Odisha Economic Development

Journal of Rural Development Review Vol.-VI, No.-6, October-December.. 2018 ISSN No.
2456 -7191 (Online)
ECONOMIC DEVELOPMENT IN PRE AND POST-INDEPENDENCE ODISHA

: A COMPARATIVE ANALYSIS
Manas Ranjan Debata

Director
State institute for Rural Development and Panchayati Raj (SIRD & PR) Odisha
ABSTRACT
Globalization is a process which involves economic integration, transfer of policies
across borders which transmits knowledge; stabilize culture and establishment of a global market
free from socio-political control. Globalisation is defined as free movements of goods, services,
capital (FDI), people and information technology across national boundaries. It is a process of
transformation of regional or local phenomena into global ones. Globalization is multi-
dimensional and it directly or indirectly makes considerable impact on human life. Globalisation
can be referred as homogenisation or integration of people, countries, their economies and
cultures. It has led to the end of geography and also death of distance. Geography and national
border have become obsolete concepts. So fast is the information flow, so advanced is science
and communication technology and so interconnected is the global market that, not only we get
information from farthest comers of the world in fractions of seconds, not only we reach at
remotest points of the globe in fastest pace and shortest time ever, but also the easy availability
of goods and services from around the world in local market places makes their origin point
irrelevant. Globalization has many meanings depending on the context and on the person who is
talking about. The term globalization refers to the integration of economies of the world through
uninhibited trade and financial flows, as also through mutual exchange of technology and
knowledge. Ideally, it also contains free inter-country movement of labour. In the context of
Odisha in particular as well as India in general, this implies opening up the economy to foreign
direct investment by providing facilities to foreign companies to invest in different fields of
economic activity in India, removing constraints and obstacles to the entry of MNCs in India,
allowing Indian companies to enter in to foreign collaborations and also encouraging them to set
up joint ventures abroad; carrying out massive import liberalization programs by switching over
from quantitative restrictions to tariffs and import duties, therefore globalization has been
identified with the policy reforms of 1991 in India.
Key words-
GDDP,GDP ,GER,GGY ,GKS , GOALS, GSDP,GSVA ,GVA , IAP -Integrated Action
Plan, ICDS, OSDC, PGR, SONTR,SOR, SOTR, SECC,SDGs,TFG,
Introduction-
The term “Globalization” has been propounded by Adam Smith in his book “Wealth of
Nations” in 1776. In general sense “Globalization” means closer contact between different parts
of the world, with increasing possibilities of personal exchange, mutual understanding and
friendship between “World Citizens” and creation of global civilization. The forces of
globalization affect virtually every country in the world.
In the pre-Plan era, the economy of Bihar and Odisha Province was in a dismal state.
Owing to the failure of harnessing its resources, the scale of public expenditure in these
Manas Ranjan Debat, Director, State institute for Rural Development and Panchayati Raj (SIRD &
PR) Odisha
Journal of Rural Development Review Vol.-VI, No.-6, October-December.. 2018 ISSN No. 2456 -7191 (Online)
provinces was the lowest in the country. On account of its abject poverty, the province was
exempted from contributing to the central revenue under the Meston Settlement. In Bihar and
Odisha province, the Odisha portion was relatively poor and less developed.Later, when Odisha
was separated from Bihar in 1936, it was obvious that there would be an initial deficit for Odisha
which could not have been financed by increasing the burden of taxation on the people of
Odisha. There was unanimity that a corresponding subvention from the central treasury was
indispensable. In this background, the financial position of Odisha subsequent to its formation is
traced.
The deficit in the financial position of the newly formed Odisha province was distressing.
The Government of India decided to grant Rs. 40.5 lakh to the new province for balancing its
budget. In addition, a non-recurring grant of Rs. 9.5 lakh was assigned to the province for certain
specific purposes. The principles of financial settlement between the Provinces and the Centre
were recommended by Sir Otto Niemeyer, after the Government of India Act, 1935 came into
force. Sir Otto Niemeyer observed, Some increase in expenditure is inevitable; it is impossible to
ignore the fact that the existing standard of expenditure in Odisha is extremely low and scope for
expansion of the provinces own resources in the early future is usually limited. The financial
accounts of the province during the period prior to the war (i.e., from 1936-37 to 1938-39) reveal
its ceaseless struggle to make both ends meet. The inelasticity of the main sources of revenue,
such as land revenue, excise, forests and stamps, made it impossible for the province to augment
the income from those sources. Hence, inadequate revenue generation weighed heavily on the
province
Methodology-
The study attempted to analyse the socio-economic development in Odisha in the pre
and post-globalisation period by following historical and analytical methods. The study shall
use inductive and deductive method wherever applicable. The study based on the primary
sources materials like various government documents, historical documents, archival materials,
gazettes and documents released by different government bodies. It also focuses on various other
secondary sources material such as books, monographs, articles published in various news
magazines, journals and newspaper besides using web materials. In addition, inputs by many
scholars and experts who have experience on this research work have been inserted into this
work.
The main thrust of the study revolve round two main arguments: a) Poor socio-economic
situation of Odisha in pre-globalisation period paved the way for the forces of market economy
to eye on resource rich Odisha; and b) The adverse effect of globalisation on tribal culture of
Odisha has prompted the local people to resort to resistance movements against the state’s
reform agenda.
Economic Development Of Odisha During 1939-40 To 1945-46 -
During the War Period 1939-40 to 1945-46 there was a little change in the pattern of
revenue and expenditure of Odisha province. Odisha revenue increased from Rs.1.8 crs in 1938-
39 to Rs.3.6 crs in 1945-46.However,the surplus did not solve the provincial finance. This is due
PR) Odisha
to the adoption of anti-inflationary policies of mopping up as much purchasing power as possible

