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Odisha Economic Survey, 2015-16
State Finances of Odisha: 2015-16
Introduction
The overall fiscal scenario in Odisha continued to be broadly satisfactory from 2013-
14onwards despite a couple of aggregate indicators causing some concern. The basic
prudential policy of maintaining revenue account surpluses to finance the capital outlays in
developmental sector continued to be successfully implemented. The continuous decline in
debt stock to GSDP ratio and debt servicing ratio with higher growth in GSDP has made the
state fiscal policy sustainable and solvent. Revenue Surplus, low fiscal deficit and low debt
to GSDP ratio has created space for more borrowing. Considering, the positive impact of
debt on the potential GSDP of the state, there is a need for incurring fresh debt, to facilitate
higher allocation in developmental sector for creation of capital assets as well as
maintenance of the existing assets so as to increase the productivity of the state economy.
Guided by the rolling targets of the Medium Term Fiscal Plan, a part of the obligations under
the fiscal responsibility legislation of the State, key fiscal parameters were kept within
permissible range, meeting an important conditionality of the Thirteenth Finance
Commission of India. All these are achieved against the backdrop of the sluggish growth in
Indian Economy.
The subdued macro-economic scenario has affected the State’s finances to a limited extent.
Besides transfers from the Centre also exhibited fall; for a state like Odisha that is heavily
dependent on the central transfers, such fall can have serious consequences.
9.1.Overview The continued modest economic growth, particularly so in the mining and manufacturing
sectors has adversely affected the buoyancy in both tax and non-tax revenues of the State.
The central transfers that includes both shared taxes and grants, after dropping noticeably in
2012-13 and 2013-14 as ratios of GSDP, have increased in 2014-15and 2015-16 mainly due
to the transfer of Central Assistance for 66 restructured Centrally Sponsored Schemes
(CSS) through Consolidated Fund of the State and the discontinuance of the previous
practice of direct transfer of central assistance to various implementing agencies. Therefore,
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Odisha Economic Survey, 2015-16
the higher grants from the centre are because of the change in the accounting of financial
assistance for the centrally sponsored schemes (CSS).
Total revenue receipts (as % of GSDP) have gone up from 17.65% in 2013-14 to 18.40% in
2014-15 and 21.35% in 2015-16(BE) respectively. Figure 9.1 presents the trends in broad
fiscal parameters of revenue and expenditure that sum up the fiscal position of the State.
Figure 9.1: Trends in Broad Expenditure Ratio (% GSDP)
Revenue expenditures were also higher at 16.51% of GSDP in 2014-15 as compared to
16.45% in 2013-14. However, the Total Revenue Receipt has gone from 17.65% of GSDP in
2013-14 to 18.40% of GSDP in 2014-15. The State could break the capital outlay barrier of 3
per cent of GSDP in 2014-15 by achieving Capital Outlay at 3.6% of GSDP. Besides, the
State could achieve total expenditure more than 20% of GSDP in 2014-15.
The Total Revenue Receipt and total Revenue Expenditure are budgeted at 21.35% and
19.81% of GSDP respectively in 2015-16. The Capital Outlay and Total Expenditure are
estimated at 4.56% and 25.42% of GSDP in 2015-16.
During 2012-13 to 2014-15, the annual average total revenue receipt has increased by
0.40% of GSDP as against annual average rise in revenue expenditure of 0.51% of GSDP
during the same period. As a result, the revenue surplus of 2.23% of GSDP in 2012-13 has
come down to the level of 1.89% of GSDP in 2014-15. The zero fiscal deficit position in
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Odisha Economic Survey, 2015-16
2012-13 has gone up to -1.17% of GSDP in 2014-15. This implies the entire borrowing
during this time period has financed higher capital outlay and it has reached to a level of
3.57 % of GSDP. It is budgeted at 4.56% of GSDP in 2015-16. Figure 9.2 depicts the trends
the major deficit indicators.
Figure 9.2: Major Deficit Indicators (% GSDP)
*Negative (-) sign indicates deficit
During 2011-12 to 2015-16(BE), the State has been generating Revenue Surplus as against
the revenue deficit of all the states in India at the consolidated level during the same time
period. Though, the fiscal deficit which indicates the net borrowing of the states is going up
since 2011-12, because of less interest expenditure, the primary deficit ratio of the State has
remained favorable as compared to all states in India1. The fiscal deficit is required to be
kept within the prescribed 3% of GSDP in terms of FRBM Act and should be taken care of
while working out the revised estimates for 2015-16.
Fiscal consolidation in Odisha has been undertaken under a rule based framework through
the enactment of Odisha Fiscal Responsibility and Budget Management (FRBM) Act, 2005.
The management of state finance in Odisha is guided by FRBM Act, 2005 and the
recommendation from successive finance commissions. The State Government has
amended the FRBM Act, 2005 on the basis of recommendations of the 13th Finance
Commission. To examine the impact of FRBM Act on the Odisha’s fiscal space, the time
1 State Finances: A Study of Budgets 2014 -15, Reserve Bank of India
2.492.23
1.20
1.891.54
0.280.00
-1.67 -1.77
-3.13
1.421.10
-0.63 -0.86
-1.82
-4.00
-3.00
-2.00
-1.00
0.00
1.00
2.00
3.00
20
11
-12
20
12
-13
20
13
-14
20
14
-15
20
15
-16
(B
E)
Revenue Deficit / . Fiscal Deficit / . Primary Deficit / .
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Odisha Economic Survey, 2015-16
period for assessment of fiscal performance is undertaken by considering two time periods
around the implementation of FRBM legislation. The time periods for assessing the fiscal
performance in terms of major deficit indicators are from 1995-96 to 2004-05 (Pre FRBM
Period) and 2005-06 to 2014-15 (Post FRBM Period). Each time period is of ten year
duration and annual average of major fiscal deficit indicators are taken to assess the impact
of FRBM Act on state fiscal performance.
Figure 9.3: Major Deficit Indicators (% GSDP): Pre FRBM & Post FRBM
*Negative (-) sign indicates deficit, RDR, FDR & PDR are Revenue Deficit, Fiscal Deficit and Primary
Deficit Ratio as proportion of GSDP
Figure 9.3 presents a comparative view of State Fiscal Performance in terms of major fiscal
deficit indicators in Pre FRBM and Post FRBM Period. A significant improvement has been
registered in Post FRBM Period over Pre FRBM Period.
-3.34%
-5.58%
-1.60%
1.90%
-0.38%
1.58%
-6.00%
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
RD
R
FDR
PD
R
Pre FRBM / . Post FRBM / .
