Odisha’s macroeconomic developments
Odisha economy registered a sharp recovery in 2021-22 as per the advance estimate of Gross State Domestic Product (GSDP). Real GSDP has grown at a rate of 10.1 per cent It is one of the fastest growing states in the country and registered a growth rate much higher than India’s GDP growth rate of 8.8 per cent as per the first advance estimate. Like the rest of the world, Odisha also faced the adverse impact of COVID-19 and the state’s GSDP contracted by 5.3 per cent in 2020-21 against a contraction of 6.6 per cent in India’s GDP. Odisha economy has demonstrated far more resilience vis-à-vis all India. The state economy reverted to the pre-covid level much faster. While India’s real GDP grew by 1.6 per cent between 2019-20 to 2021-22 leaving aside the covid year of 2020-21, the comparable figure for Odisha is 4.2 per cent. Not only Odisha’s recovery process is faster, but it is also more broad-based. Assuming normal monsoon, no furthermore damaging waves of corona virus mutations and induced economic disruption, stable oil prices, and steadily easing of supply chain, GSDP may grow in real terms by 9.0-9.5 per cent in 2022-23. However, the Russia and Ukraine conflict has brought in further uncertainty. It is likely to impact global trade and businesses with its ramifications on domestic price level, exchange rate, commodity supplies and supply chain operations. Per capita income of Odisha has also grown at a double-digit rate of 16.8 per cent in 2021-22 The average growth of Odisha’s per capita income over the last ten years (2012-13 to 2021-22) is 10.3 per cent against 9.15 per cent growth rate in the case of India. Odisha’s per capita income of INR 48,499 in 2011-12 reached INR 1,27,383 in 2021-22. While in absolute terms, it is lower than India’s per capita income, the rate at which it is growing implies that it would soon exceed India level. Odisha’s per capita income was 76 per cent of the per-capita income of India in 2011-12. It stands now at 84.7 per cent in 2021-22 . Between 2011-12 and 2019-20, for which comparable data are available, there are only nine states including Odisha whose per capita income rank has improved, while in the case of ten states, there is no change in rank and another ten states have dropped in per capita income ranking. Industry sector grew at 14.5 per cent ( followed by service sector with 7.9 per cent growth rate in 2021-22. Agriculture and allied sector registered a contraction of 3.4 per cent in 2021-22 due to drought, unseasonal rain, and Cyclone “JAWAD”. While natural calamities continue to affect agriculture in the state, agriculture and allied activities grew at an average rate of 9.5 per cent between 2018-19 to 2020-21 before the current contraction. Inflation or rise in general price level of all goods and services have an asymmetrical impact on different sections of society. While economically better sections of the society can withstand the price pressure, it adversely affects the poor people. Inflation in the state, based on consumer price index, has remained within a comfortable range of 2.7 per cent between April 2021- January 2022 . Rural inflation is 2.3 per cent while urban areas registered a tad higher inflation rate of 3.8 per cent . During the same time, inflation at the all-India level remained at an elevated level of 5.3 per cent. Successful supply side management and broad-based economic recovery kept the demand and supply side pressures better aligned.
Growth Dynamics – Sectoral contributions
As per the advance estimate of 2021-22, share of agriculture and allied activities in Gross State Value Added (GSVA in current prices) is 20.6 per cent , with service sector share of 39.9 per cent and industry sector share of 39.5 per cent. At all-India level, Service sector has the maximum share of 53 per cent followed by Industry’s share of 28.2 per cent and Agriculture and allied activities’ share of 18.8 per cent. The state economy has undergone a structural transformation with agriculture sector’s share steadily declining from 33 per cent in 1993-94 to 20.6 per cent in 2021-22. Industry sector whose share was only 17 per cent in 1993-94 has more than doubled its share in state GSVA to 39.5 per cent in 2021-22. Notwithstanding the falling share of agriculture in state GSVA, it still employs the bulk of the workers.
As of 2019-20, 48.31 per cent of state’s total workforce were working in agriculture and allied activities. Therefore, agriculture sector would continue to occupy a critical position in the state economy.
While there is mild moderation in the share of industry from 43.6 per cent in 2011-12 to 39.5 per cent in 2021- 22 , in the last ten years (2012-13 to 2021-22), industry’s contribution to GSVA remained in the range of 35 per cent to 40 per cent with an average share of 39 per cent over the ten years. As per the latest Periodic Labour Force Survey (2019-20), 26.93 per cent of workers are engaged in industry sector. The sector has shown rapid recovery from COVID loss and likely to grow by 14.5 per cent in 2021-22 (AE). Mining and quarrying, and manufacturing have been the major drivers of growth in industry sector. Manufacturing sector with 56 per cent share in Industrial GSVA grew at 14.3 per cent in 2021-22 while mining sector with 21 per cent share registered 18.1 per cent growth. The services sector has a major share of about 40 per cent in GSVA (2021-2022 AE) and an employment share of close to 25 per cent in 2019-20. The sector is expected to grow at 7.9 percent in 2021-22 (AE). Overall, the sector is seven percent larger than pre-COVID-19 (2019-20) level in real terms. This is largely due to resilience shown by public spending in public administration and financial services which continued to post growth during severe economic downturn in 2020-21, and in the following year, 2021-22.
A closer look at sub-sectors shows that manufacturing has contributed the maximum to GSVA growth over the last ten years. This is followed by trade, repair, hotels and restaurants, mining and quarrying and public administration.
Employment scenario
The Labour Force Participation Rate (LFPR), worker-population ratio (WPR) and Unemployment rate are three key parameters through which employment situation is gauged. As per the latest labour force survey (PLFS, 2019-20), Odisha’s performance is better than all India in terms of LFPR and WPR while unemployment rate is a little higher than all India. Nearly 55.3 per cent of the population aged 15+ in Odisha were part of the labour force in 2019-20. This is an increase from 48.3 percent in 2017-18 and higher than all India LFPR of 53.5 per cent. In terms of WPR of 2019-20, there are 51.9 per cent of the population in the relevant age group who are employed in the state against all India WPR of 50.9 per cent. Unemployment in the state was recorded as 6.2 per cent in 2019-20 in comparison to 4.8 per cent at India level.