and putting off some expenditure to future years. During this period the province received some
temporary subsidies from the central Government on agency subjects like press censorship,
agency police, National War Front and on certain other functions like publicity, civil defence etc.
There was however, considerable increase in revenue expenditure under all heads,
particularly in the departments dealing with the security services and the war effort. The
budgetary position during the war period showed some improvement owing partly to the
implementation of the recommendations of the Retrenchment Committee in 1937-38, and partly
due to the increase in receipts under income tax, provincial excise, forests, etc.
Economic Development Of Odisha During 1946-47 To 1948-49-
During the Post-War Period that is before integration (from the end of the war until 1949)
when the princely states were integrated with the Province, its budgetary position underwent
some marked changes in the pattern of revenue and expenditure. Many new taxes were imposed
and the rates of the existing taxes were increased. Expenditure on developmental activities
showed some increase on account of implementation of the Post-War Development Plan from
1945-46, which was estimated at a total cost of Rs. 37.89 crore.
Various grants and subsidies received from the Centre during the war period were either
stopped or incorporated in the Post-War Development Grants. The revenue account of Odisha,
which showed a nominal surplus till then, revealed a huge deficit of Rs. 111.18 lakh in 1948-49
for the first time since its formation in 1936. The deficit was primarily due to the first phase of
merger on 1st January 1948.The merger resulted in a setback to the financial position of the
province. The revenue receipts could not keep pace with the rising expenditure on the revenue
account in spite of the economy drive.
Economic Development Of Odisha During 1949-50 To 1950-51 -
This period begins from the time of the merger of princely states with Odisha in 1949 and
ends with the commencement of the first Five Year Plan in the year 1951.Two important events
of the time, which had profound influence on the finances of the State, were the Federal
Financial Integration, which came into force on 1st August 1949 and the Deshmukh Award that
was necessitated by the adoption of the new Constitution on 26th January 1950.Despite all efforts
to improve the State's revenue receipts position, its per capita income remained the lowest among
the Part-A States. Under the Deshmukh Award, Odisha's share of income tax increased from two
to three per cent. This was only an adjustment of the lapsed percentages consequent upon the
partition of India and no new principle was involved in this redistribution. This no doubt
improved Odisha's share, but the improvement was insignificant against the aggregate financial
needs.
At the time of integration, the expectations of the State Government were latched on to
the recommendations of the Indian States Finances Enquiry Committee. The State Government
had anticipated that the Net Revenue Gap, caused by federal financial integration of the merged
areas would be reimbursed. Additionally, a substantial financial relief from the Centre was also
hoped for. The integration entailed an average annual revenue loss for Odisha of about Rs. 21
lakh, while the expenditure on the departments and services taken over by the central
PR) Odisha
Government amounted to about Rs. 2 lakh. The State had to put up with a net loss of revenue to
the tune of Rs. 19 lakh. The State had hoped to get the difference of these two amounts, but the
Government of India held the view that the `Net Revenue Gap' would mean not the net amount
that the State had lost but the amount that the Centre had gained as a result of the integration.'
After the federal financial integration, all the expanding sources of revenue of the merged areas
such as income tax, central excise, revenue from post and telegraphs were passed on to the hands
of the centre.
Economic And Financial Position Of Odisha In Pre And Post-Independence Era-
Total Expenditure as percentage of GSDP has increased from 6.2 per cent during the 1st
Plan period to a peak of around 20 per cent during the 12th Plan period. The trend in revenue
expenditure as percentage of GSDP has exhibited similar pattern. Subsequent to a fluctuating
trend, a sustained rise in the capital outlay ratio is observed since the 10th Plan period
Comparison Of Plan And Non-Plan Expenditure Of Odisha During Plan Periods-
The Non-plan Expenditure as a proportion of GSDP has consistently increased till 10th
plan period but it has declined thereafter. This has mainly due to compression in non-plan
Expenditure items Source-such as salary, pension and interest payment.It can be shown in the
following table and graph.
S.No Plans Plan Expenditure/GSDP Non-Plan Expenditure/GSDP
1 2nd Plan 3.9 4.3
2 3rd Plan 4.9 6.9
3 Annual Plan(1966-69) 3 7.7
4 4th Plan 2.7 8.3
5 5th Plan 3.4 9
6 Annual Plan(1978-80) 6.2 9.2
7 6th Plan 6.0 8.6
8 7th Plan 7.0 9.2
9 Annual Plan(1990-92) 8.4 10.6
10 8th Plan 6.2 11.8
11 9th Plan 5.7 13.3
12 10th Plan 3.9 13.9
13 11th Plan 5.7 11.2
14 12th Plan 9.5 10.6
Source-Budget at a Glance-GoO {various issues}
Comparison Of Developmental And Non-Developmental Expenditure-
Plan and Non-plan Expenditure of Odisha during Plan
13.3
The quality of expenditure is the key to 14 Periods 11.8
13.9
11.2 10.6
10.6
fiscal consolidation. It helps in reaping efficiency 12 9 9.2 9.2 9.5
8.6
10 7.7 8.3 8.4
and welfare gains while smootheing the effects of 8 6.9
6.2 6.0
7.0
6.2 5.7 5.7
4.9
fiscal adjustment. Empirical analysis indicates that 6 3.94.3
3 2.7 3.4
3.9
expenditure on social and physical infrastructure 4