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Odisha Economic Survey, 2015-16
9.2. Composition of Total Revenue Receipt
The contribution of State Own Revenue to total Revenue Receipt has increased to 53% and
52% respectively in 2012-13 and 2013-14 from 49% in 2011-12. During 2014-15 and 2015-
16(BE), the share of Central Transfer has been more than the share of State Own revenue.
This is mainly due to change in the accounting of financial assistance for the centrally
sponsored schemes (CSS). Figure 9.4 presents the trends in composition of Total Revenue
Receipt. The average share of State Own Revenue and Central Transfer to the Total
Revenue Receipt is calculated at 49% and 51% respectively during 2011-12 to 2015-16(BE).
Figure 9.4: The composition of Total Revenue Receipt
*SOR: State Own Revenue, CT: Central Transfer
The State Own Revenue andCentral Transfer are reported at 9.02% and 9.47% of GSDP
during 2011-12 to 2015-16(BE).
9.3. Trends in State Own Revenue The State Own Revenue (SOR)as proportion of GSDP has improved from 8.83% to 9.11%
in 2013-14. The rising trend is mainly driven by State Own Tax Revenue(SOTR).Because of
deterioration in collection of State Own Non Tax Revenue(SONTR) in 2014-15, the SOTR as
a proportion of GSDP has declined to 9.01%.An important reason for the lowSONTR of the
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
20
11
-12
20
12
-13
20
13
-14
20
14
-15
20
15
-16
(BE)
Ave
rage
49%53% 52%
49%
43%
49%51%47% 48%
51%
57%
51%
SOR / CT /
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Odisha Economic Survey, 2015-16
State is sluggish tax collection on account of subdued mining activities. The budget estimate
of SOR is pegged at 9.12% of GSDP. Figure 9.5 presents the trends in SOR.
.
Figure 9.5: Trends in State Own Revenue Receipt (% of GSDP)
*SOR: State Own Revenue, SOTR: State Own Tax Revenue. SONTR: State OwnNon Tax Revenue
The Tax to GSDP ratio represents the tax efficiency of the state. The consolidated SOTR to
GSDP ratio for all the states in India is reported at 7.8% and 7.7% respectively in 2013-14
and 2014-15 which higher than Odisha.
The consolidated State Own Non Tax Revenue to GSDP ratio for all the states in India is
reported at 1.3% and 1.4% respectively in 2013-14 and 2014-15 which lower than Odisha.
Hence, there is a need to raise the efficiency in Tax Revenue for the state as efficiency is
below the national average.
5.97 5.89 6.09 6.40 6.40
2.86 3.16 3.02 2.61 2.71
8.83 9.05 9.11 9.01 9.12
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.008.00
9.00
10.00
20
11
-12
20
12
-13
20
13
-14
20
14
-15
20
15
-16
(BE)
SOTR / . SONTR / . SOR / .
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Odisha Economic Survey, 2015-16
Figure 9.6 presents the composition of SOTR and SONTR in State Own Revenue.
Figure 9.6: Composition of SOTR and SONTR
The share of SOTR and SONTR in State Own Revenue is 68% and 32% respectively during
2011-12 to2014-15. In order raise the SOTR to GSDP ratio and buoyancy in SOTR, the
share of SOTR has been targeted at 70% in 2015-16(BE).
9.4. Tax Buoyancy
Tax buoyancy is defined as the ratio of growth in tax revenue to the growth in the
corresponding nominal GSDP. Figure 9.7 presents the trends in buoyancy in both SOTR and
SONTR. The buoyancy in SOTR has been inelastic in 2012-13 and average buoyancy
during the period 2011-12 to 2015-16(BE) is calculated at 1.31. The buoyancy in SNOTR
has been inelastic in 2013-14 and negative in 2014-15. The average buoyancy during the
period 2011-12 to 2015-16(BE) is estimated at 1.32. Figure 9.7 presents the trends in tax
buoyancy.
70%
30%
Composition in 2015-16(BE)
SOTR SONTR
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Odisha Economic Survey, 2015-16
Figure 9.7: Trends in Tax Buoyancy
*SOTRB: State Own Tax Revenue Buoyancy, SONTRB: State Own Non Tax Revenue Buoyancy
9.4. Trends in State Own Tax Revenue
The tax structure of the State has been subtly changing over the years, and particularly in
the recent period. The composition of taxes reflects the structure of the state economy. The
trends in collection of taxes as percentage of GSDP are presented in the table 9.1.
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
20
11
-12
20
12
-13
20
13
-14
20
14
-15
20
15
-16
(BE)
Ave
rage
1.72
0.89
1.43 1.48
1.01
1.31
2.98
1.91
0.43
-0.31
1.61
1.32
SOTRB SONTRB
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Odisha Economic Survey, 2015-16
Table 9.1: Trends in Collection of Taxes (% of GSDP)
The collection of sales tax (VAT), being the consumption based tax, is growing since 2011-
12 and the average collection on account of VAT as proportion of GSDP is reported at
3.78%. It is targeted at 3.85% of GSDP in 2015-16(BE). Followed by VAT, the collection of
State Excise and Entry Tax are calculated at 0.62% and 0.56% of GSDP during 2011-12 to
2014-15. In this period, the entry tax has exhibited a declining trend. State Excise and Entry
tax are budgeted at 0.69% and 0.58% respectively in 2015-16. A declining trend is observed
in case of Motor Vehicle Tax and Stamp & Registration fee. Professional tax has been
stagnating during this period.
The descriptive statistics of the tax components of SOTR is presented in table 9.2.