While Odisha performs better than all India on labour force participation including female labour force participation (LFPR), boosting the female LFPR may bring benefits
of economic growth to larger section of the society. Higher Female LFPR would lead to aggregate rise in overall LFPR in the state as well. Agriculture and allied activities, trade and repair services and construction are the activities that provide maximum employment in the state. However, as the state is diversifying and more value-added industries are coming to the state, and with the emergence of new age service sector, this employment pattern is likely to change over a period. While employment was
adversely affected due to the COVID-19 pandemic, quarterly data from the PLFS show that labour force participation and workforce participation were recovering by Jan-Mar ’21 (pre second wave).
A quick analysis of per-capita income and sector-wise employment share across states suggests that agriculture and construction have negative correlation with employment share and per-capita income across states. Richer states have lower employment share in agriculture, and construction. In the case of Odisha, share of agriculture in total employment in 2019-20 was higher at 48.3 per cent than the average of all 29 states. Average employment share of top five high income states in agriculture is lower at 38.5 per cent. Similarly, nearly 19.5 percent of Odisha’s workforce were employed in construction; comparable figure for top five high income states is 10.7 per cent. This provides an opportunity for skilling to mobilize the workforce from low valued added sectors to high value-added sectors. As the state is poised to bring about a skill revolution, rise in worker productivity would add to individual income as well as aggregate state income.
Public Finance
Odisha is one of the most fiscally prudent state in the country. Not only has it managed to keep its fiscal deficit within the FRBM limit, but it has also kept its Debt to GSDP ratio much lower than the FRBM threshold . The state is running a revenue surplus (difference between revenue receipt and revenue expenditure) for several years. It’s primary deficit (which fuels the debt to GSDP ratio) is also much lower than many other states in the country. Most of the expenditure in the state is geared towards development expenditure and it is a frontrunner in the country amongst the comparable states in terms of development expenditure to GSDP ratio.
Odisha has managed a revenue surplus of 1.8 per cent between 2016-17 and 2021-22. Average Gross Fiscal Deficit was also 2.6 per cent for the state which was among the lowest when compared with major states. Debt stock as percent of GSDP is within the manageable limits for Odisha. This has helped the state to raise funds from open market at a relatively lower interest cost.
The state is the highest spender on infrastructure creation (proxied by capital outlay to GSDP) in recent times, with 4 per cent of GSDP spent on capital outlay as per 2021-22 BE. In the preceding two years, capital outlay to GSDP was 3.6 per cent in 2020-21 and 3.8 per cent in 2019-20.
is only one quarter, it could not help in the overall sector registering a growth as 3/4th of the sector contracted. Agriculture sector, despite a declining share in overall GSVA, a result of structural transformation that is happening in the state, accommodates the largest share of workers in the state with employment. Overall, 48.31 per cent of workers find work in these sectors and it is 55 per cent in the case of rural Odisha as per PLFS 2019-20.
While natural calamities remain the predominant factor in determining agricultural output and productivity, in the years when there are no major calamities, the sector has registered a robust growth rate. In preceding three years of 2021-22, the sector on an average grew at 9.45 per cent rate. However, even temporary blips could have a debilitating impact on households dependent on agriculture and allied sector. Government of Odisha is cognisant about these facts and hence the policy mix is tilted towards the rural and farming households to offer them income support to withstand such exogenous shocks and build resilience among the households.
Crop
During the year 2020-21, the Net Sown Area increased by 1.54 per cent from 2019-20 and was recorded at 54.15 lakh hectares constituting about 35 per cent of the total geographical area in the state. The cropping intensity of the state was 158 per cent. Latest available data (2015-16) show that about 93 per cent of the operational holdings were marginal or small. The state is witnessing diversification towards high value crops led by initiatives such as Integrated Farming System (IFS), Intensive Agriculture Programme (IAP), Mission for Integrated Development of Horticulture (MIDH), Technology Mission on Cotton, and Technology Mission on Sugarcane. These initiatives are geared towards enhancing farm income in the state. The share of area under vegetables has increased from 7.42 per cent in 2014-15 to 8.17 per cent in 2020-21 whereas the share of fruits has increased from 3.63 per cent to 4.15 per cent during the period indicating diversification towards high value crops. The share of area under spices and flowers increased to 3.09 per cent and 2.67 per cent respectively.
In 2020-21, production of major crops which include mainly food grains, oil seeds, cotton, sugarcane, vegetables, and spices grew at 5.55 per cent over 2019-20. Food grains contributed around 49 per cent of the total crop production of the state, with a record contribution of 130.39 lakh MT production in 2020-21 . There was a significant growth in production of maize (13.51 per cent), cereals (12.7 percent), and sugarcane (9.96 per cent) over the previous year. There is a marginal increase in the production
of fruits (1.82 per cent), spices and condiments (2.75 per cent) in 2020-21 over the previous year. There has been increase in the productivity of major crops since last two decades. The compound annual growth rate (CAGR) of productivity of cereals was 4.91 per cent, pulses by 2.05 per cent, oil seeds by 2.71 per cent, cotton by 3.35 per cent and vegetables by 2.05 per cent during the period 2000-01 to 2020-21 . Despite increase in agricultural productivity, productivity of major crops in Odisha is still lower than the national averages. This indicates that there is still scope for increasing productivity to meet food and nutrition security in the state and enhance farmers’ income.
The Government has undertaken several measures to increase irrigation coverage, provide quality seeds and facilitate credits and provide financial assistance (under KALIA scheme). From 2016-17 to 2020-21, the utilisation of irrigation in terms of area has increased from 34.09 lakh hectares to
42.51 lakh hectares. During 2020-21, 175702.50 quintals of seeds have been supplied by the Odisha State Seeds Corporation (OSSC) to 2096 PACS and Large Area Multi- Purpose Societies (LAMPCS) for distribution to farmers. The state has implemented initiatives such as Mukhyamantri Krushi Udyog Yojana (MKUY) and BALARAM to provide term loans and crop loans to enable easy credit access for the farmers in the state. During the last seven years, crop loans (for purchase of seeds and fertilizer) increased from INR 11.30 thousand crores to INR 24.61 thousand crores, at a CAGR of 13.85 per cent . Term loan (extended for purchasing farm equipment) increased from INR 3.72 thousand crores to INR 11.13 thousand crores at CAGR of 20.03 per cent during the same period. Appropriate use of fertiliser and pesticides is critical for increasing productivity and protecting the crops from pest attack. The use of fertilizer and pesticides increased to 76.21 kg/ha and 169 gmai/ha in 2020-21 from 72.71 kg/ha and 160 gmai/ha in 2019-20 respectively showing a rising trend.
