The State Government has had to fall back upon market borrowing with the Union Government failing to release Rs 2,100 crore of funds towards Odisha's share in Central taxes. The State Government resorted to this desperate bid after a lapse of nine years, said sources. The State Government opted for market borrowings to fund the ongoing infrastructure projects, said a senior official in Department of Finance.
Odisha had never gone for market borrowing since 2005-06 due to its own tax and non-tax revenue generation. The sources revealed that permission of the Government of India's Department of Economic Affairs (DEA) has been taken for Rs 3,000 crore of Open Market Borrowing during 2014-15. And initially, the State has taken Rs 1,000 crore from open market to fund capital investments.
Major infrastructure projects under AIBP, PMGSY and road infrastructure are facing acute shortage of funds. The Centre had released Rs 618.04 crore towards the State's share in Central taxes in February this year against the monthly instalment of Rs 1,300.84 crore.
In the On Account Budget for the year 2014-15, the Government of India had estimated Odisha's share in Central taxes at Rs 18,580.59 crore and, accordingly, Rs 1327.18 crore per month was released by the Centre during April to July 2014. However, in the Annual Budget, the State's share in Central taxes for 2014-15 was reduced to Rs 18,317.10 crore, and Rs 1,300.84 crore per month was being released during August 2014 to January 2015.
The reduction in monthly instalment of the State's share in Central taxes adversely affected the State's liquidity position. This has seriously impacted the implementation of various plans and programmes of the State Government for which expenditure commitments have been made.