Table 9.2: Descriptive Statistics Collection of Taxes (% of GSDP)
Sales Tax (VAT) State Excise
Stamp Duty &Regn Fees Entry Tax
Mean 3.79% 0.64% 0.27% 0.56%
Std. Dev. 0.08% 0.04% 0.11% 0.02%
Skewness -153.56% 35.17% 234.45% -106.34%
Median 3.79% 0.62% 0.22% 0.56%
Minimum 3.64% 0.59% 0.21% 0.53%
Maximum 3.87% 0.69% 0.50% 0.58%
Motor Vehicle Tax
Electricity Duty Land Revenue Profession Tax
Mean 0.31% 0.31% 0.18% 0.05%
Std. Dev. 0.02% 0.13% 0.03% 0.00%
Skewness 105.24% 214.85% 34.69% 30.63%
Median 0.31% 0.24% 0.16% 0.05%
Minimum 0.29% 0.23% 0.14% 0.05%
Maximum 0.35% 0.56% 0.23% 0.06%
Item 2011-12 2012-13 2013-14 2014-15
Average
2011-12 to
2014-15
2015-16
(BE)
Sales Tax (VAT) 3.64% 3.79% 3.87% 3.81% 3.78% 3.85%
State Excise 0.61% 0.59% 0.64% 0.66% 0.62% 0.69%
Stamp Duty & Regn Fees 0.22% 0.21% 0.22% 0.26% 0.23% 0.50%
Entry Tax 0.58% 0.53% 0.58% 0.55% 0.56% 0.58%
Motor Vehicle Tax 0.35% 0.29% 0.31% 0.29% 0.31% 0.32%
Electricity Duty 0.24% 0.23% 0.24% 0.56% 0.32% 0.25%
Land Revenue 0.23% 0.16% 0.16% 0.21% 0.19% 0.14%
Profession Tax 0.06% 0.05% 0.05% 0.05% 0.05% 0.06%
Other Taxes 0.03% 0.03% 0.02% 0.01% 0.02% 0.01%
Total : 5.97% 5.89% 6.09% 6.40% 6.09% 6.40%
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Odisha Economic Survey, 2015-16
The fluctuation in the collection of Stamp Duty and fees is relatively high as compared other
taxes. The fluctuation in professional tax is zero as the collection has stagnated over the
years. The skewness is highest for Motor Vehicle Tax as after achieving 0.35% of GSDP in
2011-12, the collection is showing a declining trend. Because of mixed trends in the tax
components, the SOTR to GSDP ratio in the state is not high.
Clearly, taxes with a broad consumption-type base are more buoyant than the others,
possibly reflecting the pattern of sectoral growth in GSDP during the last five years. The
uncertainties regarding the countrywide introduction of a goods and services tax (GST)
continue to plague comprehensive reform of the tax system and the services sector (i.e., the
largest part of GSDP) is largely out of the tax net at the State level, except the State share
in service tax levied by the Centre. The prolonged sub judicestatus of entry tax has added to
the uncertainties in the tax system of the State.
9.5. Composition of State Own Tax Revenue
Figure 9.8 and 9.9 presents the share of tax components in SOTR for the period from 2011-
12 to 2014-15 and for 2015-16(BE).
Figure 9.8: Composition of Tax Components from 2011-12 to 2014-15
62%
10% 4% 9%
5%
6%3%
1%
0%
4%
Sales Tax (VAT) State Excise
Stamp Duty & Regn Fees Entry Tax
Motor Vehicle Tax Electricity Duty
Land Revenue Profession Tax
Other Taxes
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Odisha Economic Survey, 2015-16
Figure 9.9: Composition of Tax Components for 2015-16(BE)
During 2011-12 to 2014-15, the share of VAT in SOTR is highest at 62% followed by State
Excise (10%), and Entry Tax(9%). These three tax components contribute almost 80% of the
SOTR.
In 2015-16(BE), these components are expected to contribute 80% of the SOTR. However,
considering the declining trend in Stamp Duty & Registration fee, the budget 2015-16 has
estimated 100% growth over 2014-15, expecting the rise of share from 4% in 2014-15 to 8%
share in 2015-16. The tax gap in Stamp Duty & Registration fee is acknowledged and there
is a felt need to bridge this gap.
9.6. Buoyancy of Major items of State Own Tax Revenue As discussed earlier, buoyancy is a performance measure of the revenue collection with
respect tothe growth in state economy. Table 9.3 presents trends in tax buoyancy of
major tax items of State Own Tax Revenue. Steady buoyancy is not observed from the
trend. During the period from 2011-12 to 2014-15, though the annual average buoyancy
is highest for Stamp Duty & Registration Fees at 4.25, it has exhibited very high
60%
11%8%
9%
5%
4% 2%
1%
0%
3%
Sales Tax (VAT) State ExciseStamp Duty & Regn Fees Entry TaxMotor Vehicle Tax Electricity DutyLand Revenue Profession Tax
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Odisha Economic Survey, 2015-16
variation2. Electricity Duty has the second highest buoyancy at 2.04 coupled with highest
variation. Land Revenue has recorded lowest buoyancy with a very high variation. VAT
and Excise Duty have shown elastic buoyancy with moderate variation.
Table 9.3: Trends in Buoyancy of Major Tax Components
Item 2011-12 2012-13 2013-14 2014-15 Average Variation
Sales Tax (VAT) 1.75 1.36 1.25 0.86 1.31 0.32
State Excise 2.23 0.65 2.18 1.22 1.61 0.67
Stamp Duty &Regn Fees 1.70 0.70 1.29 2.74 4.25 5.96
Entry Tax 1.55 0.17 2.34 0.51 1.24 0.88
Motor Vehicle Tax 0.71 -0.40 1.76 0.50 1.00 1.10
Electricity Duty 1.75 0.53 1.56 13.38 2.04 7.30
Land Revenue 2.87 -1.46 0.31 4.24 0.42 3.25
Profession Tax -0.41 0.54 1.18 1.09 0.76 0.72
Total : 1.72 0.89 1.43 1.48 1.31 0.35
It is observed that the correlation between average tax buoyancy and variation in tax buoyancy is very high at 62%.3
9.7. Composition of State Own NonTax Revenue
Mobilization of resources through non-tax sources serves the twin purpose of having a
rational non-tax structure and generating resources to finance more expenditure. The
importance of non-tax revenue is now being realized by the states in India in the context
huge financialrequirements for upgrading and modernizing basic infrastructure. Therefore,
non-tax revenue is essential to finance the operation & maintenance (O&M) of existing
capital assets that creates positive externalities.Mobilizing resources through a rational non
tax structure induces equity, efficiency and neutrality on the growth pattern of the state.
During 2011-12 to 2015-16(BE), the compound average growth rate of SONTR has been
8.76% only. The growth in collection of non-tax revenue has witnessed a huge variation of
17% during this time period.This indicates that the growth rate of collection of State‘s Own
Non Tax Revenue has been uneven. This high variation is mainly attributed to receipts
from sources like Mining Royalty, Interest, Dividend, and receipts from Forest and
Irrigation sectors. During the same period, the SONTR as proportion of GSDP is estimated
2 Variation is measured by Standard Deviation
3 Correlation Coefficient
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Odisha Economic Survey, 2015-16
at 2.87%. The SONTR constitutes only 31% of the State Own Revenue. Table 9.4 presents
the trends in collection of non-tax components as proportion of GSDP.