2
can have growth augmenting effects. States need to 0
prioritize expenditure on physical and social
infrastructure and economize on non-essential
heads. Plan Expenditure/GSDP Non-Plan Expenditure/GSDP
PR) Odisha
Developmental expenditure as percentage of GSDP has increased from 7.6 per cent in the
1 Plan period to 15.1 per cent in the 12th Plan Sl
st
Plans Developmental Non-
period. The non-developmental expenditure has N Expenditure/G Developmental
1. 4th Plan 7.6 3.4
increased from the 1st Plan period to the 10th Plan
2. 5th Plan 9.2 3.3
period, and during 11th and 12th Plan period there is
3. Annual 12.0 3.4
a sharp decline. A surge in Developmental Plan(1978-80)
expenditure is witnessed during the 11th Plan and the 4. 6th Plan 11.3 3.2
12th Plan period. This reflects the State's 5. 7th Plan 12.0 4.3
commitment to improve the quality of expenditure. 6. Annual 13.9 5.1
The detailed analysis is in the graph. Plan(1990-92)
7. 8th Plan 12.5 5.5
Developmental And Non-Developmental 8. 9th Plan 11.5 7.5
Expenditure (% Of Gsdp)- 9. 10th Plan 9.5 8.4
There is a need for the creation of fiscal space 10. 11th Plan 11.4 5.5
for development of critical infrastructure and 11. 12th Plan 15.1 4.7
achievement of human development levels envisaged
Developmental and Non-Developmental Expenditure (%
in the UN Millennium Development Goals. In its of GSDP)
15.1
broadest sense, fiscal space can be defined as the 16.0
13.9
availability of budgetary room that allows a 14.0
12.0 12.0
12.5
11.3 11.5 11.4
Government to provide resources for desired 12.0
9.2 9.5
10.0
purposes without any prejudice to the sustainability 7.6
8.4
7.5
8.0
of a Government's financial position. The creation 5.5 5.5
6.0 5.1 4.7
of fiscal space and the sustainability of the fiscal 4.3
3.4 3.3 3.4 3.2
4.0
position of the State can be traced by analyzing the
2.0
deficit indicators and debt indicators of the State
0.0
Finances.
Comparative Analysis Of Economic Growth Of
Odisha During Plan Periods-
The role of economic growth in income and Developmental Expenditure/GSDP Non-Developmental Expenditure/GSDP
wealth re-distribution and generating opportunities

for everyone in that redistribution cannot be overstated. Swift, sustainable, and all-inclusive
growth requires a robust macroeconomic foundation to usher fiscal prudence and a reliable
medium term fiscal framework. To set the context for the broader thematic and policy
discussion, it is imperative to analyze the economic growth. The details are given in the
following table.
S.No Plans CAGR/ GSDP Per capita GSDP
1 1st Plan 2.13% 0.21%
2 2nd Plan 2.54% 0.74%
3 3rd Plan 3.64% 1.22%
4 Annual Plan (1966-69) 5.36% 3.10%
5 4th Plan 2.52% 0.38%
6 5th Plan 8.03% 6.03%
7 Annual Plan(1978-80) -12.09% -13.50%
PR) Odisha
8 6th Plan 1.94% 0.17%

