Naveen Patnaik, the chief minister of Odisha, has contributed to the state’s altered social and economic landscape.
Odisha has experienced significant changes in both its growth rates and financial situation. Odisha used to record overdrafts for close to 300 days a year before to the adoption of the Fiscal Responsibility and Budget Management (FRBM) Act at the federal and state levels. However, Odisha has been reporting a revenue surplus and a budgetary deficit of less than 3% since 2004–2005. Odisha’s budgetary stability was attained by strict austerity measures, including hiring workers on a contract basis at extremely low pay and freezing employment for decades.
Naveen Patnaik, the Chief Minister of Odisha, declared on October 16, 2022, that all contractual employment in the State would be regularised. Prior to this, many State government personnel had to serve on a contract for six years before being regularised. The Chief Minister also declared that the State’s fiscal situation had improved, enabling him to abandon the strategy of contractual hiring.
Since the legislation on mining leases was altered and auctions were implemented, Odisha has benefited greatly financially from the mining industry. During the Covid-19 crisis, the State was able to comply with all FRBM requirements, including maintaining a 3.0% fiscal deficit and having no revenue deficit.
The State budgeted to only get 20,000 crore from non-tax revenue in the years 2021–2022, with mining accounting for the majority of this amount. However, the State broke all previous records by collecting more than 54,000 crore from sources other than taxes. Compared to the budgeted amount (of 1,25,600 crore), the State raised much more money (1,53,021 crore). Over the past 17 years, the State has been able to keep its debt to gross domestic product ratio low (about 20%).
The mining industry contributes to macroeconomic expansion as well as the State Treasury. Compared to only 28% nationally, the industry sector generates 40% of the gross value addition in Odisha. Compared to the national average of 53%, the service sector in Odisha accounts for about 40% of GVA. In addition, compared to the national average of 19%, the contribution from agriculture and related activities is 21%.
Over the national average
Odisha’s growth over the previous 19 years has outpaced the national average. The State’s growth between 2002 and 2022 was higher than the national average of 6.3 percent, averaging 7.1% year. Odisha’s position among the 29 States (including J&K for comparison purposes) in terms of Per Capita Net State Domestic Product (PNSDP) at Constant Prices (2011–12) increased from 25 in 2004–05 to 17 in 2018–19.
Odisha is the 20th out of 29 States in the PNSDP for 2020–21. Odisha is emerging as a State with a medium income if all the States are categorised using the UNDP’s Human Development Index technique for classifying countries (low, medium, high, and very high), overtaking 12 other States (in 2018-19). Odisha’s per capita income has increased from 73% in 2004–05 to 84% in 2020–21 compared to the national average. Odisha’s per capita NSDP in 2020–21 was $1,01,501, which was lower than the national average of ₹1,26,855.
According to the NITI Aayog’s multi-dimensional poverty index, 29.35% of the population of Odisha is multi-dimensionally poor, which is higher than the national average of 25.1%. Odisha is ranked 20th out of 28 States (excluding J&K).
Despite Odisha’s remarkable growth performance, there are significant worries about how these advantages will be distributed to all facets of society. According to the published data for 2011–12, the Scheduled Tribe (64%) and Scheduled Caste (41.39%) communities continue to have disproportionately high rates of poverty. The prevalence of poverty was 24% among OBCs, 14% among general categories, and 36% on average for the entire State.
Similar to this, the majority of the tribal population in Odisha is concentrated in the southern (48%) and northern (40%) regions. A similar image is presented by the NITI Aayog’s multi-dimensional poverty head count ratio at the district level. Compared to other districts, tribally dominant districts have a significantly greater incidence of poverty.
The State must take substantial action to ensure that all societal segments and geographical areas share in the benefits of growth.