Table 9.4: Trends in Major Non Tax Components (% GSDP)
Non Tax Components 2011-12 2012-13 2013-14 2014-15
2015-16 (BE) Average Variation
Interest 0.26% 0.23% 0.45% 0.11% 0.06% 0.21% 0.17%
Dividend 0.13% 0.22% 0.16% 0.35% 0.33% 0.27% 0.09%
Education 0.01% 0.03% 0.03% 0.01% 0.01% 0.02% 0.01%
Medical 0.02% 0.00% 0.01% 0.01% 0.01% 0.01% 0.00%
Water Supply & Sanitation
0.03% 0.02% 0.02% 0.02% 0.02% 0.02% 0.00%
Housing 0.01% 0.01% 0.01% 0.00% 0.00% 0.00% 0.00%
Forest & Wildlife 0.09% 0.07% 0.03% 0.02% 0.01% 0.03% 0.03%
Irrigation 0.15% 0.16% 0.16% 0.20% 0.15% 0.17% 0.02%
Non-Ferrous Mining &
Metallurgical Industries
2.03% 2.23% 1.99% 1.71% 1.99% 1.98% 0.21%
Others 0.16% 0.19% 0.16% 0.17% 0.12% 0.16% 0.03%
During 2011-12 to 2014-15(BE), revenue collection from Mining activity has been highest at
1.98% of GSDP followed by Dividend Receipt, Interest Receipt and user fee from Irrigation.
Revenue Collection from Mining and Interest Receiptshas huge variation followed by
Dividend. The correlation between the tax collection as proportion of GSDP and the variation
in tax collection is very high at 79%. This further validates the acute unevenness in collection
of non-tax revenue.
Equity (Share) Capital is the paid up capital infused by the State Government in Statutory
Corporations (3 nos.), Govt. Companies (84 nos.), Joint Stock Companies (23 nos.), Co-
operative Societies (31 nos.) and Rural Banks (3 nos.) aggregating 142 entities. The Return
on Equity Capital (ROEC) is measured by the dividend received as proportion outstanding
equity capital. In FY 2014-15, ROEC has increased by 2.38 times over FY 2013-14 because
of more dividend pay-out by the government Companies. The ROEC is calculated at 30.71%
in FY 2014-15 as against 13.67% in FY 2013-14.
The Return on Cash Balance on Investment Account (ROCBI) is measured by interest
realised over cash balance in investment account. Cash Balance on Investment Account
includes Cash Balance, Investment from Cash Balance (G-Sec & T-Bills) and other Cash
Balances. Others Cash Balances include cash with department officers, cash in both sinking
fund and guarantee redemption fund. The interest realised includes interest on 14 Days
Treasury Bills rediscounted during the year. ROCBI has reduced to 3.12% in FY 2014-15 as
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Odisha Economic Survey, 2015-16
against 6.57% in FY 2013-14 because of very high deposits with R.B.I at the end of FY
2014-15.
Figure 9.10 presents the composition of Non Tax Components. During 2011-12 to 2014-15,
the share of revenue from Non-Ferrous Mining & Metallurgical Industries (Mining Royalty) in
SONTR is highest at 72.3% followed by Interest Receipt (9.4%) and Dividend (8.2%).
Revenue collection from Major, Medium & Minor Irrigation constitutes 6.2% and collection
from Forest & Wild Life contributes 1.8% of the SONTR.
The collection in 2015-16(BE) from Non-Ferrous Mining & Metallurgical Industries (Mining
Royalty) is estimated at 73.5%, followed by followed by Dividend at 12.1% of SONTR.
Revenue collection from Major, Medium & Minor Irrigation is expected at 5.5% and collection
from interest Receipt is pegged at 2.2% of the SONTR. User Charges from water supply &
sanitation, medical facilities and education are expected to contribute 0.8%,0.4% and 0.3%
respectively.
Figure 9.10: Composition of Non Tax Components
9.4%
8.2%
0.7%
0.4%
0.8%
0.2%
1.8%6.2%
72.3%80.4%
Interest Dividend Education
Medical Water Supply & Sanitation Housing
Forest & Wildlife Irrigation Non-Ferrous Mining & Metallurgical Industries
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Odisha Economic Survey, 2015-16
9.8. Central Transfers
Central transfers comprise of shared taxes (devolution from the Centre) and grants. The
Central transfers as proportion to GSDP as well as proportion to Total Revenue Receipt are
presented in Table 9.5.
Table 9.5: Trends in Central Transfers
Year Shared Tax
(Rs. Cr) Grants ( Rs. Cr)
Central Transfer
% of TRR % of GSDP
2011-12 12229.09 8152.19 20381.28 50.62% 9.05%
2012-13 13965.01 6859.73 20824.74 47.40% 8.16%
2013-14 15247.09 8429.42 23676.51 48.37% 8.54%
2014-15 16181.22 12917.50 29098.72 51.05% 9.39%
2015-16 (BE) 19580.00 21066.57 40646.57 57.30% 12.23%
In 2012-13 and 2013 -14, the Central Transfers as a percentage of TRR and GSDP has
declined mainly due to decline in Grants as proportion to both GSDP and TRR. Figure 9.11
presents the trends in grants component.
Figure 9.11: Trends in Grants
3.62%
2.69%3.04%
4.17%
6.34%20.25%
15.61%17.22%
22.66%
29.70%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
20
11
-12
20
12
-13
20
13
-14
20
14
-15
20
15
-16
(B
E)
Gra
nts
to
TR
R /
.
Gra
nts
to
GSD
P /
.
Grants to GSDP / . Grants to TRR / .
9 / 16
Odisha Economic Survey, 2015-16
In 2012-13 and 2013 -14, the share of grants to Central Transfer has also declined. Figure
9.12 presents the trends in share of grants component in Central transfer.
Figure 9.12: Trends in Share of Grants in Central Transfers
The grants can be broadly divided into Plan grants and non-Plan grants. While non-Plan
grants include Finance Commission mandated grants as well as other (often discretionary)
non-Plan grants, Plan grants broadly include grants for State Plan Schemes, Central Plan
Schemes, Centrally Sponsored Schemes, and Special Plan Schemes (not applicable to
Odisha at present).
The share of central transfer to total Revenue Receipt in case of Odisha has been over 50%
over the years. However, the trend was reversed in 2012-13 and 2013-14 when the Central
transfer fell below 50% due to lower central transfer in shape of grants. However,
consequent upon the decision to route the Central Assistance for 66 restructured CSS
through State Budget, Odisha’s dependence on central transfer has increased to 57.30% in
the year 2015-16 (BE).Figure 9.13presents the composition of different components of
central grants received by the Government of Odisha in recent years. During 2010-11 to
2014-15, in total Grant-in-Aid from Central Government, the share of grants for State Plan
Scheme is highest at 58% followed by Non-Plan grants at 25% and grants for Centrally
Sponsored Schemes at 16%. Block grant which is part of the State Plan Scheme constitutes
33% of total grants and 57% of the State Plan Scheme. In 2012-13, Non Plan Grant was
drastically reduced by 41% over 2011-12.
