Odisha has witnessed dramatic changes both in terms of growth rates and fiscal position. Before the enactment of the Fiscal Responsibility and Budget Management (FRBM) legislation at the national and State levels, Odisha used to record overdraft for nearly 300 days in year. However, from 2004-05 Odisha has been recording revenue surplus and less than three per cent fiscal deficit. Odisha’s fiscal discipline was achieved through stringent austerity measures such as freezing employment for decades, slashing sanctioned positions and recruiting employees on contract at a very low salary.

On October 16, 2022, the Chief Minister of Odisha, Naveen Patnaik, abolished the contractual employment in the State and announced to regularise all contractual employees. Prior to this, a large proportion of State government employees had to work for six years on contract before getting regularised. The Chief Minister further announced that improvement in fiscal health of the State allows him to scrap the contractual recruitment policy.

After the change in the mining lease policy and implementation of auctions, Odisha has been receiving huge revenue from the mining sector. The windfall collection of revenue from the mining sector during Covid-19 crisis enabled the State to meet all FRBM norms such as zero revenue deficit and keeping fiscal deficit within 3 per cent.

In 2021-22, the State had budgeted to collect only ₹20,000 crore from non-tax revenue, of which mining has a lion’s share. However, the State made history by collecting more than ₹54,000 crore from non-tax sources. The State mobilised much higher revenue (₹1,53,021 crore) than the budgeted amount (₹1,25,600 crore). The State has been able to maintain a low debt to GSDP ratio (around 20 per cent) in the last 17 years.

The contribution of the mining sector is not confined to the State exchequer but also macroeconomic growth. The industry sector contributes 40 per cent of the gross value addition of Odisha against only 28 per cent at national level. The service sector contributes around 40 per cent to the GVA of Odisha against the national average of 53 per cent. And agriculture and allied activities contribute 21 per cent against the national average of 19 per cent.

Above national average

During the last 19 years, Odisha has grown faster than the national average. Between 2002 and 2022, the State grew at an annual average of 7.1 per cent, which is higher than the national average of 6.3 per cent. As a result, Odisha’s rank among 29 States (including J&K for comparison purpose) in terms of Per capita Net State Domestic Product (PNSDP) at 2011-12 constant prices jumped from 25 in 2004-05 to 17 in 2018-19.

In terms of the PNSDP of 2020-21, Odisha ranks at 20th among 29 States. If all the States are categorised based on the Human Development Index methodology of UNDP for grouping countries ( low, medium, high and very high), Odisha is emerging as a medium income State, leaving behind 12 States (in 2018-19). Compared to the national average per capita income, Odisha’s has increased from 73 per cent in 2004-05 to 84 per cent in 2020-21. In current price of 2020-21, the per capita NSDP of Odisha was ₹1,01,501 against the national average of ₹1,26,855.

In terms of multi-dimensional poverty index of NITI Aayog, 29.35 per cent of Odisha’s population is multi-dimensionally poor against the national average of 25.01 percent. Odisha ranks 20th among 28 States (excluding J&K).

In spite of Odisha’s astounding growth performance, there are serious concerns over the distribution of these benefits to all sections of society. As per the available estimates of 2011-12, poverty remains disproportionately concentrated among the Scheduled Tribe (64 per cent) and Scheduled Caste (41.39 per cent) communities. Poverty incidence was 24 per cent among OBCs, 14 per cent among general categories and 36 per cent average for the State as a whole.

Similarly, poverty is concentrated in the southern (48 per cent) and northern (40 per cent) parts of Odisha where maximum tribal people reside. The district level multi-dimensional poverty head count ratio of NITI Aayog also gives a similar picture. Tribal dominated districts have a much higher incidence of poverty compared to other districts.

The State needs to take serious measures for the distribution of the benefits of growth to all sections of society and regions.

Amarendra works at NISER and Bibhunandini at Berhampur University, Odisha. Views are personal