 "Fiscal prudent Odisha faces many challenges on socioeconomic front")
For at least a decade of the past 24 years, Odisha under the governance of Naveen Patnaik and his Biju Janata Dal (BJD) has maintained a consistent revenue surplus. This fiscal health has allowed the government to invest in asset generation and roll out social welfare schemes, despite its own tax revenues (OTR) accounting for at best a third of its revenue receipts during the past 10 years.
The state kept its fiscal deficit within the permissible limit, even during the Covid-impacted year of 2020-21. It did not resort to the enhanced fiscal deficit limit permitted by the Centre during this period.
Odisha took fiscal consolidation a step further by achieving a surplus position during the second wave of Covid-19 and the Omicron-hit year of 2021-22, when most states struggled to contain their fiscal deficit within even the enhanced permissible ceiling. The debt never exceeded 19.2 per cent of its gross state domestic product (GSDP) in any of these 10 years. This fiscal discipline meant that the state did not overstretch its resources, even on capital outlays, which at times constituted up to a quarter of total expenditure and 4-6 per cent of GSDP.
However, this is only one side of the story. Critics of the BJD government argue that it has neglected to fill crucial vacancies and incur only necessary expenditures to maintain its revenue surplus position. Despite some positive indicators, such as the gender ratio and total fertility rate, the state’s socio-economic indicators leave much to be desired. For instance, the state’s unemployment rate remained higher than the national average in the past six years (for which data is available), though the gap narrowed in 2022-23.
Similarly, the state’s per capita income has consistently been lower than the national average over the past decade, though the gap has been narrowing in recent years. The multidimensional poverty rate in the state surpassed the all-India level for 2015-16 and 2019-21, and female literacy and infant mortality rates are nothing to boast about, despite improvements over the years.
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Amarendra Das, associate professor in economics at the Bhubaneswar-based National Institute of Science Education and Research (NISER), argues: “Odisha has been consistently maintaining a revenue surplus by understaffing the public offices, including education and health departments. Our research shows that Odisha has negative genuine savings.”
Despite being a relatively poor state, Odisha has recorded low growth in population since the last decades of the 20th century. The total fertility rate (TFR) in the state came down to 1.8 during 2019-21, on a par with Kerala and Tamil Nadu and lower than the national average.
Amitabh Kundu, professor emeritus at Ahmedabad-based L J University, suggests that this declining TFR, lower than the replacement rate of 2.1, means that the state will see a fall in population in a couple of decades, much before the national level. This demographic shift, he says, presents both challenges and opportunities.
In the event of a population decline, Odisha can expect less expenditure on human resource development, less unemployment, and less out-migration, says Kundu, adding that the government can now focus on quality rather than quantity.
However, with an increase in the elderly population and a decline in the working-age population, the dependency rate would rise, he points out. The state will then have to invest in old-age security and a health-care system for senior citizens.
It also has to reorganise its education system spatially since the number of children at the village level has already started declining, says Kundu, adding secondary and higher education will have to be provided at nodal centres, supported by child-friendly transport systems.
In the run-up to the election to the 147-member Assembly, scheduled in phases from May 13 to June 1, Chief Minister Patnaik announced several social welfare schemes. The Congress and the Bharatiya Janata Party (BJP) have also promised several populist measures in their manifestos. The BJD is yet to come out with its own. However, it’s important to distinguish between social welfare measures and freebies, which often blur into each other.
Das of NISER suggests Odisha spend money on building long-term capabilities, instead of focusing on short-term political gains. “This requires more investment in the recruitment of teachers, doctors, building skills of youth for artificial intelligence, machine learning, green energy, and disaster mitigation.”
From municipal leaders to farmers and college students, the BJD government in Odisha announced sops almost every day during the period leading up to the enforcement of the model code of conduct. These included a hike in monthly remuneration for all Panchayati Raj representatives, the creation of 55 new notified area councils, the introduction of Nua-O scholarship for college students at a cost of Rs 3,701 crore over five years, a budget of Rs 6,029.70 crore for the next three years under its flagship Krushak Assistance for Livelihood and Income Augmentation scheme, and the introduction of ‘SWAYAM’, a Rs 448 crore scheme offering Rs 1 lakh interest-free loans to unemployed youth.
On Sunday, the BJP announced “Narendra Modi’s 21 guarantees” for Odisha in its manifesto, which include a cash voucher of Rs 50,000 valid for two years for women, a minimum support price of Rs 3,100 crore a quintal for paddy, and an increase in pension up to Rs 3,500 a month. The BJP has also promised to generate 350,000 jobs by 2029 through economic initiatives, create 2.5 million lakhpati didis by 2027, return chit fund money within 18 months of coming to power, and provide an annual lean period allowance of about Rs 10,000 for fishermen.
In its manifesto announced in March this year, the Congress promised jobs to half a million youth, a monthly unemployment allowance of Rs 3,000, Rs 2,000 each month to women heads of households, and a gas cylinder for Rs 500 to each family, among others.