9 7th Plan 5.60% 3.67%
10 Annual Plan(1990-92) 9.80% 7.87%
11 8th Plan 2.84% 1.24%
12 9th Plan 3.56% 2.17%
13 10th Plan 11.00% 9.55%
14 11th Plan 6.06% 4.67%
15 12th Plan* 7.16% 6.09%
Source: Compiled from Economic Survey, Government of Odisha (various issues)
* For the 12th Plan, GSDP is taken at constant (2011-12) prices, however for the rest of the plans, it is at
constant (2004-05) prices.
The Compound Annual Growth Rate (CAGR) of Gross State Domestic Product (GSDP)
for various Plan periods is delineated in Year Growth of GSDP(%)
Table. During the first three Plan periods, 2012-13 4.61
the growth fluctuated between 2-3 per cent 2013-14 8.73
and further to 8.03 per cent. However, it 2014-15 6
improved to 5.36 per cent during the 2015-16 6.01
th
Annual Plan of 1966-69 and the 5 Plan 2016-17 7.94
Period respectively. The growth in
GSDP and per capita income declined Growth of GSDP(%)
th
in the 4 Plan Period because of a 8.73
10
politically unstable situation in the 7.94
8 6 6.01
State. During the Annual Plan 1978-80,
a negative CAGR in both GSDP and 6 4.61
per capita GSDP was witnessed 4

because a severe drought had impacted 2
the production in agriculture sector. 0
The trends in the growth of GSDP are 2012-13 2013-14 2014-15 2015-16 2016-17
shown in the table as well as in the Growth of GSDP(%)
graph.
Comparison Of Trend In States’s Own Tax Revenue Receipts (% OF GSDP)-
Efficiency in Non-Tax Revenue is represented by SONTR relative to GSDP. The
efficiency in the non-tax revenue has followed a cyclical pattern through different Plan periods.
It showed an increasing pattern
from 1st Plan period to 5th Plan
period, followed by a declining
trend up to the 3rd Annual Plan
period (1990-92). Since the 9th
Plan period it has been on the
rise. This rise is attributed to
buoyancy in the revenue from
non-ferrous mining and
metallurgical industries. The
PR) Odisha
percentage of SOR to GSDP and SOTR to GSDP has witnessed an upward trend consistently.
An upward break is observed in the 9th Plan period for both SOR and SOTR ratio. In the 12th
Plan period, SOR to GSDP and SOTR to GSDP ratio peaked at 8.7 per cent and 6.1 per cent
respectively. Hence, from the past trend, it can be deduced that the State's Own Revenue is
mainly contributed by the States Own Tax Revenue. This rise in SOTR is mainly attributable to
higher buoyancy in Sales Tax, Excise Duty and Stamp & Registration fee. The Trend in States’s
Own tax revenue Receipts (% of GSDP) is shown in the following graph.
Comparison Of Different Components State Own Tax Revenue Of Odisha During Plan
Periods-
The different components of state own tax revenue in different plan periods are shown in
the table since 1st plan period to 12th plan.
Plan Prof. Land Stamps State Sales M.V. Entry Elect. Other SOTR
Tax Rev. & Reg. Excise Tax Tax Tax Duties
1st Plan - 22.8% 15.1% 31.4% 25.2% 3.1% - 0.05% 2.3% 100%
2nd Plan - 28.7% 10.3% 16.0% 32.1% 10.0% - 0.3% 2.5% 100%
3rd Plan - 17.8% 8.3% 12.4% 45.4% 9.1% 0.8% 4.4% 1.9% 100%
Annual Plan - 8.0% 8.2% 13.3% 51.2% 9.3% 0.2% 8.0% 1.9% 100%
(1966-69)
4th Plan - 5.4% 8.4% 12.9% 52.2% 8.7% 2.4% 8.1% 1.9% 100%
5th Plan - 5.2% 7.2% 8.9% 56.3% 7.8% 2.9% 9.4% 2.3% 100%
Annual Plan - 4.8% 6.5% 7.1% 57.5% 7.3% 2.6% 11.6% 2.4% 100%
(1978-80)
6th Plan - 6.3% 6.1% 7.5% 57.4% 7.5% 2.1% 13.8% -0.7% 100%
7th Plan - 9.2% 5.7% 7.1% 53.9% 8.8% 0.2% 13.8% 1.3% 100%
Annual Plan - 7.9% 4.9% 7.5% 55.8% 8.3% 0.01% 14.8% 0.7% 100%
(1990-92)
8th Plan - 3.3% 5.5% 7.2% 62.9% 9.9% 0.0% 10.7% 0.5% 100%
9th Plan - 3.1% 5.2% 7.2% 62.0% 9.0% 5.2% 7.0% 0.6% 100%
10th Plan 1.4% 2.9% 4.6% 7.6% 59.4% 8.0% 9.9% 5.9% 0.4% 100%
11th Plan 1.2% 3.8% 4.5% 9.3% 60.5% 6.4% 9.3% 4.5% 0.5% 100%
12th Plan 0.8% 2.7% 5.3% 11.1% 60.5% 4.9% 8.4% 6.0% 0.2% 100%
Source-compiled from Finance Account, GoO
Comparison Of Trends In Central Transfers To States (% Of Gsdp)-

