Odisha looks bugged by the lowest tax to Gross State Domestic Product (GSDP) ratio as the State finished third lowest in the country last fiscal year. Only Jharkhand and West Bengal have fared poorer in the year 2014-15.
The State’s own tax revenues were estimated at around 6.19 per cent of the GSDP in 2014-15, and the blip here is the proportion is to take a further plunge in 2015-16 to around 6 per cent.
If the projections made by the 14th Finance Commission are any indication, the State will maintain the third lowest slot nationally even by 2019-20 - despite the ratio increasing to around 8.26 per cent.
Significantly, Bihar, Chhattisgarh and Assam would be better placed in this vital indicator then with their respective proportions at 8.32 per cent, 8.87 per cent and 8.3 per cent.
The result is the State is facing ‘financial distress’. Odisha could fund only a mere 28 per cent of its total annual plan outlay pegged at around Rs44,150 crore in 2015-16 from its own resources. More significant is the State could fund only around 42 per cent of its total revenue expenditure for the FY 2015-16 from its own revenue (tax + non-tax) mobilised against funding nearly half (48 per cent) of the total revenue expenditure from its own revenues in 2010-11.
Given the tightrope case, Odisha cried hoarse when its pocket of 14th Finance Commission award for the fiscal year 2016-17 was robbed of by around Rs4, 553 crore. Peeved, Chief Minister Naveen Patnaik fumed at the Centre over such fact. Notwithstanding Finance Minister Arun Jaitley’s claim of over 7 - 7.5 per cent GDP growth in 2016-17, the slowdown in economy has robbed the Centre of its own tax revenue buoyancy from what was predicted by the 14th Finance Commission then in 2014.
Sample this. According to the14th Finance Commission, Odisha was awarded an amount of Rs31,028 crore in 2016-17 as its share in Centre’s divisible tax pool. However, as per the 2016-17 Budget tabled in Parliament, the State could see only Rs26,890 crore coming in 2016-17 towards its share from the divisible pool. This estimates the trimming of State’s share by over Rs4,550 crore in 2016-17.
However, the 14th Finance Commission (FC) has awarded Rs31,028 crore to Odisha assuming the divisible pool at Rs668,425 crore.
But the actual divisible pool in the Budget 2016-17 is estimated at Rs570,337 crore only, which indicates the imminent slow-down effect on Centre’s tax buoyancy. Reason: The 14th FC has estimated the gross tax revenue of Centre for year 2016-17 at Rs18,027,87 crore against the 2016-17 Budget estimate of mere Rs13,770,22 crore.