Pradeep Kumar Panda

Indian Economy

Budget is around the corner. Both the Indian economy and Odisha economy are facing the threat of a slowdown in the GDP/GSDP growth respectively. Even though the state economy has fared better than the national output growth, the threat of a slowdown in the state cannot be ruled out in short term. In the era of cooperative federalism and rule based fiscal policy regime the states should play complementary role in the fiscal policy. Therefore, the Budget should be used as a fiscal instrument to revive the economic growth by adopting an expansionary fiscal policy stance.

NSS survey shows that more than 50% people working in agriculture want to leave farming as occupation. The recent launch of KALIA scheme although provides financial support to farmers for buying inputs, it does not address the long term constraints. Capital investment in agriculture has been declining steadily. Lack of irrigation and shortage of cold storage facilities are the major constraints faced by farmers of the state to increase the output and double farmers’ income.

Along with the capital subsidy, the state government should exempt the electricity bills for the initial five years to all the cold storages and charge electricity bills at the domestic rates subsequently. This can make the operation of cold storages viable. Use of solar energy in the cold storages should also be promoted by providing special subsidy. For promoting lift irrigation, use of solar energy should be promoted by providing special capital subsidy.

Only 12 of 147 state PSUs are paying dividends to the state. Most of the PSUs are making losses. The PSUs providing public goods can be retained by the state. However, the PSUs producing private goods that are making losses should be sold out. Land allotment policies in the Industrial areas of the state should be streamlined for the startups For fast clearance of mining industries, the state government should make a list of Go-Zones and No-Go-Zones.

Access to good health care should be treated as a fundamental right of every citizen. Quality health care at low cost can be provided only by the public health care providers. The state has although witnessed significant improvement in the maternal and child health care, there is hardly any room for complacency. The state is still an under performer in most of the health indicators. Out of pocket health expenditure in Odisha is 71%. 35 to 45 million people in the country are pushed to poverty because of out of pocket expenditure. Health expenditure burden of the households can be reduced significantly by strengthening the primary and secondary health care facilities available at PHCs, CHCs and at district level hospitals. All hospitals should be strengthened with more manpower, diagnostic facilities and medicines. Health expenditure of the state should increase to 2.5% of the GSDP.

Quality education for all, at all levels –Primary, secondary, tertiary, technical –can transform the state economy into a knowledge society. Quality education requires the strengthening of physical infrastructure and employment of trained and motivated teachers. There are thousands of vacancies in both school and mass education department and higher education department. All vacancies should be filled up in every school, college and Universities. Ranking of state universities can only be improved through recruitment of highly skilled and motivated teachers.

A study commissioned by the World Bank on the scope of eco-tourism in Odisha, shows enough potential. The demand for accommodation at most of the eco-tourism destinations in peak season is much higher than the existing capacity. The state government should invest in this sector to build up more accommodation facilities for mobilizing revenue, and generating employment in the locality. The state government should create the physical infrastructure and the tourist and forest debarments can operate these facilities with the coordination of local communities/ self-help groups in revenue and cost sharing model for the operation and maintenance. The tourism department and forest departments should work in better coordination to strengthen the eco-tourism in the state.

A higher rate of unemployment in the State at 7.1% in 2017-18 compared to the national average of 6.1% puts a severe dent on growth story of the state and should be considered as a warning bell for the state economy. The state government should fill up the vacancy positions in education and health departments and in key revenue generating departments. The understaffing of various departments has also reduced the fiscal capacity of the state.

The surplus position of the state provides enough fiscal space for the state to go for more recruitment in the government department. For generating self-employment, state government should open skill development institutes for providing certified training programs like soil testing, farm consultancy, plumbing, and many repairing jobs. Real estate sector is witnessing fast growth in the state, especially in the periphery of urban areas. This sector can be tapped for mobilizing more revenue. The state government can impose holding tax on all pucca houses beyond the size of Low Income Group housing projects. This can be applicable for both urban and rural areas.

The power to collect revenue can be handed over to PRIs and ULBs. The study commissioned by the Finance Department for evaluating the Piped Water Schemes of the state shows that most of the households have the willingness to get a pipe connection to home and willingness to pay ranges from Rs 30 to Rs 300 in the water scarce areas. The state government can notify guidelines for PRIs to provide house connection and collect user fees from every households.

The off-budget resources are growing in the state every year. The funds available under DMF, CAMPA, CSR, Coal Cess, Construction workers welfare fund are seeing rising trend. However, the quality of planning and spending of these funds are far from satisfactory. Fifty percent of these funds can be directly transferred to panchayats for investment in drinking water projects, providing street lights, construction of smart class rooms, quarters for teachers in the school campuses. Rest of the funds can be utilized by the district authority for mega projects. Similarly, the Budget document should show the utilization of MLA LAD, MPLAD funds and all off-budget resources.

(The author is a New Delhi based Economist)