The State Government is hopeful of registering a 7 per cent growth in 2021-22 though due to Covid-19 it is likely to contract by 1-2 percent in 2020-21 fiscal.As the Government has decided to initiate the process of formulation of Budget Estimates for 2021-22, Economic Outlook for 2021-22 presents a positive scenario, officials say.
Steps are taken for initiation of Budget Estimate 2021-22 preparation and to complete it in time for enabling the Department of Finance to present the Annual Budget in the Odisha Legislative Assembly at the appropriate time.
Principal Secretary Finance, Ashok Kumar Meena has brought to the notice of all Secretaries and heads Of Departments in this regard, while bringing home to the point about the priorities of the State Government.
While Chief Minister Naveen Patnaik has made it clear that the Odisha Government is very serious about restoring economy both at State level and at individual household level, with the Covid-19 pandemic having posed tremendous challenges to every sphere of governance, the Department of Finance is making all-out efforts to meet the challenges.
The State has been fighting the pandemic since March and the battle against the virus is likely to continue for some more time.While priorities of the State Government in the medium-term still remains to achieve Sustainable Development Goals through faster reduction of poverty, increasing farmer’s income, providing piped drinking water to all, making available quality affordable healthcare facilities, enabling quality education and skills development, providing quality physical infrastructure for improving economic activities and empowering women, ST, SC and other vulnerable populations to enhance their participation in economic activities, but in short run effective Covid management, saving lives and providing livelihoods to the people will remain priority, an official pointed out.
In case of Odisha, the economy is projected to contract by about 1-2 percent in 2020-21 and it is expected to register a growth of about 7 per cent during 2021-22.The economic contraction, both at national and sub-national level, will adversely impact the collection of direct and indirect taxes during 2020-21 and 2021-22.So, the share tax and the grant-in-aid receivable from Centre will be affected during 2020-21 as well as in 2021-22.
To counter the adverse impact of shutdown and lockdown on State’s resources, the State Government has taken some timely steps to raise one-time revenues through renewal of mining leases and mopping up of unused money parked in bank accounts.
These efforts have substantially reduced the resource gap and overall collection of the State’s own tax and non-tax till August, 2020 compared to the previous year.State’s own revenues are expected to register moderate growth in FY 2021-22, primarily due to contraction of base The GST compensation in the year 2021-22 would depend on the performance of the economy.
Besides, there still remains uncertainty on the quantum of share in Central taxes as the State’s horizontal share may get changed in the Final Report of the 15th Finance Commission.
Considering all the factors, spending is expected to increase by about 12 per cent in FY 2021-22 over the current year’s revised estimates. As part of the Public Finance Management (PFM) Reform, the State Government has introduced a new budget making process for preparation of Annual Budget, 2020-21.
The preparation of Annual Budget for FY 2021-22 will be based on the principles adopted for Annual Budget, 2020-21 which inter-alia include advanced budget calendar, macro-fiscal forecasting and advanced indication of departmental ceilings. The Departments will be given 2-3 months’ time to have thorough scrutiny and prioritization of Budget proposals within ceiling communicated. All departments will be communicated with a multi-year ceiling, so that they would have predictability in fund flow and can make multi-year project planning.