The Government has undertaken several initiatives for improving post-harvest management practices and reducing losses through creation of mandis, cold storage, cashew processing plants, pack houses, low-cost onion structures, e-NAM mandis etc. As of 2020-21, there were 3,840 number of mandies and Paddy Procurement Centres (PPCs) operational in the state. About 61.9 lakh MT paddy were procured in the state during Kharif Marketing Season (KMS) 2020-21. In paddy procurement by districts, Bargarh topped the list, followed by the district of Kalahandi, while Ganjam was in the third position. During KMS 2020-
21, INR 11,756.64 crores and INR 2,695.83 crores have been credited to the bank account of beneficiaries against Kharif and Rabi procurement respectively. In 2020-21, the procurement of sunflowers and groundnuts increased by 53.34 per cent and 9.7 per cent over 2019-20. Odisha is the first state in the country to introduce a Millet Mission to promote the production and distribution of millets. During KMS 2020-21, about 2,03,887 quintals of Ragi have been procured by 157 PACS/LAMPCS. Considering development of agricultural marketing, as of 2020-21, there were 66 Regulated Market Committees (RMCs) in Odisha, out of which 41 function as e-NAM mandies to facilitate online trading. There was significant increase in online trading of agricultural commodities and coconuts in 2020-21 over 2019-20.
Livestock
As per the Livestock Census 2019, the total livestock population in the state stood at 182 lakhs accounting for 3.39 per cent of India’s total livestock population, while poultry population was 274 lakhs, which was 3.22 per cent of the total poultry in the country. In Odisha, cattle forms 55 per cent of total livestock population. The share of exotic/crossbreed in total cattle population has significantly increased with crossbreed female cattle population increasing by 36 per cent in 2019 over 2012, thus indicating rising share of more productive animals in the state.
Milk production in Odisha has grown from 1903 thousand MT in 2014-15 to 2373 thousand MT in 2020-21, increasing the per capita availability of milk from 114 gm/day in 2012-13 to 138 gm/per day . However, at the all India level, per capita availability of milk is 427 gms/day (2020-21). Meat production in the state has consistently been increasing from 162.5 thousand MT in 2014-15 to 213.1 thousand MT in 2020-21 . Egg production in Odisha has increased significantly
from 192 crore in 2014-15 to 286.2 crore in 2020-21 . Per capita availability of eggs is 54 eggs per year in Odisha versus 91 eggs per year in India (2020-21).
Fishing and aquaculture
The Government has been promoting the fishery sector extensively through the implementation of Odisha Fishery Policy, 2015 and by leveraging technologies such as Bio-floc, Cage culture and Poly-lining. The fish production in the state has more than doubled from 413.89 thousand MT in 2013-14 to 872.97 thousand MT in 2020-21 registering a CAGR of 11.25 per cent during the same period.
Out of the total fish production, freshwater fish constitutes 66 per cent, brackish water fish 14 per cent and marine fish 20 per cent. The shares of freshwater fish and brackish water fish have gradually increased over the last decade. There has been steady increase in crab and shrimp production in the state. In 2020-21, crab production grew by 15.4 per cent to 5.69 thousand MT from 4.93 thousand MT in 2019-20. Shrimp production in the state has increased by 7.94 per cent
to 108.31 thousand MT in 2020-21 from 100.34 thousand MT in 2019-20. In 2020-21, export of fish has marginally increased (0.90 per cent) to 215.14 thousand MT from 213.18 thousand MT in 2019-20 while import of freshwater fish contracted by 7 per cent from 46.3 thousand MT in 2019-20 to 43.0 thousand MT in 2020-21.
Forestry and logging
The state has actively promoted forest conservation through afforestation activities, promotion of forest protection units and prevention of forest fire activities among others. Odisha recorded the highest increase in forest cover in 2021 in the country, with an increase of 537 sq. km. over 2019. Currently, Odisha has a significant share in the country’s forest cover accounting for 52,156 sq. kms and constituting approximately 33.50 per cent of total geographical area of the state.
Environment and Climate Change
Odisha has undertaken several initiatives to address climate change risks and environmental concerns including creation of a comprehensive state action plan for climate change (2018-23), dedicated climate budget, creation of management trust fund and implementation of integrated coastal management project. Climate Change Action Plan (2018-23) is a coordinated response of eleven sectoral missions which includes preparation of action plan, implementation of activities in a time bound manner and mobilization of resources. Formulation of Climate Budget by the Government aims
to keep track of Government expenditure incurred on climate change and aids in re-designing and safeguarding the existing projects through the lens of climate change and supports the mitigation action plan. Odisha has been accorded the status of a front runner due to its best performance in the indicators pertaining to SDGs 13 (Climate Change),14 (Life on water) and 15 (Life on land) under SDG India Index Report 2020-21 prepared by NITI Aayog.
Rural Development
Besides promoting agriculture and allied activities, the state has been implementing several rural development programmes to eradicate poverty, improve standard of living, and promote a healthy society by creating awareness about hygiene, sanitation, and eradication of illiteracy. In 2020-21, MGNREGS provided employment to a record number of 62.15 lakh persons which was 66 per cent higher as compared to 37.32 lakh persons in 2019-20. This has helped people in the rural areas to mitigate the adverse effects of job losses due to the pandemic.
To improve rural infrastructure and provide pucca houses to rural families, a total of 4,38,747 number of houses were built in 2020-21 under different state and centrally sponsored schemes. During 2020, 4,60,000 tube wells were installed, and 47,411 Piped Water Supply (PWS) schemes were commissioned to foster access to drinking water in rural areas. The Government has implemented several schemes like Pradhan Mantri Gram Sadak Yojana (PMGSY), Biju Setu Yojana (BSY), and
Mukhya Mantri Sadak Yojana (MMSY) to improve rural road connectivity in the state. Special package of minimum wage, out of the State budget, played a key role in boosting employment generation and enhancing income of the poor in 20 migration prone blocks of four districts, i.e., Bargarh, Bolangir, Kalahandi and Nuapada.
Odisha’s industry sector on an average grew at 6.35 per cent between 2011-12 to 2021-22 while the average growth witnessed in the country during the same period was 4.6 per cent.