The trends in Central
Transfers as percentage of GSDP are
presented in the graph. It shows that
the percentage of Shared Tax to
GSDP increased steadily till the 3rd
Annual Plan period (1990-92) and
then it declined in both the 8th and
the 9th Plan periods. The 10th Plan
period witnessed a sustained rise,
PR) Odisha
Source-Compiled from Finance Accounts, Govt. of Odisha (from various issues)

which remained at 6 per cent in the 12th Plan. The receipts on account of Grants-in-aid as a
percentage of GSDP) have fluctuated between the 1st Plan and 9th Plan periods. In the 2nd Annual
Plan period (1978-80), it was at its highest at 4.7 per cent before declining to 2.7 per cent in the
9th Plan period. Afterwards, the share of Grants-in-aid in GSDP has followed an upward trend
with 3.5 per cent in the 12th Plan period.
No definite pattern is observed in case of Central Transfers as a percentage of GSDP
during the 1st Plan to 9th Plan periods. Since the 9th Plan, it has increased consistently. One
noteworthy observation from the chart is that between the 2nd and 5th Plan periods, Central
Transfers were mainly driven by Grants-in-aid. However, in the subsequent Plans, Shared tax
constitutes major share in Central Transfers indicating greater untied transfer of funds to State.
Comparison In Sectoral Composition Of Odisha During Plan Periods-
The change in the relative contribution of various sectors to GSDP is indicative of the
structural changes happening in the economy. The details are analyzed in the following table.
It is observed from the above table that the share of Agriculture & Allied activities has
declined steadily over the Plan periods, starting at 40.94 per cent in 1st Plan period and ending at
20.32 per cent in 12th Plan period. The share of Industry has increased from 9.06 per cent in 1st
Plan period to 38.45 per cent in 12th Plan period. A sharp rise in the share of Industry is
witnessed in 11th and 12th Plan periods. Though the share of Services Sector has declined from
50 per cent in 1st Plan period to 41.24 per cent in 12th Plan period, the contribution of Services
Sector has always remained the highest.
Sl No Plan Agriculture Industry Services
1 1st Plan 40.94% 9.06% 50.01%
2 2nd Plan 35.54% 10.21% 54.25%
3 3rd Plan 37.91% 11.46% 50.63%
4 Annual Plan (1966-69) 42.50% 11.18% 46.31%
5 4th Plan 43.00% 11.32% 45.68%
6 5th Plan 38.52% 14.35% 47.13%
7 Annual Plan(1978-80) 36.04% 15.70% 48.25%
8 6th Plan 42.79% 12.13% 45.08%
9 7th Plan 38.49% 14.91% 46.59%
10 Annual Plan(1990-92) 33.03% 16.33% 50.64%
11 8th Plan 32.56% 17.36% 50.07%
12 9th Plan 29.10% 17.07% 53.82%
13 10th Plan 24.15% 21.89% 53.97%
14 11th Plan 20.66% 30.46% 48.87%
15 12th Plan 20.32% 38.45% 41.24%
Source-Compilation from Economic Surveys
Comparative Analysis Of The Process Of Fiscal Consolidation In Odisha-

