The Finance Minister of Odisha, Mr. Sashibhusan Behera, presented the Budget for financial year 2018-19 on March 23, 2018.
Budget Highlights
- The Gross State Domestic Product of Odisha for 2018-19 (at current prices) is estimated to be Rs 4,43,479 This is 6.6% higher than the revised estimates for 2017-18.
- Total expenditure for 2018-19 is estimated to be Rs 1,20,028 crore, a 11.9% increase over the revised estimates of 2017-18. In 2017-18, there was an increase of Rs 323 crore (0.3%) in the expenditure over the budget estimates.
- Total receipts (excluding borrowings) for 2018-19 are estimated to be Rs 1,00,350 crore, an increase of 11.7% as compared to the revised estimates of 2017-18. In 2017-18, total receipts (excluding borrowings) were higher than the budgeted estimate by Rs 764 crore.
- Revenue surplus for the next financial year is targeted at Rs 9,980 crore, or 2.25% of the Gross State Domestic Product (GSDP). Fiscal deficit is targeted at Rs 15,521 crore (3.5% of GSDP).
- The allocations for panchayat raj, agriculture, and home are estimated to witness the highest increase over the previous year. Allocations for rural development are expected to witness a 26% decrease.
Policy Highlights
- Drinking water: Odisha plans to complete 502 projects (out of a total plan of 546 projects) aimed at providing piped water supply to citizens, by March 2019. This will be done with an investment of Rs 591 crore. Through these projects, a pipe network of 1,498 kms will be created.
- Roads and highways: Rs 4,265 crore has been allocated for: (i) improvement of 1,175 kms of roads, (ii) construction of 40 bridges and five railways over bridges, (iii) double laning of state highways, (iv) Rs 100 crore for Biju Expressway for improving connectivity in western Odisha, and (v) maintenance of roads.
- Railway infrastructure: Rs 400 crore has been allocated for the state’s contribution for the following new railway line projects: (i) Khurda-Bolangir, (ii) Nabarangpur-Jeypore, and (iii) Jeypore-Malkanagiri.
- Scholarship: Rs 1,375 crore has been allocated for pre-matric and post-matric scholarship for SC, ST, OBC, and minority students, and girls.
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Odisha’s Economy
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Figure 1: Growth in GSDP and sectors (year-on-year)
Sources: Odisha Economic Survey 2017-18; Central Statistics Office; PRS. |
Budget Estimates for 2018-19
- The total expenditure in 2018-19 is targeted at Rs 1,20,028 crore. This is 12% higher than the revised estimates of 2017-18. This expenditure is proposed to be met through receipts (other than borrowings) of Rs 1,00,350 crore and borrowings of Rs 18,617 crore. Total receipts (other than borrowings) for 2018-19 are expected to be 11.7% higher than the revised estimates of 2017-18.
Table 1: Budget 2018-19 - Key figures (Rs crore)
|
Items |
2016-17 Actuals |
2017-18 Budgeted |
2017-18 Revised |
% change from BE 2017-18 to RE of 2017-18 |
2018-19 Budgeted |
% change from RE 2017-18 to BE 2018-19 |
|
Total Expenditure |
86,903 |
1,06,911 |
1,07,234 |
0.3% |
1,20,028 |
11.9% |
|
A. Borrowings |
11,223 |
17,003 |
16,563 |
-2.6% |
18,617 |
12.4% |
|
B. Receipts (except borrowings) |
74,563 |
89,062 |
89,826 |
0.9% |
1,00,350 |
11.7% |
|
Total Receipts (A+B) |
85,787 |
1,06,065 |
1,06,388 |
0.3% |
1,18,967 |
11.8% |
|
Revenue Surplus |
9,259 |
6,694 |
8,873 |
32.5% |
9,980 |
12.5% |
|
As % of GSDP |
2.45% |
1.62% |
2.13% |
- |
2.25% |
- |
|
Fiscal Deficit |
-9,377 |
-14,435 |
-14,394 |
-0.3% |
-15,521 |
7.8% |
|
As % of GSDP |
-2.49% |
-3.50% |
-3.46% |
- |
-3.50% |
- |
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Primary Deficit |
-5,342 |
-9,435 |
-9,394 |
-0.4% |
-10,021 |
6.7% |
|
As % of GSDP |
-1.42% |
-2.29% |
-2.26% |
- |
-2.26% |
- |
Notes: BE is Budget Estimate; RE is Revised Estimate.