Manufacturing in Odisha
Manufacturing sub-sector with more than 55 per cent share within Industry sector, grew at 14.3 per cent rate as per advance estimate of 2021-22. Manufacturing in the state remains mineral based given the natural endowment of the state with high concentration of Basic metals and Coke and refined petroleum products. As per Annual Survey of Industries, 2018-19, more than 2/3rd share in manufacturing output comes from these two sectors.
Diversification of the sector could result in higher value addition in the state as well as offer new employment opportunities since mineral-based sectors are highly capital intensive. The state is actively promoting diversification through enabling infrastructure and policies aided by online systems and best-in-class facilitation. Between 2015-16 and 2021-22 (until 4th Feb, 2022), 339 projects were approved, accounting for a cumulative project cost of INR 8,46,880 crore in 29 sectors. The employment potential of these 339 approved projects in 2021-22 is 3.5 lakh persons
. Number of sectors covered through the investment approval process also saw an increase from 13 in 2015-16 to 19 in 2021-22 . Similarly, approved projects were concentrated in 16 districts in 2018-19 but it expanded to 23 districts in 2021-22 . This would help in making the development broad-based.
In the state, till March 2021, 4,93,625 Micro, Small and Medium Enterprises (MSMEs) have been established with an investment of INR 23,689.31 crore and employment of 18,11,316 persons. During the year 2020-21, 44,273 MSME units were set up with an investment of INR 1,887.79 crore, leading to employment generation for 1.19 lakh persons. The advances to MSMEs have grown from INR 13,700 crore in 2010-11 to INR 42,800 crore in 2020-21 at a CAGR of 13 per cent over this period. During 2020-21, 2,951 handicrafts units were set up in the state. The cumulative number (from 2012-13) of total handicraft units were 26,580 in the state.
Mining in Odisha
Odisha accounts for India’s 96 per cent chromite, 92 per cent of nickel, 51 per cent of bauxite, 33 per cent of iron ore, 43 per cent of manganese ore and 24 per cent of coal reserves . With a renewed vigour to industrialize the state, harnessing of the natural resources in a sustainable manner changed the economic landscape of the state. Mining, after witnessing a sharp contraction in 2020-21, has bounced back with a real growth of 18 per cent. Within Industry, mining and quarrying has 1/5th share in gross value added. Therefore, such rebound in the sector has resulted in overall high growth of industrial sector. Odisha is the largest steel and stainless-steel
producer in the country with the installed capacity of MoU-based Steel Plants being 25.27 MTPA, an increase of around 20 per cent over the last five years.
Mining generates different categories of employment including unskilled or semi-skilled labour. By the end of 2020-21, around 61,400 workers were employed directly in major mineral activities. Coal mining directly employed nearly 21,890 workers followed by iron ore (21,670 workers), chromite (7,690 workers) and manganese (3,900 workers).
The state collected INR 13,918 crore from minerals in 2020-21 . Thus, mineral revenues constituted 13 per cent of total revenue receipts (INR 1,07,200 crores) of the state in 2020-21. As per the estimates available up to December 2021, total mineral revenues in 2021-22 was INR 32,485 crore (provisional). This is a substantial jump in mineral revenues which would allow the state to direct spending towards developmental purposes.
Energy
The power sub-sector (along with gas and water supply) contributed about 2.4 per cent of the Odisha’s GSVA as per 2021-22(AE). Odisha is a power surplus state with power availability exceeding the demand. The total installed capacity of all power projects (including share of power from central and other sources) in the state was 8018.25 MW in 2020-21 in comparison to 7423.00 MW in 2019-20. It registered an annual increase of 8.01 per cent. The state has a total of 92.84 lakh electricity consumers in 2020-21. About 92.36 per cent of the total number of electricity consumers
belong to the domestic category (both rural and urban). The total power consumption of Odisha was 24,626.7 MU in 2020-21 as against 24,661.39 MU in 2019-20 excluding consumption of Industries with CGPs. In 2020-21, domestic consumption constituted 33 per cent and industrial consumption constituted 22 per cent of total consumption. .
The state’s renewable energy mix is dominated by solar energy. As of 2020-21, installed capacity of renewable power by GRIDCO from various units was 1159.10 MW, out of which 100.15 MW is from small Hydro Electric Projects, 781.85 MW from Solar Projects, 20 MW from Bio-mass Power Projects and 275.10 MW from wind sources.
Construction
Construction activities in Odisha contributed 6.73 per cent of the GSVA in 2020-21 and it is also the second-largest employer after agriculture. The share of employment in construction in Odisha (19.5 per cent) is greater than national average (11.6 per cent) in 2019-20. Construction registered a growth rate of 13.2 per cent in 2021-22 after two consecutive years of contraction in 2019-20 (-1.6 per cent) and 2020-21 (-3.1 per cent). In an activity that has a high concentration of unskilled worker
and daily wage labourer, such contraction brings with it associated problems by impacting the livelihood of people. Therefore, the recovery of the sub-sector was a much desired one.
Promoting industries
Government of Odisha has developed the online Single Window portal, GO SWIFT, which facilitates investors to do business with government and provides all requisite information/clearances to investors in a hassle-free and paper-less manner. The process of online application submission, payment, tracking and processing of applications for 54 services from 18 State Government Departments has facilitated investment in the state. New MSME units in the state are provided several types of incentives and assistance starting from those relating to getting land or shed to technical knowhow.
The state is undertaking industry relevant skill development through Odisha Skill Development Authority for diversifying the industrial sector. The reforms have led to 11 ITIs of the state securing place in India’s top 100 ITIs list selected by Union Ministry of Skill Development and Entrepreneurship. Top companies of the country are now coming for their placement to ITIs of Odisha.
Promotion of sunrise industries such as Electric Vehicles manufacturing, Green Energy Equipment, Electronics, and Hardware manufacturing are being carried out by the state. Electric Vehicles (EV) and EV component manufacturing has been classified as a new-age industry in IPR and a special incentive package including attractive capital subsidy for investments over INR 300 Crores in the new age industries including EV and EV component manufacturing has been given by the state Government. An MoU has been signed by IPICOL and Gas Authority of India (GAIL) for cooperation in the areas of green
hydrogen, green ammonia, and renewable energy (solar /wind) to produce eco-friendly fuels in Odisha.
Government of Odisha launched one common portal “Mo Bidyut” on 19th October 2020 for providing new connections within 48 hours covering domestic, GPS, SPP, Pumping and Agricultural category of consumers having load up to 5 Kilowatt to ensure faster access to electricity connection.