40.0%
32.9% 35.6%
44.4%
51.8%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
20
11
-12
20
12
-13
20
13
-14
20
14
-15
20
15
-16
(B
E)
9 / 17
Odisha Economic Survey, 2015-16
Figure 9.13: Composition ofGrants-in-aid
* Block grants is part of State Plan & calculated as proportion of total Grants-in-aid
Table 9.6provides trends in components of central grants received by the Government of
Odisha in recent years.
Table 9.6: Grants Received by Government of Odisha from the Centre
(Rs. in Crore)
Source: Finance Accounts, various issues
9.9. Trends in Functional Classifications of Revenue Expenditure
Revenue expenditures and capital outlay have been fluctuating around 15% and 2% of
GSDP respectively during 2011-12 & 2012-13. Clearly, the intended push to capital outlay
was not materializing despite higher budgetary allocations, primarily because of institutional
Category of Grant 2010-11 2011-12 2012-13 2013-14 2014-15
Grants-in-aid from central government 6806.25 8152.19 6859.73 8429.42 12917.50
a. Non-Plan grants 2111.39 2561.48 1505.49 2729.19 1929.34
b. Grants for state Plan schemes 3279.21 3853.22 3483.61 3429.46 10886.18
of which, Block grants 3041.05 3451.77 3219.57 3095.50 1331.47
c. Grants for central Plan schemes 192.01 108.60 183.00 121.67 101.90
d. Grants for centrally sponsored schemes 1223.64 1628.89 1687.63 2149.11 8.26
0.00%
20.00%
40.00%
60.00%
No
n-P
lan
gra
nts
Gra
nts
fo
r st
ate
P
lan
sch
em
es
Blo
ck g
ran
ts
Gra
nts
fo
r ce
ntr
alP
lan
sch
em
es
Gra
nts
fo
r ce
ntr
ally
spo
nso
red
sch
em
es
25.1%
57.8%
32.8%
1.6%
15.5%
9 / 18
Odisha Economic Survey, 2015-16
constraints. However, it has increased to 2.8%& 3.6% in 2013-14& 2014-15 respectively.
The Budget estimates for the year 2015-16 show that these constraints may be easing up
and the capital outlay is expected to be at4.6% of GSDP. Simultaneously, revenue
expenditure is expected to increase significantly to 19.8% of GSDP. With the increase in
revenue receipts in 2014-15& 2015-16(BE), the increase in both revenue expenditure and
capital outlay represent a fuller utilization of available resources under the constraint of the
fiscal responsibility legislation as compared to the immediately preceding years.
The structure of revenue expenditure in terms of distribution among broad groups of
expenditure remains stable, with small year-to-year changes. Figure 9.14 summarizes the
structure of revenue expenditure.The share of General, Social & Economic Services is
fluctuating over the years where as the share of Assignments to Local Bodies shows a
decreasing trend from 2013-14. It may, however, be noted that there are additional transfers
to local bodies through some of the other budgetary categorieswhich is determined by the
implementation of the awards of the State Finance Commission. The changing composition
outlined above is generally considered to be in the desirable direction.
Figure 9.14: Composition of Revenue Expenditure in Odisha (%)
0
10
20
30
40
50
60
70
80
90
100
2011-12 2012-13 2013-14 2014-15 2015-16 (BE)
100.00 100.00 100.00 100.00 100.00
31
.53
32
.49
30
.01
28
.41
30
.12
41
.37
39
.17
41
.04
41
.00
39
.57
25
.19
26
.67
27
.00
28
.99
28
.92
1.9
1
1.6
8
1.9
6
1.6
0
1.3
9
Total Revenue Expenditure A. General Services
B. Social Services C. Economic Services
D. Assignments to Local Bodies and PRIs
9 / 19
Odisha Economic Survey, 2015-16
9.10. Trends in composition of Committed Revenue Expenditure
Another way of looking at the composition of revenue expenditures is to consider the
proportion pre-empted by committed expenditures, defined here as the contractual
expenditures for salaries and wages of government employees, pensions and retirement
benefits of retired government employees and interest payments. Figure 9.15 shows the
share of such contractual expenditure in total revenue expenditures is fluctuating over years.
It is estimated that the committed expenditure was about 43% of the total revenue
expenditure in 2013-14 which has been increased to 48% in 2014-15 & 2015-16(BE). These
trends are to be reversed to allow a higher proportion to directly development-oriented
policies.
Figure 9.15: Composition of Committed Revenue Expenditure
9.11. Trends in components of Revenue Expenditure
The composition of revenue expenditure by budgetary categories in more detail is provided
in Table 9.7. While pensions are seen to be outstripping interest payments in recent years,
expenditure on each of the key areas within social and economic services is seen to have
grown apace; only the expenditure on medical and public health seems to be lagging
somewhat. Given its priority, the relatively slow growth of expenditures on this category
needs to be corrected.
26.20 24.89 24.12 30.05 27.54
13.68 14.07 13.0112.55 13.05
7.43 7.34 6.335.50 7.37
52.69 53.70 56.54 51.90 52.04
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011-12 2012-13 2013-14 2014-15 2015-16 (BE)
Salaries and Wages Pensions Interest Payments Others
9 / 20
Odisha Economic Survey, 2015-16
Table 9.7: Composition of Revenue Expenditure in Odisha
(Rs. Crore)
Item 2011-12 2012-13 2013-14 2014-15 2015-16
(BE)
Total Revenue Expenditure 34660.24 38237.56 45617.75 51135.74 65838.99
A. General Services of which 10928.58 12423.26 13689.41 14528.86 19828.82
1. Interest Payments 2576.43 2807.23 2888.22 2810.27 4850.00
2. Pensions 4740.76 5379.37 5935.17 6416.62 8593.20
B. Social Services of which 14338.07 14976.56 18721.55 20964.13 26054.33
1. General Education 6647.48 7050.73 8065.60 9822.05 11738.83
2. Medical and Public Health 1129.34 1467.34 1630.98 2512.66 3183.32
3. Water Supply and Sanitation 563.16 598.39 719.94 1051.98 1901.62
C. Economic Services of which 8732.47 10196.24 12314.59 14825.38 19037.42
1. Agriculture and Allied Services 3165.99 4104.23 4701.12 5613.46 6353.87
2. Rural Development 1836.96 2178.70 2983.63 4446.25 6760.34
3. Irrigation and Flood Control 860.24 1043.22 1397.05 1376.40 1807.34
4. Roads and Bridges 1177.10 1536.76 1693.89 1884.36 2131.69
D. Assignments to Local Bodies and PRIs
661.11 641.49 892.20 817.37 918.42
Memo Item:
Salaries and Wages 9081.77 9515.42 11004.89 15365.21 18129.70
Source : Finance Accounts (various issues) and Budget Document, 2014-15
Table 9.8 provides the sector wise contribution to the revenue expenditure. The
Developmental services Sector contributes around 68% of the total revenue expenditure. In
the Developmental Sector, more emphasis is given to Social Services Sector as compared
to Economic Services Sector. This is on account of the outcome of policy orientation towards
the inclusive growth. General Education in Social Services Sector and Rural Development in
Economic Services Sector are given higher allocation. Medical and Public Health, Water
Supply & Sanitation, Irrigation & Flood Control and Roads & Bridges need more allocation
9 / 21
Odisha Economic Survey, 2015-16
for operation & maintenance of capital assets as theses developmental sub sectors create
significant positive externalities.