Sources: Odisha Budget Documents 2018-19; PRS.
Expenditure in 2018-19
- Capital expenditure for 2018-19 is proposed to be Rs 29,808 crore, which is an increase of 13% over the revised estimates of 2017-18. This includes expenditure which affects the assets and liabilities of the state, and leads to creation of assets (such as bridges and hospital), and repayment of loans, among others. The revised estimates of 2017-18 indicate that capital expenditure will be 7% higher than estimated for the year.
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Odisha is expected to spend Rs 62,000 crore on schemes. Out of this amount, Rs 34,770 crore will be on state schemes (56%). The remaining Rs 27,230 crore will be spent on central schemes (central sector and centrally sponsored schemes). |
- Revenue expenditure for 2018-19 is proposed to be Rs 90,220 crore, which is an increase of 11.6% over revised estimates of 2017-18. This expenditure includes payment of salaries, maintenance, etc.
- In 2018-19, Odisha is expected to spend Rs 9,657 crore on servicing its debt (i.e., Rs 4,157 crore on repaying loans, and Rs 5,500 crore on interest payments). This is 20.5% higher than the revised estimates of 2017-18.
Table 2: Expenditure budget 2018-19 (Rs crore)
|
Item |
2016-17 Actuals |
2017-18 Budgeted |
2017-18 Revised |
% change from BE 2017-18 to RE 2017-18 |
2018-19 Budgeted |
% change from RE 2017-18 to BE 2018-19 |
|
Capital Expenditure |
21,862 |
24,674 |
26,412 |
7.0% |
29,808 |
12.9% |
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Revenue Expenditure |
65,041 |
82,237 |
80,823 |
-1.7% |
90,220 |
11.6% |
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Total Expenditure |
86,903 |
1,06,911 |
1,07,234 |
0.3% |
1,20,028 |
11.9% |
|
A. Debt Repayment |
2,962 |
3,415 |
3,015 |
-11.7% |
4,157 |
37.9% |
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B. Interest Payments |
4,035 |
5,000 |
5,000 |
0.0% |
5,500 |
10.0% |
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Debt Servicing (A+B) |
6,997 |
8,415 |
8,015 |
-4.8% |
9,657 |
20.5% |
Sources: Odisha Budget Documents 2018-19; PRS.
Sector expenditure in 2018-19
The departments listed below account for 54% of the total budgeted expenditure of Odisha in 2018-19. A comparison of Odisha’s expenditure on key sectors with 18 other states can be found in the Annexure.
Table 3: Sector-wise expenditure for Odisha Budget 2018-19 (Rs crore)
|
Department |
2016-17 Actuals |
2017-18 Revised |
2018-19 Budgeted |
% change from RE 2017-18 to BE 2018-19 |
Budget Provisions for 2018-19 |
|
School and Mass Education |
9,737 |
13,132 |
14,487 |
10.3% |
|
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Panchayat Raj and Drinking Water |
8,330 |
10,317 |
13,725 |
33.0% |
|
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Water Resources |
7,727 |
9,216 |
10,196 |
10.6% |
|
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Health and Family Welfare |
4,796 |
5,247 |
6,160 |
17.4% |
|
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Rural Development |
7,275 |
7,599 |
5,582 |
-26.5% |
|
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Home |
3,504 |
4,418 |
5,274 |
19.4% |
|
|
Housing and Urban Development |
3,070 |
4,788 |
5,162 |
7.8% |
|
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Agriculture |
3,153 |
3,618 |
4,511 |
24.7% |
|
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% of total expenditure |
54.8% |
54.4% |
54.2% |
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Sources: Odisha Budget Speech 2018-19 and Demands for Grants; PRS.
