By Nageshwar Patnaik in Bhubaneswar, November 09, 2022: From one of the poorest states till recently, Odisha, through good management of its finances and resources has progressed to become a lower middle income state with average per capita income (PCI) pegged at Rs 1,27,383 in 2021-22 recording a double-digit growth of 16.8% compared to the previous year, according to the state’s latest Economic Survey. The state’s PCI jumped to Rs 1,27,383 in 2021-22 from Rs 48,499 in 2011-12, while India’s PCI during the period increased from Rs 63,462 to Rs 1,50,326.

The mineral rich state has witnessed dramatic changes both in terms of growth rates and fiscal position from 2004-05 with Odisha 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.

Interestingly, 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.

On October 16, 2022, Chief Minister 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. Naveen further announced that improvement in fiscal health of the State allows him to scrap the contractual recruitment policy.

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).