Table 9.8: Composition of Revenue Expenditure in Odisha (in percentage)
Item 2011-12 2012-13 2013-14 2014-15 2015-16
(BE)
Total Revenue Expenditure 100.00 100.00 100.00 100.00 100.00
A. General Services 31.53 32.49 30.01 28.41 30.12
Interest Payments 7.43 7.34 6.33 5.50 7.37
Pensions 13.68 14.07 13.01 12.55 13.05
B. Social Services 41.37 39.17 41.04 41.00 39.57
1. General Education 19.18 18.44 17.68 19.21 17.83
2. Medical and Public Health 3.26 3.84 3.58 4.91 4.84
3. Water Supply and Sanitation
1.62 1.56 1.58 2.06 2.89
C. Economic Services 25.19 26.67 27.00 28.99 28.92
1. Agriculture and Allied Services
9.13 10.73 10.31 10.98 9.65
2. Rural Development 5.30 5.70 6.54 8.69 10.27
3. Irrigation and Flood Control 2.48 2.73 3.06 2.69 2.75
4. Roads and Bridges 3.40 4.02 3.71 3.69 3.24
D. Assignments to Local Bodies and PRIs
1.91 1.68 1.96 1.60 1.39
Memo Item:
Salaries and Wages 26.20 24.89 24.12 30.05 27.54
(B+ C) Developmental Services
66.56 65.84 68.04 69.99 68.49
9.12. Efficiency in Revenue Expenditure Revenue expenditure neither creates assets nor reduces a liability and generally, it is
incurred on normal running of the government departments, operation and maintenance of
existing infrastructural services. It is a short period expenditure and recurring in nature which
is incurred every year (as against capital expenditure which is long period expenditure and
nonrecurring in nature). Since, Revenue Expenditure is recurring and immediate in nature,
it should be matched with non-tax revenue of the current accounting period. Efficiency in
Revenue Expenditure of a sector is measuredby the non-tax revenue mobilized from that
particular sector. This is essentially the cost coverage ratio. To measure the efficiency,
Revenue Expenditure in Economic Services Sector is taken into consideration. This
efficiency measurement is Return on Revenue Expenditure (RORE). The average RORE for
the State is estimated at 52.8% as against average of 20.7% for the consolidated States in
9 / 22
Odisha Economic Survey, 2015-16
India for the period from 2010-11 to 2014-15. This indicates that approximately 53% of the
Revenue Expenses in the Economic Services Sector is covered by the non-tax revenue
collection from the Economic Services Sector in the State as compared to only 21% for all
the States in India.
9.13. Trends in components of Capital Outlay
The thrust on capital outlay discussed above is clearly brought out in Figure 9.16. The
compound annual average growth (CAGR) rate of capital expenditure during 2011-12 to
2015-16(BE) has been 26% which is mainly contributed by 35% CAGR in in capital outlay.
This impressive rise in capital outlay is attributed to 34% rise in capital outlay on CAGR
basis in the Developmental Services Sector. In the Developmental Sector, the Social Sector
and Economic Sector Services Sector have contributed 37% and 33% CAGR respectively
during this time period. In a relatively less developed state like Odisha, the importance of
these expenditures for sustained economic growth need hardly be emphasized. As a result,
the capital outlay to GSDP ratio has significantly increased from 2% in 2011-12 to 4.56% in
2015-16(BE).
Figure 9.16: Capital Expenditure in Odisha (Rs.Crore)
4,4
96
5,6
22 7
,75
6
11
,07
5
15
,14
9
62
1.0
1
21
6.0
3
46
3.5
5
35
8.0
0
59
3.0
1
23
27
.76
31
79
.86
22
93
.22
41
11
.45
29
06
.70
7,4
45 9,0
18
10
,51
3
15
,54
4 18
,64
9
2011-12 2012-13 2013-14 2014-15 2015-16 (BE)
Capital Outlay* Loans and Advances (Gross) Debt Repayment (Gross)
Transfer to Contingency Fund Total Capital Expenditure
9 / 23
Odisha Economic Survey, 2015-16
Figure 9.17 depicts the comparative position of Capital Outlay in Non-Developmental
Expenditure to total Non-Developmental Expenditure and Capital Outlay in Developmental
Expenditure to total Developmental Expenditure for the period 2013-15 and 2014-15.
Figure 9.17: Capital Outlay Ratioin Developmental and Non Developmental Sector
DE: Capital Outlay in Developmental Expenditure, NDE: Capital Outlay Non Developmental Expenditure
The discernible rise in share of Capital outlay and Developmental Expenditure in total
expenditure confirms the State’s commitment to strengthen the quality of expenditure and to
sustain the higher, sustainable andinclusive economic growth of the state.
9.14. Analysis of Debt Stock Position
At the time of introducing the fiscal responsibility legislation, the outstanding debt to GSDP
Ratio (Debt Stock Ratio) of Odisha was close to 48% coupled high debt servicing ratio
(IPRR)4 of 30% that raised the specter of non-sustainability of such a high level of debt,
particularly because states in India have no way of financing their deficits except through
additional borrowing. The state finances have come a long way from that stage in the
intervening years; the debt stock ratio and debt servicing ratio have improved to13.97% and
4.93% respectively in 2014-15. With deficits reigned in, there is no apprehension regarding
4 Debt Servicing Ratio is defined as Interest Payment to Total Revenue Receipt Ratio(IPRR)
14.04%14.95%
5.68% 5.18%
0.00%
5.00%
10.00%
15.00%
FY 2
01
3-1
4
FY 2
01
4-1
5
DE / . NDE / .