- During 2017-18, Odisha is expected to spend more than its budget estimates on departments such as panchayat raj (22%), and housing and urban development (7%). It is expected to spend less than the budget estimate on health (7.8%), agriculture (7.6%), and school and mass education (5.2%).
Receipts in 2018-19
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In 2014-15, Odisha raised 49% of its total revenue receipts through its own resources. 51% of the revenue receipts were devolved by the centre. In 2018-19, the state is estimated to generate 39% on its own, and receive 61% from the centre. This trend indicates that over the last few years, the share of central transfers in the state’s revenue receipts has increased. |
- The total revenue receipts for 2018-19 are estimated to be Rs 1,00,200 crore, an increase of 11.7% over the revised estimates of 2017-18. Of this, Rs 38,850 crore (39% of the revenue receipts) will be raised by the state through its own resources, and Rs 61,350 crore (61% of the revenue receipts) will be devolved by the centre in the form of grants and the state’s share in taxes.
- Non Tax Revenue: Odisha has estimated to generate Rs 10,300 crore through its own non-tax revenue sources in 2018-19. This is an increase of 14.4% over the revised estimates of 2017-18. The state has estimated to receive about 69% of its non-tax revenue from royalties on mining.
Table 4: Break up of state government receipts (Rs crore)
|
Item |
2016-17 Actuals |
2017-18 Budgeted |
2017-18 Revised |
% change from BE 2017-18 to RE 2017-18 |
2018-19 Budgeted |
% change from RE 2017-18 to BE 2018-19 |
|
State's Own Tax |
22,852 |
26,800 |
26,520 |
-1.0% |
28,550 |
7.7% |
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State's Own Non-Tax |
8,043 |
9,500 |
9,000 |
-5.3% |
10,300 |
14.4% |
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Share in Central Taxes |
28,322 |
31,422 |
31,272 |
-0.5% |
36,586 |
17.0% |
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Grants-in-aid from Centre |
15,082 |
21,210 |
22,904 |
8.0% |
24,764 |
8.1% |
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Total Revenue Receipts |
74,299 |
88,932 |
89,696 |
0.9% |
1,00,200 |
11.7% |
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Borrowings |
11,223 |
17,003 |
16,563 |
-2.6% |
18,617 |
12.4% |
|
Recovery of Loans |
264 |
130 |
130 |
0.0% |
150 |
15.4% |
|
Total Capital Receipts |
11,487 |
17,133 |
16,693 |
-2.6% |
18,767 |
12.4% |
|
Total Receipts |
85,787 |
1,06,065 |
1,06,388 |
0.3% |
1,18,967 |
11.8% |
Sources: Odisha Budget Documents 2018-19; PRS.
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During 2017-18, collections from stamp duty are estimated to be 13% lower than the budget estimates (Rs 150 crore). Collections from land revenue are estimated to be 21% lower than the budget estimates. Collections from electricity tax are estimated to be 11% higher than the budget estimates (Rs 200 crore). |
- Tax Revenue: Total own tax revenue of Odisha is estimated to be Rs 28,550 crore in 2018-19. The composition of the state’s tax revenue is shown in Figure 2. The tax to GSDP ratio is targeted at 6.4% in 2018-19, which is the same as the revised estimate of 2017-18. This implies that growth in collection of taxes is expected to be at par with the growth in the economy (7%).
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Figure 2: Composition of Tax Revenue in 2018-19 (BE) Sources: Odisha Budget Documents 2018-19; PRS. |
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Deficits, Debts and FRBM Targets for 2018-19
The Odisha Fiscal Responsibility and Budget Management (FRBM) Act, 2005 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit and fiscal deficit of the state government.