Policies, institutions, and governance
Industrial Policy Resolution of 2015 has launched many initiatives to promote downstream and ancillary industries. These, inter-alia, include interest subsidy, exemption in electricity duty, anchor tenant subsidy, reimbursement of power tariff, training subsidy etc.
The Mineral Laws (Amendment) Act, 2020 was enacted to amend the Coal Mines (Special Provisions) Act, 2015 [CMSP Act] and the Mines and Minerals (Development and Regulation) Act, 1957 [MMDR Act]. As part of its mineral development policy, the state has also implemented the policy of Long-Term Linkage (LTL) for supply of iron ore, chrome ore, bauxite ore and other minerals to the units located in Odisha through Odisha Mining Corporation Limited.
The Odisha Start-up Policy launched in August 2016, has facilitated setting up of 1,243 Start-ups in the state out of which over 33 per cent are led by women entrepreneurs. ‘O-Hub’ (Odisha Hub) – a start-up incubation centre was inaugurated in December 2021, with the aim of mobilising start-up investments. Government of Odisha came out with the Odisha Electric Vehicles Policy 2021 aimed at promoting manufacturing and usage of EVs across vehicle segments in the state by facilitating an appropriate ecosystem. To promote employment generation in Odisha and to encourage the return of migrant workers employed in different textile hubs across the country, employment incentive is being provided to the units under “Odisha Apparel Policy - 2016”.
Three per cent of Odisha’s population was urban in 1941, which is estimated to have increased to 18.5 per cent in 2021. It is projected to reach around 21 per cent by 2036 . The average annual urban growth of population in Odisha is 2.37 per cent compared to all India level growth rate of 2.76 per cent (2001-2011 Census).
Bhubaneshwar, one of the two ‘smart cities’ in Odisha (the other being Rourkela) secured the fourth rank among the top ten capital cities in India, in the ease of living index, 2021, released by the Ministry of Housing and Urban Affairs. It was also the top scorer on the citizen perception survey that incorporates views of citizens regarding the services provided by their city administration.
Some of the smart projects undertaken in Bhubaneshwar include a sensory park built to serve children with special needs; an Adaptive Traffic Signal Control (ATSC) system that dynamically changes signal timings to optimize traffic flow; a common payment card system to allow citizens to pay government fees and taxes, utility bills, transit charges etc. digitally; and ‘socially smart Bhubaneshwar’ that aims to engage youth, especially women, to promote interventions on women’s safety, leadership training, and skill training. Besides this, the Public Bicycle Sharing System aims to provide a low-cost mode of transport to the citizens of Bhubaneswar through GPS fitted bicycles. The Mo Bus project in Bhubaneshwar ensures a strong public transport system, comprising a fleet of 200 buses, equipped with free Wi-Fi, clean and technologically advanced equipment, catering to around one lakh passengers. This network is expected to increase with the addition of 189 buses in the future. Rourkela similarly has benefitted from citizen friendly parks with gym facilities, smart bus shelters and terminus, and the Birsa Munda stadium with a seating capacity of 10,000 spectators that is building an ecosystem for sports and generating employment.
In 2021, Puri became the first city in the country, to have ‘Drink from Tap’ facility under the SUJAL mission that focusses on water quality. The state also won the Elets Water Innovation Award of Excellence 2021 for 24x7 water supply to Puri town under the mission. Under the Buxi Jagabandhu Assured Drinking water to all Habitation, i.e., “BASUDHA”, the state is also providing universal coverage of water supply to all ULBs of the state including slums. The state has targeted to provide safe drinking water in all villages by 2025. Odisha is on the verge of achieving universal coverage of Energy Efficient Smart LED Street Lighting in urban areas through its street lighting projects in 115+ ULBs. Under its 5T initiative to bring change in administration and service delivery in the state, Odisha has started its mission to provide ‘digital door numbers’ to every unique address. This will enable faster provision of public services and make communication and logistics easier. To improve disaster preparedness of the cities beginning with Bhubaneswar, overhead power cables are being substituted by underground ones, and multipurpose cyclone/flood shelters are being organized, and satellite phones are being
provided.
In Odisha, 22 per cent of the urban population lives in slums. The JAGA mission, launched in 2018, aims to ensure tenure security, providing necessary amenities, infrastructure, and improved housing, and bring slums into the fold of planned development.
In the wake of the coronavirus pandemic, the state is providing employment to urban labour through project “MUKTA”, to ensure that daily wage workers and labourers have alternative means of livelihood. Up to September 2021, more than 21,420 projects were undertaken across 114 urban local bodies under the project.
‘Hotels and restaurants’ accounted for on an average 2.16 per cent of the service sector GSVA between 2011-12 and 2019-20. As expected, this activity bore the brunt of the pandemic, contracting significantly in 2020-21 by 84.3 per cent. In 2021-22, it registered a high growth rate of 40.7 per cent. Therefore, it would take another year or so to reach the pre-pandemic level GSVA. Hotel and restaurant business is closely associated with tourism. Given the high potential of tourism in the state, hotel and restaurant sector has the potential for a higher economic
growth and employment in the state. The state has taken several steps to boost awareness and increase infrastructure that could help bring more national and international tourists. Hosting of international sports events as well as national level sports events would also help to develop tourism. Odisha is gradually becoming a hub for medical visits and education. These facilities would have a combined bearing upon hotel and restaurant sector.
The transport sub-sector supporting the critical mining and manufacturing industries of the state, contracted by 13.78 per cent in 2020-21 but recovered to grow at the rate of 8.24 per cent in the year 2021-22 (AE). The share of road transport is highest within the sub-sector. Water transport services showed resilience through the pandemic, registering growth rates in 2020-
21 and 2021-22. Paradip Port, declared as the eighth major port of India, showed the biggest improvement in reducing average turnaround time of ships from over seven days in 2014-15 to less than 2.76 days in 2020-21.
The communications and broadcasting services sub-sector’s contribution to total service sector GSVA stood at 4.29 per cent in 2020-21. It contracted by 2.34 per cent in 2020-21 but rebounded strongly in 2021-22. The overall tele-density of Odisha, i.e., the number of phones per 100 population is 78.46, while the national average is 88.17. On internet access, subscribers per 100 population of the state is 49.09 in comparison to the national average of 60.73. Increasing
the connectivity remains key on multiple accounts including access to finance for MSMEs, financial inclusion for excluded population, digital finance, and digital banking. Besides these, online school education, tele-medicine and direct benefit transfer are contingent upon the efficacy of the communication sector.