9 / 24
Odisha Economic Survey, 2015-16
sustainability at all. In fact, the State has not even made any recourse to the Reserve Bank
of India’s overdraft facility in recent years.
To assess the impact of FRBM Act, 2005 on the management of debt position of the State,
the trends in debt indicatorsduring the period 1995-96 to 2004-05 (Pre FRBM Period: 10
Years) and 2005-06 to 2014-15 (Post FRBM Period: 10 Years) are examined. Figure 9.18
presents the comparative position of debt indicators.
Figure 9.18: Comparative Position of Debt Indicators in Pre & Post FRBM Period
The average outstanding debt to GSDP Ratio (Debt Stock Ratio) has declined significantly
from 39.91% during Pre FRBM Period to 23.57% in Post FRBM Period showing an
improvement of 16.34%. Similarly,the average Debt Servicing Ratio (IPRR) has declined
significantly from 29.66% during Pre FRBM Period to 11.44% in Post FRBM Period showing
an improvement of 18.22%. The FRBM stipulation for debt stock ratio is 29.5% and for debt
servicing ratio is 15% for 2014-15.
One of the reasons for the continuous improvement in debt stock ratio and debt servicing
ratio is the less borrowing at lower cost to keep fiscal deficits and debt servicing ratio below
the prescribed level stipulated in the fiscal responsibility legislation.
In order to have a clear scenario, table 9.9 presents the descriptive statistics of debt
indicators in both Pre and Post FRBM Period.
0.00%
10.00%
20.00%
30.00%
40.00%
Pre
FR
BM
Po
st F
RB
M
39.91%
23.57%
29.66%
11.44%
Debt Stock / . IPRR / .
9 / 25
Odisha Economic Survey, 2015-16
Table 9.9: Descriptive Statistics of Debt Indicators in Pre and Post FRBM
Period
Pre FRBM Period Post FRBM Period
Debt Stock IPRR Debt Stock IPRR
Mean 39.91% 29.66% 23.57% 11.44%
Std. Dev. 7.52% 5.64% 9.81% 6.64%
Median 37.80% 28.12% 19.81% 9.20%
Minimum 28.81% 21.03% 13.92% 4.93%
Maximum 50.73% 40.22% 42.84% 26.25%
Range 21.92% 19.19% 28.92% 21.32%
The average cost of Borrowing5 during Pre FRBM Period is estimated at 10.66% has
declined to 7.75% during Post FRBM Period. The lower cost of borrowing is represented by
the trend line in figure 9.19. The cost of borrowing was at 10.08% and 10.95% in 1995-96
and 1996-97 respectively. It has come down to 7.54% and 6.86% during 2013-14 and 2014-
15.
Figure 9.19: Trends in Cost of Borrowing
Average Interest Payment of the State is 1.03% of GSDP compared to all State average
of 1.50% during 2012-13 to 2014-15. During the same period, the Debt Stock of the
State is at 14.40% of GSDP compared to all State average of 21.27%. The Interest
5Cost of Borrowing t = Interest Paymentt/ Average ( Debt Stock t&Debt Stock t-1)
10.1%11.0%11.3%10.9%
7.5%
11.7%12.6%
11.1%
9.6%
10.1%10.1%
8.7%8.6%
7.9%8.2%8.0%
6.6%7.3%7.5%
6.9%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
19
95
-96
19
96
-97
19
97
-98
19
98
-99
19
99
-00
20
00
-01
20
01
-02
20
02
-03
20
03
-04
20
04
-05
20
05
-06
20
06
-07
20
07
-08
20
08
-09
20
09
-10
20
10
-11
20
11
-12
20
12
-13
20
13
-14
20
14
-15
Pre FRBM Post FRBM Period
Trend Line Line
9 / 26
Odisha Economic Survey, 2015-16
payment to Revenue Receipt ratio is estimated at about 5.74% during 2012-13 to 2014-
15. This indicates that the debt stock of Odisha is at sustainable level. Figure 9.20
presents the comparative position of the State with all States at consolidated level.
Figure 9.21 presents the trends in debt indicators of the State since 2010-11.
Figure 9.20: Comparative Positions of Debt Indicators
Figure 9.21 presents the trends in debt indicators of the State since 2010-11. The
continuous improvement both in debt stock ratio and debt servicing ratio is also
witnessed in these last five years. During these last five years, the debt stock has
declined by 5.85% and debt servicing ratio by 4.27%.
The compound average growth rate (CAGR) of Debt stock during these last five years is
calculated at only 2.54%. The Interest payment has witnessed a negative compound
average growth rate (CAGR) of (-) 2.12%.
1.03%
1.50%
14.40%
21.27%
0.00%
0.50%
1.00%
1.50%
2.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Od
ish
a All
Stat
es
IPR
/ .
De
bt
Sto
ck /
.
IPR / . Debt Stock / .
9 / 27
Odisha Economic Survey, 2015-16
Figure 9.21: Trends in Debt Indicators: 2010-11 to 2014-15
9.15. Analysis of Debt Sustainability and Debt Solvency
Fiscal Policy is sustainable if the Government isable to service the Debt Stock over the time
periods when the interest payment is due. If the Government is insolvent and still able to
continue to service the debt, then it is borrowing more to repay the interest payment.
Therefore, Solvency is a necessarycondition for sustainability. Solvency is a long-term
aspect of the debt position of the Government; sustainability is a short term aspect.
To achieve both solvency andsustainability of public debt, the following condition is to be
adhered.
d≤c< g
Where
„d‟is the growth rate of debt stock, „c‟ is the cost of borrowing and „g‟ isgrowth rate of
nominal GSDP.
The debt sustainability and debt solvency of Post FRBM is compared with Pre FRBM Period.
9.20%
6.40% 6.39% 5.90%4.93%
19.81%
17.13%
14.88%13.95% 13.97%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0%
5%
10%
15%
20%
25%
20
10
-11
20
11
-12
20
12
-13
20
13
-14
20
14
-15
IPR
R /
.
De
bt
Sto
ck /
.
IPRR / . Debt Stock / .
9 / 28
Odisha Economic Survey, 2015-16
The Pre FRBM Period is of 10 years spanning from 1995-96 to 2004-05 and the Post FRBM
Period is also of 10 years spanning from 2005-06 to 2014-15. Table 9.10 presents the
estimated variables.
Table 9.10: Pre FRBM and Post FRBM Debt Sustainability Parameters
Variables Pre FRBM Post FRBM
d 15.62% 1.92%
c 10.66% 7.75%
g 10.36% 15.48%
“d” is the compound average growth rate in debt stock, “g” is the compound average
growth rate of nominal GSDP. “c” is the cost of borrowing. The cost of borrowing is
calculated as interest payment as proportion to average debt stock of last year and current
year.6
It is observed that the condition of d ≤ c < gis not satisfied during Pre FRBM Period.