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The 14th Finance Commission allowed relaxation of fiscal deficit target from 3% to 3.5% if: (i) the debt-GSDP ratio is under 25% in the preceding year, and (ii) interest payments are less than or equal to 10% of its revenue receipts in the preceding year. In 2017-18, the debt-GSDP ratio of Odisha (or outstanding liabilities) is estimated to be 18%. Further, the interest payments are estimated to be 5.6% of the revenue receipts. |
Revenue deficit: It is the excess of revenue expenditure over revenue receipts. A revenue deficit implies that the government needs to borrow in order to finance its expenses which do not create capital assets.
The budget estimates a revenue surplus of Rs 9,980 crore (or 2.25% of GSDP) in 2018-19. This implies that revenue receipts are expected to be higher than the revenue expenditure, resulting in a surplus. The estimate indicates that the state is expected to be within the target of eliminating revenue deficit, prescribed by the 14th Finance Commission.
Fiscal deficit: It is the excess of total expenditure over total receipts. This gap is filled by borrowings by the government, and leads to an increase in total liabilities. In 2018-19, fiscal deficit is estimated to be Rs 15,521 crore, which is 3.5% of the GSDP. The estimate is higher than the 3% limit prescribed by the 14th Finance Commission. This limit may be relaxed to a maximum of 3.5%, if states are able to contain their debt and interest payments to certain specified levels.
Outstanding Liabilities: It is the accumulation of borrowings over the years. In 2018-19, the outstanding liabilities are expected at 20.7% of the GSDP.
Table 5: Budget targets for deficits for Odisha (% of GSDP)
|
Year |
Revenue |
Fiscal |
Outstanding Liabilities |
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2016-17 |
2.45% |
-2.49% |
16.47% |
|
2017-18 (RE) |
2.13% |
-3.46% |
18.39% |
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2018-19 (BE) |
2.25% |
-3.50% |
20.73% |
|
2019-20 |
2.29% |
-3.50% |
21.61% |
|
2020-21 |
2.34% |
-3.50% |
22.43% |
Sources: Odisha Budget Documents 2018-19; PRS.
Figures 3 and 4 show the trend in deficits and outstanding liabilities targets from 2016-17 to 2018-19:
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Figure 3: Revenue and Fiscal Deficit (% of GSDP)
Sources: Odisha Budget Documents; PRS. |
Figure 4:Outstanding liabilities targets (% of GSDP) Sources: Odisha Budget Documents; PRS. |
Annexure
The graphs below compare Odisha’s expenditure on four key sectors as a proportion of its total budget, with 18 other states.[1]
- Education: Odisha has allocated 14.7% of its total budget on education in 2018-19. This is lower than the average expenditure (16.1%) allocated to education by 18 other states (using 2017-18 BE). The state had estimated to spend 15.5% of its budget on education in 2017-18, which reduced to 14.8% at the revised stage.
- Rural development: Odisha has allocated 9% of its expenditure on rural development. This is higher than the average (5.6%) of the 18 other states. The state had estimated to spend 7.7% of its budget on rural development in 2017-18, which increased to 9.4% at the revised stage.
- Agriculture: The state has allocated 6.9% of its total budget towards agriculture and allied activities. This is higher than the allocations of 18 other states (6.4%). The state spent 7.7% of its budget on agriculture in 2016-17, which reduced to 6.3% in 2017-18 (as per revised estimates).
- Health: Odisha has allocated 5.1% of its total expenditure on health, which is higher than the average expenditure of 18 other states (4.8%).
Note: 2016-17, 2017-18 (BE), 2017-18 (RE), and 2018-19 (BE) figures are for Odisha.
Sources: Annual Financial Statement, various state budgets; PRS.
[1] The 18 states apart from Odisha are: Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Gujarat, Haryana, Jammu and Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, and West Bengal.
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