The Loneliness Of Odisha Budget

Leave aside studying, no one in Odisha or outside even talks about Odisha budget. None of the numerous management/technical institutions, the academia in Bhubaneswar and around the state discuss the budget. The much-celebrated college-turned universities in Cuttack, Bhubaneswar, Sambalpur, Berhampur, Balasore, Keonjhar, Rourkela would not even remember that February is the month when the state budget is presented in the assembly. TV channels take bytes from perennially retired and semi-retired finance professionals lacking new perspectives and lenses. It is a rigmarole with no viewership.

Still some channels show this in prime-time evening slots, every year this time, and I appreciate their discipline superseding commercial interests. The former civil servants who take pride in their experience in everything including economics are either outdated, tired or shy. The locked wisdom remains in the wistful evenings of living rooms.

How do the next generations know what is happening with their state, the economic performance so that they take crucial decisions in life? Is there a possibility of reverse migration? Or when they come back to Odisha, they find the real estate prices costlier than in Gurgaon or Bengaluru? Finally, who is going to stay in Odisha? Hopefully, the Odias will.

Together, the states are more important than the Centre in increasing India’s GDP. Odisha and its performance are crucial for the country. Increasing investments and expenditures will boost India’s growth and job creation. Odisha’s per capita income is 84.7% of the per capita income of India in 2021-22. But Odisha’s budget is “a best ignored drill”. The civil society, as expected, is in a slumber.

Recently the council of ministers approved the annual budget of Rs 2.3 lakh crore for 2023-24 and this is deemed to be the highest-ever budget in Odisha. This is almost about 15-17% more than last year’s budget. What does this mean? This signifies greater outlay and aggressive expansion of the funds allocation and higher aspirations. Small budget, limited spending but large budget and more leverage in spending. The mood is one of front-foot outreach and the intention to spend more and make the economy more agile and prosperous. A lot would depend on how the outlay is ultimately managed, where it matters.

By budgeting for more in the 2023 budget, the state’s confidence is reaffirmed (after the last two budgets) after COVID-19 impacted economic stalemate and now augurs well for enhanced spending on welfare measures. The government is already in the works for the forthcoming elections, firing from all cylinders and reaching to the last mile with gifts. Roti, kapda, makan still remain the expected gifts. If not expected, then offered as largesse.

The budget size in 2023 is about 17% bigger to meet expenditure in providing free rice, housing, health schemes to the masses. 71.5% of females aged 6 years and above in the state, is the proportion who ever attended school. 78.1% mothers in Odisha had at least 4 antenatal care visits. Slightly above 20.4% children aged between 6-23 months are receiving adequate diet. Health and education interventions will still require additional investment to better prepare for all-round socio-economic development. The family has to be healthy for the state to be healthy.

The COVID aftermath is now mopped away, almost. Per capita income of Odisha has grown at 16.8% in 2021-22. But the agriculture and allied sector has not shown much upward movement. In the last FY, about 3 lakh hectares of agricultural land should have been brought under irrigation coverage. The state government has plans to spend about Rs 11,000 crore on mega lift irrigation projects over five years (till 2027), to provide irrigation to additional 3 lakh hectares, thus doubling the irrigation coverage in five years. But who will track the development against the target?

The 2023 budget should deliver a stronger economy — stronger growth, public finances and employment. Good growth of the manufacturing sector now should create about 25% more employment. Rise in demand for intermediate goods or capital goods or raw materials would be an impetus for trading and logistics industry. However, I would specifically watch the diversification of manufacturing industry from basic metals and coke and petroleum products to other value-added sectors. Despite investment promises and MoU signings, this has still not happened on the ground.

I hope the state is gearing up for a substantial increase in capital investment and infrastructure development. Populist expenditure aside, economic growth can occur as a result of increases in the production of goods and services. Enhanced consumer spending increases national/international trade, and businesses that increase their investment in capital spending will all impact the level of production of goods and services in the state economy.

The 2023 Railway budget of India has made the highest-ever allocation for Odisha — Rs 10,012 crore. This would be a force multiplier for infrastructure development and resultant production of goods and services. It is expected that 280 km of railway tracks will be laid and 57 railway stations will be modernized. This will create work, trade and self-employment opportunities.

Sports has been one of the priority sectors for the state in the last decade and the budget has grown significantly between 2010 and 2022, almost 14 times. The youth population in Odisha is at an all-time high with nearly 36% population aged 14 to 34. This is a coveted demographic dividend for the state and holds promise to propel the state into a higher growth orbit.

Sports will motivate youths towards a health conscious, inspirational and purposeful future. 2023 will give them a chance closer home to realise the effect of sports and allied career opportunities too. The sports industry has the potential to contribute about 1-2% of the SGDP in Odisha. The ecosystem includes sports infrastructure, sports events, sports hospitality, training, manufacturing and retail of sports goods. The economic benefit of sports is much smaller in comparison to the social development it ushers in.

Hypertension and diabetes have assumed epidemic proportions in Odisha with long-term impact on health and well-being of the population. Over 25% men and 22% women aged above 15 years have high BP. Around 6% men and 5% women have severely elevated BP. Hypertension is almost getting uncontrollable.

The state will have earnings of a little more than Rs 1 lakh crore from its own resources, both tax and non-tax revenue. Tax revenue is charged on income earned by an individual or an entity (direct tax) and on the value of transaction of goods and services (indirect tax). Non-tax revenue is charged against services provided by the government.

The three main administrative non-tax receipts heads — general services, social services and economic services — account for about 80% of states’ own non-tax revenue. Hence to increase revenues from non-tax sources, fees/user charges for the various services provided by the state government need to be reformed. This is where the states’ quality and reach of public services make a big difference to our lives.

Governance and economy are directly related. Making subsidies judicious and not always populist warrants the government’s confidence, temerity and people’s engagement. Services provided by the government like police services, electricity, municipal services, can be chargeable without citizens’ protest if they promise good quality. These sources give non-tax revenue to the state government. Besides, the state will earn about Rs 77,000 crore from the Centre tax share. Though comfortably places, the state should not allow any downslide in revenue surplus.

Since 2021, Odisha has been preparing revenue-surplus budget. In the last two years, the revenue surplus were 2.54% in 2022 and 3.29% in 2021 of GSDP. My apprehension is that since this is the last budget before 2024 elections, the social schemes will weigh heavy on the budget and the surplus. Row has already erupted on the free rice scheme. There are a host of other schemes which I expect to continue.

The council of ministers also approved project proposals like i) water treatment plant at Mundali, ii) creation of leave and training reserve (LTR) posts in education department, iii) infrastructure development of Odisha Adarsha Vidyalayas, and others.

But more on that in the next part, soon.

In the meantime, do not try to obfuscate the budget with jargon gobbledygook. Keep it relatable like a household hisab note.