The fiscal situation of the State deteriorated from revenue surplus in the early 1980s to
persistent deficits by mid-1980s, and the revenue and fiscal deficits reached a peak around the
turn of the century. From a revenue surplus of 2 per cent of GSDP 1980-81, the State became
PR) Odisha
revenue deficit to the extent of 6.06 per cent of GSDP at the end of the year 2001-02. The
primary deficit also deteriorated severely over the years. The fiscal imbalance manifested in
severe liquidity crunch. The State Government depended heavily on Ways and Means Advances
and Overdrafts from Reserve Bank of India for day to day cash requirements. Payment through
treasuries was rationed. Availability of funds for works expenditure was severely restricted. The
State was characterized as a State under severe fiscal stress by the 10th Finance Commission.
This affected the growth of the State's economy as the ability to provide funds for capital
investment and maintenance of capital assets was seriously eroded. The Plan outlay of the State
Government also remained stagnant over a long period.
The central theme of the fiscal reforms programme was the preparation of a Medium
Term Fiscal Framework (MTFF) indicating the outcomes of the reforms measures in terms of the
monitorable fiscal indicators. Annual targets were set in terms of these indicators for each year of
the medium term period. The State took corrective measures primarily to prune the revenue
expenditure. The immediate policy measure of the State has been to reduce the burden of interest
payment through prepayment of high cost market borrowing and also through debt swaps.
Between 2002-03 and 2004-05, high cost debt amounting to Rs. 2543.62 crore was swapped
against low cost debt which resulted in interest relief of Rs. 144.47 crore. On the basis of 12th
Finance Commission recommendations, the State Government legislated the Odisha Fiscal
Responsibility & Budget Management (FRBM) Act, 2005 which came into force with effect
from 14th June 2005. The enactment of the Odisha FRBM legislation, 2005 provided a rule based
framework for the fiscal consolidation process in Odisha. The FRBM Act, 2005 and the
recommendation from the central finance commissions, collectively guide the management of
State finances. After the enactment of FRBM Act, the debt sustainability indicators improved
and the State was able to get out of the debt trap situation. During the year 2006-07, pre-payment
of high cost market borrowing amounting to Rs. 394.61 crore was made followed by another
tranche of amount Rs. 356.16 crore in the year 2007-08. In 2012-13, the third tranche of
prepayment of high cost loans of Rs. 575.28 crore was effected which resulted in a relief of
interest payment to the tune of Rs. 55.24 crore.
The State Government policy for debt restructuring through debt swap, prepayment of
high cost borrowing and adhering to need-based borrowing have contributed to sharp decline in
debt stock during the 11th and 12th Plan period. Through all these efforts, the debt stock ratio of
44 per cent in the 10th Plan period, declined to 14.5 per cent in the 12th Plan period. Further, debt
servicing ratio of 31 per cent in the 9th Plan period, declined to 5.1 per cent in the 12th Plan
period. With the improvement in fiscal situation, the State's dependence on borrowing for
financing of State Plan outlay has come down very significantly. In 2002-03, the net borrowing
to the State Plan Outlay ratio was at 1.52 times. It declined to 0.25 times in 2015-16 implying
that more non-debt receipts were financing the State Plan as compared to the debt financing of
State Plan in previous years.
Comparison Of Fiscal Scenario In Odisha (In Pre And Post Frbm Period)-
The Fiscal Responsibility and Budget Management Bill (FRBM Bill) was introduced in
India in December 2000. Firstly, the bill highlighted the terrible state of government finances in
India both at the Union and the state levels under the statement of objects and reasons. Secondly,
PR) Odisha
it sought to introduce the fundamentals of fiscal discipline at the various levels of the
government. The FRBM bill was introduced with the broad objectives of eliminating revenue
deficit by 31st March 2006, prohibiting government borrowings from the Reserve Bank of
India three years after enactment of the bill, and reducing the fiscal deficit to 2 per cent of GDP
(also by 31st March 2006). Further, the bill proposed for the government to reduce liabilities to
50 per cent of the estimated GDP by year 2011. There were mixed reviews among economists
about the provisions of the bill, with some criticizing it as too drastic. Political debate ensued in
the country. Several revisions later, it resulted in a much relaxed and watered-down version of
the bill (including postponing the date for elimination of revenue deficit to 31st March 2008). The
main objectives of the act were:
 To introduce transparent fiscal management systems in the country
 To introduce a more equitable and manageable distribution of the country's debts over the
years
 To aim for fiscal stability for India in the long run
The tenth plan of the Planning Commission of India highlighted the need for fiscal
discipline at the level of the states. This was
to reduce the debt-to-GDP ratio of Fiscal Parameter Pre-FRBM Post-
Period FRBM
India. Reserve Bank of India (RBI), in its role Period
as the ultimate financial authority in India, States own Tax revenue 4.24 5.83
was also a keen supporter of the concept and States own Non-Tax revenue 1.66 2.40
publicly highlighted the need for state level Shared tax 4.65 5.78
fiscal responsibility legislation in India. By Grant- in -Aid 2.93 3.46
2007, the states of Karnataka, Kerala, Punjab, Revenue Expenditure 16.51 15.46
Nadu, Maharashtra and Uttar Pradesh are Capital outlay 1.94 2.66
among those which have already legislated Total Expenditure 18.45 18.12
the required fiscal discipline laws at the state Plan Expenditure 5.41 6.99
Non-Plan Expenditure 13.04 11.45
level.
Developmental Expenditure 11.33 12.54
A comparison can be made in Pre and Non-Developmental 7.12 5.90
Post FRBM Period (during a 12-year period) Expenditure
i.e fro 1993-94 to 2004-05 and presented in Revenue Deficit -3.03 2.02
the adjacent table. The objective is to Fiscal Deficit -5.36 -0.67
compare and contrast the performance of Primary Deficit -1.53 1.08
fiscal parameters during these periods. The Interest payment 3.83 1.75
SOTR and SONTR (as percentage of GSDP) Debt Stock 38.39 22.02
have improved, in the post- FRBM period. CAGR of Interest payment 15.50 -2.94
The Share in Central Taxes and Grants-in-Aid (as percentage of GSDP) in the post-FRBM
period has also increased significantly. The improvement in revenue efficiency has financed
higher outlay and productive expenditure; as a result the State has witnessed higher growth in
GSDP.
PR) Odisha
Implications And Conclusion-
 There is an urgent need to strengthen the institutional capacity to undertake evidence-based