Therefore, the debt was not sustainable, as was well as not solvent. The state was in debt
trap condition. However, in Post FRBM Period, the condition of d ≤ c < gis satisfied.
Therefore, both debt sustainability and solvency is achieved in Post FRBM Period. The fiscal
policy of the State during the Post FRBM Period wherein there has been a significant decline
in both Debt to GSDP ratio and Debt Servicing Ratio has transformed the State to a debt
solvency situation.
9.16.Composition of Out Standing Debt Stock and Outstanding Liability
The Outstanding Public Debt and Outstanding Borrowing from State Provident Fund
constitute Outstanding Debt Stock of the State. Outstanding Public Debt, Outstanding
Borrowing from Public Accounts and Contingency Fund constitute total Liability of the State.
During 2010-11 to 2014-15, the share of debt stock to total liability is estimated at 80%. The
public debt andState Provident Fund contribute 63% and37% of the total debt stock. The
Public Debt, Public Account and Contingency Fund constitute 50%, 49% and 1% to the total
6 Interest Payment is also made on quarterly and semi-annual basis.
9 / 29
Odisha Economic Survey, 2015-16
liability respectively. The trend in composition of liability as proportion to GSDP7 is given in
table 9.11.
Table 9.11: Trends in Composition of Liability (% of GSDP)
Liabilities 2010-11 2011-12 2012-13 2013-14 2014-15
Consolidated Fund 12.96 10.93 9.13 8.41 8.67
1 (a+b+c+d+e+f) Public Debt 12.96 10.93 9.13 8.41 8.67
a Open Market Borrowings (Net SLR based Market borrowings) 3.12 2.27 1.49 1.05 1.47
b
Borrowings from Banks and FIs/ Negotiated Loans 1.43 1.47 1.32 1.42 1.61
c Special Securities issued to NSSF 4.28 3.77 3.37 3.24 3.25
d Bonds/ Debentures which are issued by the State Govt.t 0.28 0.20 0.13 0.08 0.04
e Loans from Centre (Net) 3.84 3.23 2.82 2.61 2.30
f Other Liabilities 8.60 7.87 6.48 5.89 6.50
2 (a+b+c) Public Accounts 10.32 10.15 10.01 9.71 9.41
a State Provident Funds 6.86 6.20 5.74 5.54 5.30
b Small Savings, Insurance and Pension Funds, Trust and Endowments, etc 0.00 0.00 0.00 0.00 0.00
c Other items in Public Accounts of which 3.98 3.95 4.26 4.17 4.11
i. Deposits 1.53 1.58 2.02 2.15 2.22
Bearing Interest 0.03 0.03 0.03 0.02 0.01
Not Bearing Interest 1.50 1.55 1.99 2.14 2.21
ii. Reserve Funds/ Sinking Fund 2.46 2.37 2.24 2.02 1.89
Bearing Interest 0.01 0.13 0.07 0.02 0.01
Not Bearing Interest 2.44 2.24 2.17 2.00 1.88
3 Contingency Fund 0.01 0.17 0.16 0.09 0.13
Total Liabilities (1+2+3) 23.28 21.25 19.30 18.21 18.21
7 GSDP is at 2011-12 Base.
9 / 30
Odisha Economic Survey, 2015-16
Figure 9.22 presents the trends in the composition of debt stock to GSDP Ratio. The
declining trend is observed in most of the components of the debt stock. Outstanding debt
on account of State Provident Fund as proportion to GSDP has declined from 6.86% in
2010-11 to 5.30% in 2014-15. Debt on account of NSSF as proportion to GSDP has declined
from 4.28% in 2010-11 to 3.25% in 2014-15. However, the negotiated loan from the
Financial Institutions and Banks has increased from 1.43% of GSDP in 2010-11 to 1.61% in
2014-15. Debt due to Open Market borrowing through State Development Loan has
decreased from 3.12% of GSDP in 2010-11 to 1.47% of GSDP in 2013-14. Loansfrom
Centre has also come down from 3.84% of GSDP in 2010-11 to 2.30% in 2014-15.
Figure 9.22: Composition of Debt Stock as % of GSDP
Figure 9.23 presents the dispersion of the outstanding debt in 2014-15. State Provident
Fund contributes 38% of the total debt followed by Special Securities issued to NSSF(23%),
Loans from Centre(16.50%), institutional borrowings(11.50%) and Open Market Borrowing
(10.55%)
0
1
2
3
4
5
6
7
20
10
-11
20
11
-12
20
12
-13
20
13
-14
20
14
-15
3.12
2.27
1.49
1.05
1.471.43 1.47 1.32 1.42
1.61
4.28
3.77
3.37 3.24 3.25
3.84
3.23
2.822.61
2.30
6.86
6.20
5.745.54
5.30
Open Market Borrowings (Net SLR based Market borrowings)
Borrowings from Banks and FIs/ Negotiated Loans
Special Securities issued to NSSF
Bonds/ Debentures which are issued by the State Govt.t
Loans from Centre (Net)
State Provident Funds
9 / 31
Odisha Economic Survey, 2015-16
Figure 9.23: Dispersion of Debt Stock at the end of 2014-15
One of the reasons for the continuous decline in debt components is to keep fiscal deficits
below the prescribed level under the fiscal responsibility legislation which reduces net debt
burden of the State.If growth in GSDP exceeds the growth in outstanding debt, debt to
GSDP ratio will decline and will be below the FRBM stipulation. Higher growth rate in GSDP
compared to growth in debt stock coupled with low cost of borrowing has made the fiscal
policy of the State sustainable and has created solvency in debt.FRBM legislation as a fiscal
policy rule has helped to achieve stability in State Finance and efficiency in expenditure
allocation.
Now that the State’s finances are considerably stable, the tasks of further improving the
quality expenditure, regular expenditure review, expanding the coverage of public services,
and of investing in social and physical infrastructure are very critical to achieve higher
inclusive growth rate on sustainable basis.In order to fulfill this objective the State has to go
for higher capital receipts to fund capital outlay in developmental sectors as there is capacity
to sustain additional debt burden and the State economy has reached a stage wherein it can
absorb higher capital outlay after the fiscal stabilization.
10.55%
11.50%
23.28%
0.26%
16.46%
37.96%
54.41%
Open Market Borrowings (Net SLR based Market borrowings)Borrowings from Banks and FIs/ Negotiated LoansSpecial Securities issued to NSSFBonds/ Debentures which are issued by the State Govt.tLoans from Centre (Net)