NIPFP says Odisha achieved revenue and fiscal surplus, reduced debt burden

Despite volatility and the slowdown after 2007-2008 Odisha was able to achieve revenue and fiscal surplus and reduced the debt burden substantially in 2012-13 in the post FRBM period, says a government report.

The National Institute of Public Finance and Policy (NIPFP) report was presented in the state Assembly on Monday by Finance Minister Pradip Kumar Amat.

"Odisha government consistently maintained strong fiscal position during the post FRBM (Fiscal Responsibility & Budget Management) period," the report said.

While budget projections for the year with regard to major fiscal outcomes were within FRBM Act stipulation, the state government managed to achieve improved out turns. In 2012-13, the revenue surplus was substantial at 2.23% relative to GSDP and the state enjoyed a fiscal surplus situation, it said.

The outstanding debt burden was only 14.87% of GSDP, which was well below the 30.2% level recommended as prudent by the 13th Finance Commission. Compared to the fiscal targets specified for the year in the amended FRBM Act, 2011, a zero revenue deficit, fiscal deficit limit of 3% of GSDP, and debt burden of 30.2% to the GSDP were acheived by the state.

"These achievements were commendable," the report said.

As against a target of interest payment as percentage of revenue receipts at 15%, the achievement has been only 6.39%, the report stated.

The compression of both revenue and capital expenditure as compared to the budget estimates was the major instrument to achieve large revenue surplus and elimination of fiscal deficit in the fiscal year 2012-13.

However, actual revenue realisation exceeded the target marginally, the report said. It was the higher realisation of non-tax revenue that helped in meeting the revenue target as own tax receipts and central grants fell below the budget projections.

With rising revenue surplus and slow growing capital expenditure, the government reduced its dependence on market borrowing and even discharged some high cost loans to bring down its overall debt stock.

The state government accumulated a large cash balance 2012-13, which was invested in Government of India treasury bills with RBI, it said.  However, compliance to the fiscal management principles enunciated in the act should not be neglected.

One of the important principles has been to formulate a realistic budget by giving due regard to the general economic outlook to minimise the deviation from the budget projections during the year.

The decline in own tax revenue as compared to the budget estimates in 2012-13 despite a higher GSDP growth over the last year does not satisfy the observance of this principle, it said. "The examination of the budget estimaetes and actual expenditure during 2012-13 shows that under many heads the budgetary provisions were not fully utilised," the report said adding actual expenditure for some of the important sectors like education, water supply and sanitation, and irrigation and flood control were less than that of the budget estimates.

Although the state government managed to generate a large revenue surplus - substantially more than the budget estimates, the capital expenditure as percentage of GSDP has remained subdued in recent yars, it said.

The NIPFP suggested that the comfortable cash balance position and emergence of substantial surplus in revenue account should enable the government to restructure the expenditure pattern focusing on priority sectors and infastructure building.

The assessment of the spending pattern revealed that under-spending in several high-priority sectors was more due to capacity problems rather than the objective of compressing the overall expenditure.

The improvement in fiscal position of the government and emergence of comfortable resource position should lead to effective policy actions for removing the impediments to better utilisation of budgetd provisions and larger allocations to priority sectors, it said.

Strengthening capacity to improve project conceptualisation and implementation in infrastructure sector should be the key objective of the government policies.

The government also should pay attention to facilitate land acquisition, improve coordination among departments at policy and implementation level and speed up environment clearances from central agencies for better implemenation of projets and utilisation of the aproved budget, the report added.