policymaking and create systems for real time monitoring and assessment of development
and governance apparatus in the State to effectively transform good intentions to improved
human wellbeing. Importantly, there is a need to review and introduce correctives in the
policy response to rapidly overcome the chronic socioeconomic development gaps in the
State.
 The move towards decentralization (from centre to States) accompanied by greater
flexibility in financial planning and the pressures and inevitability of adopting competitive
development policies among contiguous States makes it necessary for the State governments
to reform and strengthen their policy making process.
 For raising agricultural productivity, use of quality inputs, exploitation of modern
technology and shift into high value commodities such as fruits, vegetables, flowers,
fisheries, animal husbandry and poultry needs to be propagated.
 To make farming remunerative for farmers, market intervention of the government through
minimum support prices (MSP) with wide coverage of commodities needs to be ensured so
that farmers can get fair prices for their produce at market places without any exploitation
from private traders.
 The development vision carried forward by the Government of Odisha over the years has
borne visible results. Due to rapid overall development of the remotest of regions, there has
been a steep decline in poverty and malnutrition. The commitment of the State to
sustainable development is through prudent management of its resources and better revenue
generation.
 It has enabled the State to make higher capital investment in public infrastructure and
people-centric welfare measures without recourse to higher borrowing. It has brought in
comprehensive and inclusive socio-economic development in the State.
 The focus of the state government should be on equitable distribution of the benefits of
growth and development among all sections of the society by 2036, when Odisha would
complete a hundred years of its statehood. The vision will reflect the aspirational goals of
the present generation. The State Government should believe in accomplishing this vision
by eradicating poverty, eliminating hunger, removing inequalities and empowering one and
all.
 The State's proactive approach towards development is closely aligned with the Sustainable
Development Goals (SDGs) of the United Nations - crafted as a plan of action for people,
planet and prosperity. The vision timeline of 2036 for Odisha encompasses the cutoff for the
SDGs in 2030. The State is determined in its approach to mobilize the means required to
cater to the needs of its people —the poorest and vulnerable in particular.
 The Government intends to provide basic necessities to all sections of the society. This
broadly encompasses eradication of poverty; sustainable agriculture; improved health and
nutrition; affordable and quality education and creation of equal employment opportunities;
PR) Odisha
access to affordable, reliable and sustainable energy sources; gender equality and
empowerment of women and girls; and the development of resilient infrastructure.
 The State is committed to grant access to improved health care facilities by providing
qualitative, preventive and curative health care services to the people. The Government
focuses not only on providing universal health coverage through establishment of more
number of health care centers, particularly in underserved and backward regions, but also on
improvement of quality in health services in respect of infant and maternal care.
 An important area of Government intervention is the public provisioning of education, given
the pivotal role that education plays in accelerating socio-economic development. The State
Government intends to transform the quality of education in the State to improve learning
outcomes for students. The education system in the State is being recalibrated to prepare the
students to meet future challenges.
 The Government initiative to support and create centers of excellence in Higher Education
and research would also go a long way in enhancing quality of human capital. The existing
Government policy is to make the State an education hub and to create a knowledge society,
ensuring lifelong learning and employable skills to all by 2036. Skill Development by
industry aligned vocational training institutes would help make the workforce acquire
employable skills.
 The State Government is committed to gender equality by ensuring empowerment of
women and girls. A number of steps have been taken ranging from increasing enrolment of
girl child in schools to providing equal opportunities in economic, social and political
spheres of life. Gender Responsive Budgeting is a step in the right direction. The State
Government has also been working for overall development of differently abled persons,
provisioning of social security pension, pensions to destitute and persons with disabilities so
as to enable them to lead a dignified life.
 The State recognizes the pivotal role that entrepreneurship plays in driving the growth of the
developing economies. Development of entrepreneurship in Micro, Small and Medium
Enterprise (MSME) sector is imperative to make the economy competitive.
 It also has the potential to promote inclusive growth through empowerment of women,
disadvantaged sections as well as educated unemployed youth.
 The Government strives to promote entrepreneurship through encouragement and assistance
to start-ups and innovation, self- employment along with incubator cells and
entrepreneurship development cells as infrastructural support.
 This is a strategic step towards farmer-centric development. Odisha acknowledges that it
