominal Gross State Domestic product (GSDP) is estimated to grow by 11.2 percent from₹ 8.61 lakh crore in 2023-24 to ₹9.26 lakh crore in 2024-25. Similarly, real GSDP is expected to grow by 8 percent in 2024-25.   Nominal GSDP has grown by 10.57 percent and real GSDP by 8.46 percent in 2023-24 compared to previous fiscal. The budget is estimated to grow by 15 percent from ₹2.30 lakh crore in 2023-24 to ₹2.65 crore in 2024-25. The rise is 15 percent from ₹2 crore in 2022-23 to ₹2.30 crore in 2023-24. It means in the last two years’ budgetary outlay has increased by 15 percent and more than nominal GDP too. Further overall budgetary outlay as percentage of GSDP is likely to be 28.61 percent in current fiscal, nearly the same as (i.e.,27.64 percent) in previous fiscal. Hence there are no changes between BJD government and BJP government as far as growth of budgetary outlay is concerned.

   Of the total budget estimates, programme expenditure is estimated to increase to ₹ 1.55 lakh crore in 2024-25 from ₹ 1.25 lakh crore from previous fiscal. Similarly, administrative expenditure is estimated to rise to ₹97,725 crore, from ₹ 94,000 crore; transfer to Panchayats and Urban Local Bodies estimated to rise to ₹8,375 crore from ₹7,600 crore; the Disaster Risk Management Funds to ₹3,900 crore from ₹ 3,700 crore   in same period.  However, administrative expenditure that comprises salary, pension, interest payment will decline by ₹ 9500 crore from ₹1,03500 crore in interim budget of 2024-25. Decline in administrative expenditure   means there will be no new employment in state government jobs which will dampen the spirit of youths.

Chief Minister Mohan Charan Majhi said his government’s top priority is ‘Annadata’. Agriculture is the single largest employment sector and holds the key to socio-economic development of the state. This sector employs 45.8 per cent of the total workforce and contributes 22.5 per cent to the Gross State Value Added (GSVA). “I propose to increase the allocation under agriculture and allied sectors by more than 36 per cent from ₹ 24,829 crore in 2023-24 to ₹ 33,919 crore in 2024-25,” This is a welcome step. But allocation in various schemes is meagre compared to requirements.

 BJP has promised ₹ 50,000 to every woman of the state under the Subhadra Yojana. There are more than two crore women in the state. The government will need ₹ 1 lakh crore to fulfil this promise in two years, but only ₹ 10,000 crores has been allotted. The budget promises to enhance the support price on paddy to ₹ 3,100 per quintal. But the budget allocation is only ₹ 3,500   crore. while there is a need of ₹10,000 crore. This will cover only 30 per cent farmers. The Budget promises 25 lakh Lakhpati Didis by 2027. For this ₹ 20,000 crore will be required to implement the programme, while only Rs 1,000 crore is provisioned. ₹ 1000 crore have been allocated for metro rail, but experts say that it will cost ₹ 6,000 crores.

  Addressing a large election rally at Angul Stadium on May 20, 2024, Prime Minister Modi had promised to supply free electricity to the people if the BJP is voted to power in the Odisha Assembly." He elaborated that under the PM Surya Ghar Yojana, the BJP government would provide a ₹ 75,000 subsidy to consumers for installing rooftop solar panels, eliminating the need to pay electricity bills for up to 300 units. There is no sign of fulfilling this promise.

   By contrast, expenditure has been cut in certain departments in absolute terms too compared to previous fiscal. For example, outlay has declined from ₹ 1336.16 crore to ₹ 731.5 crore in case of General Administration Department; from ₹ 61,852.83 crore to ₹ 59,311.57 crore in case of Finance department; from ₹191.94 crore to ₹85.98 crore for Odisha legislative Assembly.  For higher education, it has increased marginally by 9 percent, only less than the nominal GSDP growth. Except for two or three departments, there has been a slight increase in all the other departments.

The budget does not make an attempt to raise resources and resorts to more borrowing. State’s own tax as percentage of GSDP is estimated to be 6.47 percent, same as in previous fiscal. It should be more than 6.75 percent as per the 13th Finance commission. State’s non-tax revenue as percentage of GSDP is estimated to decline from 6.3 percent in 2023-24 to 6 percent in the current fiscal.

Budget continues to have a revenue surplus of 2.9 percent of GSDP in 2024-25 as against 2.7 percent in previous fiscal, though many expenditures are cut or don’t have adequate allocation. But the fiscal deficit is estimated to rise as a percentage of GSDP to 3.5 percent from 3 percent while debt as a percentage of GSDP will rise to 13.1 percent from 12.4 percent in the same period. Total debt estimated to increase to ₹ 1. 25 lakh crores by the end of March 2025 from ₹ 1.12 lakh crore with per capita debt revolving around ₹ 20,736 crores.

Actually. the major problem today is unemployment, price rise with concomitant health and education becoming costlier and unaffordable. Hence, huge expenditure is needed on above. Money should have been spent more on creating jobs, making health and education affordable and providing financial assistance to vulnerable sections of society. The impediment may be a resource crunch. Effort should be taken to raise resources.

The author is an Odisha based eminent economist/columnist. Email: skmohapatra67@gmail.com