Here is a reality check for Odisha. What sounds disconcerting for the State is post the enactment of Fiscal Responsibility and Budget Management (FRBM) Act since the years of 2005-06 to 2014, the development expenditure by Odisha in proportion to Gross State Domestic Product (GSDP) has taken a hit vis-a-vis the pre FRBM years since 1991-92.
This has come as a big surprise when except Jharkhand, all other poorly developed States like Uttar Pradesh, Bihar, Rajasthan, Chhattisgarh and Madhya Pradesh have seen a significant spike in their respective development expenditures in proportion to GSDP in the post FRBM era vis-a-vis the pre FRBM years. Such a glitch plaguing the State’s development agenda was revealed by the RBI in its recently released report State of Finance - 2015-16.
The effect is resilient Odisha in 2030 looks endangered as this lopsided spending has hit two vital lifelines of the State: Energy and health. When States like Bihar and UP spent around 7.6 per cent and 6.2 per cent of their total expenditure on energy in 2013-14, Odisha spent mere 2.1 per cent. Similarly, the expenditure on health in Odisha is mere 3.3 per cent of total spending - the second lowest after Bihar among States having poorest health infrastructure.
According to State of Finances 2015-16, the development expenditure in Odisha with proportion to GSDP was down marginally to 11.7 per cent in post FRBM era from 11.8 in pre FRBM years. On the contrary, it was up by 4 per cent in Chhattisgarh and 2 per cent in Uttar Pradesh. Other poor developed States except Jharkhand have seen a spike by around 1 per cent. The RBI, therefore, raises concern over the quality of expenditure in Odisha. “An increased spending on development, capital outlay in the State could only then stimulate to bring a significant turnaround in the per capita income”, RBI report observed.
The RBI report has revealed that development expenditure as proportion to GSDP in Odisha has not increased in 2015-16 as it remained at around 17.3 per cent - the same proportion that was in 2014-15 Revised Estimates (RE). Moreover, the social sector expenditure as proportion to GSDP has dipped to 10.8 per cent in 2015-16 against around 11.3 per cent in 2014-15 RE. And, the capital outlay made in 2015-16 BE was the same as the 2014-15 BE (Budget Estimates).
In comparison, the development expenditure in 2015-16 by Chhattisgarh was a whopping 21.2 per cent of GSDP and social sector expenditure was 15 per cent of GSDP when it has lesser population than Odisha. The outcome: Chhattisgarh’s per capita income is much higher than Odisha.
Though capital outlay as a proportion to GSDP in Odisha was up by 0.4 per cent to 2.2 per cent in post FRBM era, the corresponding rise by Bihar, Chhattisgarh and UP was in the range of around 1 per cent.