cannot eliminate poverty and address the challenging issue of regional disparity without
increasing the household income in the Agriculture and allied sectors.
 Agriculture continues to play a central role in the State's economy. Odisha is among the few
States preparing a separate Agriculture Budget. The State has formed a separate
"Agriculture Cabinet Committee”. Agriculture Department has been renamed as Department
of Agriculture and Farmers' Empowerment.
PR) Odisha
 The efforts of the state government in the days to come would be directed at redesigning the
strategy for agriculture by reducing drought vulnerability and increasing farm income
through higher investment in irrigation, access to institutional credit, provision of quality
inputs like seeds, fertilizers, and pesticides. These efforts would also encompass the strategy
to mitigate the effects of climate change.
 Odisha is regarded as a land of myriad marvels. The State is bestowed with the most
stunning destinations which offer a visual feast for the admirers of nature. It is also home to
a highly culturally rich heritage belonging to one of the oldest civilizations of the world.
Acknowledging the role that tourism can play in economic development, through creation of
employment and eradication of poverty in the State, the Government endeavors to develop
Odisha as one of the most preferred tourist destinations and to place it prominently on the
domestic and international tourism map. The strategy would involve giving high priority to
development and promotion of tourism, conservation of heritage and natural environment.
 As more number of people move away from the rural areas into urban spaces in search of
better employment opportunities, new challenges in the areas of housing, drinking water and
sanitation have come up in the urban areas. Urban development, therefore, requires strategic
focus. By keeping these things in mind state government is implementing the National
Rurban Mission in the Rurban Clusters in Odisha and now the state rank in the national
level is in the top.
 Government of Odisha intends to make all efforts for the development of slum areas into
quality housing modules through planned integration. Slum areas will also be integrated into
each city' through infrastructure connection and service delivery. Service delivery in urban
areas will be improved significantly through Public - Private Partnership (PPP)
interventions, and separate regulatory municipal service delivery enterprises. Service
delivery bodies in small cities can continue to be effectively managed through the regional
governance model, where each city serves as a service hub for surrounding rural areas with
the hub and spoke model.
 Towards making the budget procedure transparent and accountable, the State has in the
recent years moved towards an Open Budgeting process. The budget information has been
made available in the public domain in a timely and accessible manner. Furthermore, the
State has also introduced the Participatory Budget Initiative whereby the citizens of the
State have been able to provide suggestions on matter of revenue collection and expenditure
priorities.
 In recent years the need for moving towards a Multi-Year Expenditure Framework and a
more robust outcome budgeting has been strongly felt. Keeping with the spirit of holistic
and medium term budgeting, the focus would be on top-down budgeting where the resource
priorities would be guided by medium and long-term strategies. The annual sectoral
priorities and allocations would also be set accordingly. The Medium Term Expenditure
Framework (MTEF) would act as a central element of public expenditure management
reform to bridge the disparity between policy-making, planning, budget-implementation and
budget outcomes.
PR) Odisha
 As the heart of all socio-economic changes lies in the theme of convergence. The process of
convergence will enable the State to achieve synergies by removing duplications and lack of
co-ordination among implementing agencies in developmental programmes. Convergence
as a process is critical for efficient use of resources, avoidance of wastage, and for ensuring
the desired output and outcomes of the schemes and programmes. Convergence
encompasses institutional convergence, convergence of human resources and convergence
of financial resources for timely achievement of the envisaged developmental goal
efficiently.
Keeping in view the aspiration of people of Odisha, there will be a constant endeavor on the part
of all stakeholders to strive together to achieve a higher trajectory of economic and social
development on sustainable basis.
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Journal of Rural Development Review Vol.-VI, No.-6, October-December.. 2018 ISSN No.

2456 -7191 (Online)

ECONOMIC DEVELOPMENT IN PRE AND POST-INDEPENDENCE ODISHA

Manas Ranjan Debata

to the adoption of anti-inflationary policies of mopping up as much purchasing power as possible

expenditure on social and physical infrastructure 4

wealth re-distribution and generating opportunities

8 6th Plan 1.94% 0.17%

per capita GSDP was witnessed 4

Comparison Of Trends In Central Transfers To States (% Of Gsdp)-

Source-Compiled from Finance Accounts, Govt. of Odisha (from various issues)

Comparative Analysis Of The Process Of Fiscal Consolidation In Odisha-

fiscal responsibility legislation in India. By Grant- in -Aid 2.93 3.46

Implications And Conclusion-

 There is an urgent need to strengthen the institutional capacity to undertake evidence-based

1. Achievement of Government, (E-Magazine), Government of Odisha, 2005.

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