In Odisha, financial services accounted for a share of 9.33 per cent in 2021-22 (AE). This sub-sector was unaffected by the pandemic, registering a GSVA growth of 9.23 per cent in 2020-21, and continued in a similar vein in 2021-22. Promoting new age finance such as FINTECH and digital banking would give a further boost to financial services.
Social Infrastructure, Protection
and Empowerment
Sustainable Development Goals (SDG) provide a measurement framework of human progress in which Odisha stands as a consistent performer. As per the NITI Aayog report on ‘SDG India Index 2020-21’, Odisha has been categorized as a “performer” state with overall score 61, showing an improvement of 3 points over the score for the year 2019-20. Out of the 17 SDGs, Odisha is a front runner and performer in 9 SDGs. The SDGs where the state is front runner are as follows: SDG 3: Good Health & Well Being, SDG 6: Clean Water & Sanitation, SDG 7: Affordable & Clean Energy, SDG 10: Reduced
Inequalities, SDG 11: Sustainable Cities & Communities, SDG 12: Responsible Consumption & Production, SDG 13: Climate Action, SDG 14: Life Below Water, SDG 15: Life on Land.
Social sector accounts for the majority share of developmental expenditure in 2021-22 BE. Within the social sector, education, health, and water supply and sanitation are the sectors with higher allocations. Given the high concentration of tribal population in the state, expenditure on welfare of these social groups also forms an important component of social expenditure. Outlook for expenditure in social sector indicates that the share of these sectors continues to get stable allocations in 2021-22 (BE). In capital outlay on social services, the bulk is spent on the welfare of SC/STs. Socially and economically weaker groups constitute close to 40 per cent of Odisha’s population and thus, their welfare has been a priority for the state. Education, medical welfare, and housing also receive significant share of social services’ capital outlay.
Quality Healthcare services
Public healthcare in Odisha focuses on accessible, equitable, affordable, and quality healthcare services for all. One of the major thrust areas of the 2021-22 state budget was Transformative Health Facilities under the aspiration for “New Odisha – Empowered Odisha”. The share of health budget as percentage of GSDP has increased from 1.19 per cent in 2019-20 to 1.59 per cent in 2021-22. The Government has undertaken many initiatives in the state through outcome based participatory bottom-up planning process with additional resource allocation. This has resulted in Odisha being a ‘front runner’ in SDG 3 i.e., Good Health & Well Being with a score of 67 in the SDG India Index 2021.
Odisha’s performance on child health parameters has witnessed steady improvements. The Infant Mortality Rate (IMR) and Under-5 Mortality Rate (U5MR) are continuously declining in the state. As per NFHS-5 (2019-21) the IMR and U5MR per 1000 live birth stood at 36.3 and 41.1 respectively that declined from 40 and 48 (NFHS-4, 2015-16) respectively . Odisha has notably immunized 90.5 percent of its children aged 12-23 months which is the highest in the country amongst major states. Maternal health indicators of the state have seen significant improvement with institutional deliveries in the state rising to 92.2 per cent in 2019-21 from 85.3 per cent in 2015-16 and Maternal Mortality Rate dropping to 136 in 2017-19 from 180 in 2014-16 . The high rate of institutional delivery in the state could be possible due to Government policy measures and effective implementation of MAMATA, Janani Suraksha Yojana, Janani Shishu Surakshya Karyakram, Nirmaya Nidaan, Sampurna, BSKY ,108/102 ambulance services and establishment of Maa Gruha. Odisha through a concerted effort has been able to reduce the Total Fertility rate (TFR) to 1.8 (NFHS-5) from a TFR of 2.2 (AHS 2012-13). Odisha has been able to achieve this by a multipronged strategy of capacity building of service providers and simultaneous community level activities to increase understanding and awareness about family planning.
The State Government has focused on building health infrastructure to provide inclusive healthcare facilities to the people of Odisha by establishing more Medical Colleges either by Government or through PPP mode or even encouraging the private sector to come forward with such projects.
Education
The education sector of Odisha has focussed on accessible and quality education for all. The Performance Grading Index (PGI) report 2019-2020 shows that Odisha has improved considerably in PGI due to significant progress in educational infrastructure like construction of school buildings/classrooms, smart class rooms, science & computer labs, library, drinking water facilities, toilet facilities and appointment of teachers and higher enrolment. Nearly 98 percent of Primary and
Upper Primary schools of the state have separate toilets for girls in 2021.
On this pathway, Odisha’s Gross Enrolment Ratio (GER) at the elementary level is maintained at a high level over the past five years reaching 92.26 per cent for primary level and 98 per cent for upper primary. The GER at secondary and higher levels of education also have an increasing trend although there is a scope of further improvement. Mo School and Mo College Abhijan by the state demonstrate the state’s intervention to promote inclusive and equitable quality education. Odisha has performed exceedingly well in Pupil Teacher Ratio (PTR) and has a better PTR at elementary level than states such as Kerala, Karnataka, Chhattisgarh, and the national average with 16:1 at primary and 15:1 for the upper primary level.
Skill Development and Technical Education
Under the ambitious 5T Programme of Government of Odisha, Skill Development and Technical Education Department have unleashed a series of initiatives for incentivizing and giving a boost to Skill Training and Technical Education in the state. The over-arching aim is to enhance the quality of technical education and augment the employability quotient of the youths and thereby transforming the demography of the state into a formidable workforce having national
and global recognition. The state has made concerted efforts towards skill development with its ‘Skilled in Odisha’ initiative. Organisations such as Directorate of Technical Education and Training, Directorate of Employment and Odisha Skill Development Authority, Technological Universities and Government Engineering Colleges and State Council for Technical Education and Vocational Training are working to materialize the objectives of ‘Skilled in Odisha’.
Government of Odisha is encouraging greater participation of women in vocational and technical education. A special scheme ‘SUDAKHYA’ has been launched by the State Government to encourage increased enrolment of girls into ITIs. The World Skill Centre has been established at Mancheswar, Bhubaneswar. The centre will provide advance skill training to students to make the graduates from ITIs, Polytechnics and Engineering Colleges ready for global placements
Multidimensional Poverty
Multidimensional poverty combines the incidence and the intensity of poverty across multiple dimensions and is the new way to view poverty of a given state. As per the Multidimensional Poverty Index (MPI) 2021 by NITI Aayog, Odisha’s MPI score is 0.136 against India’s MPI score of 0.118. In terms of headcount ratio, there are 29.35 per cent of the population who are identified as multidimensionally poor in Odisha. The Headcount Ratio values for 14 districts of Odisha are better than India whereas the MPI intensity for 20 districts fares better than all India MPI intensity. Poverty
alleviation schemes of the state covers critical areas such as housing, livelihoods, social security, standard of living etc. Key poverty alleviation schemes include Biju Pucca Ghar Yojana, Nirman Shramik Pucca Ghar Yojana, MGNREGS, and Odisha Livelihoods Mission which has substantially helped in widening the access to amenities, opportunities and rights of people.
Clean Water and Sanitation
Odisha is a front runner in SDG 6 on Clean Water & Sanitation with a score of 86 performing better than India in the year 2020-21. Initiatives such as BASUDHA, Drink from Tap Mission under 5T programme, and AMRUT have ensured the supply of clean drinking water and safe sanitation for all. As part of Swachh Bharat Mission (Gramin), Solid and Liquid Waste Management (SLWM) is being implemented in the villages of Odisha since 2020-21 with the aim to make rural Odisha ODF plus, with focus on Sanitation Sustainability and SLWM covering all villages by 2024-25.
Gender Equality and economic empowerment of women
Odisha has been making steady progress in achieving SDG 5 of gender equality. The state saw a rise of 11 points in its SDG 5 score from 2019-20 to 2020-21 as per SDG India Index 2020-21. Odisha performs reasonably well in the indicator of percentage of women who are literate with nearly 70 per cent of women falling under this category as against a national average of 71 per cent. Percentage of women owning a bank account or a savings account that they themselves use is higher in rural Odisha than
urban areas demonstrating the successful financial inclusion initiatives irrespective of the place of living. The sex ratio in Odisha compares favourably with the national average. As per NFHS-5, there are 1063 females for every 1,000 males in Odisha. Government of Odisha has been committed to advancing gender equality and thus, has adopted Gender Budgeting since 2012-13. The State Government has implemented the Biju Kanya Ratna Yojana (Amari Jhia Amari Shakti) scheme, Mission Shakti to support women’s economic empowerment.
Welfare support for the vulnerable sections of the society
The state has remained focused on ensuring better quality of life for the vulnerable and disadvantaged communities and has undertaken several initiatives through implementation of schemes such as Biju Kanya Ratna, AKANKSHYA, SAHAY, Madhubabu Pension Yojana, SWEEKRUTI to name a few. Odisha occupies a unique position among the Indian States and Union Territories for having a rich and colourful tribal scenario. In response to the prevailing extraordinary situation of COVID-19 pandemic, ST & SC Development Department rolled out Alternate Learning & Mentorship Programme
(ALMP). State Government has started Mission Jeevika with the purpose of ensuring sustainable livelihoods of ST families. The state’s approach facilitating various vulnerable sections of the society through its coverage of schemes and initiatives reflects its efforts towards inclusive socio-economic development.
Odisha has undertaken key initiatives for implementing citizen centric good governance over the past few years with the 5T governance framework (5Ts being Technology, Teamwork, Transparency & Time leading to Transformation) being at the core of all the initiatives. In the Good Governance Index (GGI) 2020-21 brought out by the Department of Administrative Reforms and Public Grievances of the Government of India, Odisha has topped in two accounts - Human Resource Development and Economic Governance in the category of group B states. Further, the state has improved its GGI score from 4.44 in 2019 to 4.58 in 2020-21.
The state ensures time bound and transparent delivery of public services through the legal framework of Odisha Right to Public Services Act (ORTPSA) which enables the citizens to demand public services as a right. The ORTPSA online module (www.central.ortpsa.in) is a dynamic dashboard for monitoring delivery of notified public services. In accordance with Odisha Right to Public Service Act, 411 services of 31 Departments have been included.
Odisha has created a comprehensive and integrated system for enhancing the efficiency and effectiveness of policing through implementation of a networking infrastructure in the form of Crime and Criminal Tracking Network and Systems (CCTNS). Under CCTNS all Police Stations (PS) and Higher Police Offices in the state have been computerized and networked and thus, Odisha is a frontrunner in implementation of CCTNS project. State Government has also introduced ‘Emergency Response Support System’ (ERSS) in the state wherein all emergency services like Police, Fire, Ambulance, Women helpline etc., will be integrated into single dialling number “112” to respond to people in distress in shortest possible time. A Mobile App namely “SAHAYATA” for
citizens and “ARAKHI” App has been developed by Odisha police to help the Investigating Officers for investigation on the spot. Odisha has a robust mechanism for tackling corruption and carrying out other vigilance activities. For corruption related cases, the state follows appropriate investigation channels of registration of cases followed by enquiries, submission of charge sheet in enquiries converted into criminal cases and then arrests and conviction in courts. Departmental action is also carried out in vigilance cases resulting in dismissal from service and/or stoppage of pension.
Under e-technology driven government service initiatives, the state has developed end-to-end automated recruitment, litigation, and human resources management systems implemented across various Government Departments. Integrated Recruitment Management System (IRMS) is a software application for end-to-end automation of the recruitment process. Similarly, Human Resources Management System (HRMS) has simplified service-related works relating to Government employees. Litigation Management System (LMS) is implemented to ensure better management of court cases of the High Court of Odisha through centralized access to data and legal research library, scheduling of tasks and seamless management of communication.
The “Odisha One” Portal is an integrated service delivery framework for over 430 Government to Citizen (G2C) services through self-mode or hybrid made through Mo Seva Kendra (MSK) at GP Level. Key G2C services like birth certificates, death certificates, payment of water and electricity bills and booking tickets of OSRTC buses, fire certificate building etc., have been integrated with the portal. The state has undertaken major e-governance transformation (5T) initiatives in various sectors such as education, telecom, cyber security, public grievance
redressal, tourism, investment and trade, land records, and disaster management , to reduce compliance burden for citizens in availing Government services.
Odisha Remote Sensing Application Centre (ORSAC) has developed many e-governance applications for the state such as Odisha Spatial Data Infrastructure, Bhubaneswar Land use Intelligence System, Odisha 4K Geo Web - Portal, Know Your Location (KYL) service, and mineral transporting Vehicle Tracking System. The State Government has taken proactive measures to strengthen the institutions of local Government over time.
Odisha has proven to be an exemplar of effective disaster management tackling regular and multiple disasters hitting the state. The state has performed well in mitigating disaster impacts through a robust community-based disaster management model which came in handy to fight COVID-19 as well. Odisha proactively has worked on its preparedness, capacity building, coordination and convergence and information sharing relating to disaster management. The state has also leveraged effective technology solution such as apps and software for processing, sanction, payment and monitoring of ex-gratia for death or injury caused due to any disaster.
Fiscal Development and Management
Major fiscal indicators
Odisha is the most fiscally prudent state in the country with key fiscal indicators showing a comfortable position. The economic slowdown in 2019-20 and COVID-19 impact in 2020-21 (reducing revenues and increasing expenditure obligations) caused a temporary blip, but there has been considerable improvement in 2021-22 as indicated by the budget estimates. Fiscal deficit has been contained within the FRBM Act requirement of 3.5 per cent of GSDP for the last five years . Revenue account has been in surplus for more than 15 years now. Primary deficit has been below 2 per cent of GSDP during the last five years barring 2019-20. Debt-GSDP ratio is being maintained below 25 per cent, the statutory benchmark.
State’s revenue receipts
Revenue receipts to GSDP ratio has been maintained at over 16 per cent since 2011-12 and estimated to be near 20 per cent in 2021-22. There was a substantial deviation from the average annual growth of total revenue receipts of above 12 per cent since 2011-12 in 2019-20 (2 per cent) and 2020-21 (5.5 per cent), caused by general economic slowdown first and then coronavirus pandemic. These receipts are bouncing back in 2021-22 with more than 17 per cent expected growth. State’s own revenues have fluctuated about 8 to10 per cent of GSDP in the last ten years. Own tax revenue collections show less fluctuations than own non-tax revenues, with fluctuations in the latter largely traceable to receipts from minerals. A smaller
share of Odisha in 15th FC awards has dampened growth in share of central taxes for Odisha. SGST, VAT and state excise are the major sources of own tax revenue, accounting for over 75 per cent of own tax revenues.
Key Revenue Indicators
Tax revenues are 54 per cent and non-tax revenues 46 per cent of total revenue receipts. Own tax revenues are 56 per cent of total tax revenue while grants from the centre are 57 per cent of total non-tax revenues. Central transfers (shared taxes + grants) were around 46 per cent of total revenue receipts in 2021-22BE. The gradual decline in this indicator over the years shows that dependence on central transfers is gradually declining. Own tax-GSDP ratio is smaller in Odisha than the all-states average, but this has been more than made up by non-tax revenues.
State’s expenditure
Total expenditures are around 25 per cent of GSDP with developmental expenditures around 17.5 per cent of GSDP. Revenue expenditures dominate total expenditures (excluding loans and advances and repayment of debt) accounting for 70 per cent in 2021-22 BE against 82 per cent in 2010-11. Bulk of the revenue expenditures are on only four groups of services – education, health & family welfare, social welfare, and water supply & sanitation. Capital outlay on various functional categories and total capital expenditures have been rising fast in recent years to meet the huge demand for necessary infrastructure. Contrary to the allocations in revenue expenditures, economic services (like irrigation and transport) account for a large part of the capital outlay (69 per cent in 2021-22 BE).
Quality of expenditure
A high share of developmental expenditures at 72.7 per cent (2021-22 BE) in Odisha is a positive indicator of the quality of expenditure. Fast rising capital expenditures in Odisha (with blips in 2019-20 and 2020-21 but resumption of growth in 2021-22) again is taken to be a change for the better in terms of the composition of total expenditures. Relatively small share of committed expenditures (salaries and wages, pensions, and interest payments) in the expenditures leaves plenty of room for discretionary, policy-based expenditures. However, pension expenditures are rising faster than the other two components of committed expenditures. Taking six adjoining or proximate states for comparison, Odisha shows highest per capita spending on health, and third highest on education and irrigation. This indicates a reasonable level of
Government expenditure within the limits imposed by fiscal prudence. Outstanding liabilities to GSDP ratio have been brought down from the 57 per cent level at end-March 2003 to 23 per cent at end-March 2022 (BE). Internal debt (mainly market borrowings and loans from banks and other financial institutions) account for more than half of the outstanding liabilities in contrast to the more than 75 per cent share for all states put together.
Debt stock
The debt stock to GSDP ratio has been kept below 20 per cent since 2010-11, well below the FRBM mandated prudent threshold of 25 per cent. The composition of debt has completely changed over the years. From heavy reliance on expensive (in terms of interest cost) sources like provident fund and NSSF, debt stock now has largest shares of market borrowings and loans from banks and financial institutions (currently the cheapest sources). All commonly used indicators of debt sustainability indicate that the state has no debt stress, and it can step up developmental expenditure. The maturity profile of debt also indicates no immediate cause for worry.
Impact of Goods and Services Tax
GST has not been a revenue neutral change for Odisha so far, with GST collections lower than the collections from the taxes it subsumed. The structural reasons for this drop lie in losing more revenue from the food items and minerals (on which the state relied heavily for revenue, but the GST system did not tax) than the gains from the inclusion of various services in the tax base as the services sector is relatively small in Odisha (compared to India as also several other states). The actual collection has been consistently below the protected revenue for these reasons. Compensations based on difference between protected and realized revenues are
being received with a time lag. About INR 5,750 crores is pending against the compensation claim for 2020-21. The impending end of compensation payment system is likely to require large-scale adjustments in the subsequent budgets in the short run.
Government initiatives
In the area of public finances, the initiatives are mostly related to systems and processes to improve efficiency, participation, and transparency. In the area of budgeting, such initiatives relate to top-down budgeting to ensure fiscal prudence, people’s participation in budget making, introduction of medium-term fiscal framework, fiscal strategy report, continuous fiscal risk management and status paper on public debt. Process improvements include various ways in which IT and ITES is being used – instances include e-budgets (dispensing with large scale printing of budget documents), e-payment, e-receipt, and e-vouchers for online payments from and to the
Government, online completion of pension related tasks, and Aadhar-based bank account verification of parties involved in financial transactions with the Government. These have made the system faster, more accurate, more convenient for many and easier for accounting.
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