Poverty on decline in Orissa, claims government

The Orissa government today refuted the charges of the Opposition that poverty level has gone up in the state during the last ten years rule of Naveen Patnaik. It also asserted that Orissa isn’t the poorest state in the country at present.

The per capita income of the state is more than seventeen states like Bihar, Uttar Pradesh and Madhya Pradesh as per the report of the Thirteenth Finance Commission (TFC). Similarly, Orissa’s growth rate during the Tenth Five-year Plan at 9.5 percent was higher than the national growth rate of 7.7 percent during this period, said Parfulla Chandra Ghadai, state finance minister, in the state assembly today.

Replying to an adjournment motion on the issue in the House, he said, the Tenth Plan growth rate of 9.5 per cent is higher than 2.02 percent recorded in the 8th Plan and 5.3 percent in the 9th Plan. Hence, the state has made rapid strides during the last one decade, he asserted.

Earlier, while the state was dependent on the ways and means advance and overdraft from the Reserve Bank of India (RBI) for meeting its daily requirement, the developmental activities had come to a halt.

However, due to prudent fiscal management, the state finances have improved markedly. The revenue deficit has been wiped out entirely and the state is having surplus in its revenue account for last four years.

Outstanding debt stock, was 55.92 percent of the Gross State Domestic Product (GSDP) in 2002-03, has declined to 27.27 percent in 2008-09. Similarly, the state plan outlay has increased from Rs 2553.27 crore in 1999-2000 to Rs 10,200 crore in 2010-11. Refuting the allegation that the state has become poorer during the last ten years, the finance minister said, the rate of poverty in the state was 47.15 percent in 1999-2000 which declined to 39.9 percent in 200-04. This is a reduction of 7.3 percent over this period. He said, the rate of poverty in Orissa, as per the estimates made by the Planning Commission, was 48.56 percent in 1993-94.

Source: sify.com

Orissa has improved ...Moved up to fourth poorest State..But assistance goes down

Sustained reforms across the sector and pouring in of private sector investment has elevated Orissa from the most poor state to

fourth poorest state, according to the findings of the Thirteenth Finance Commission.[FC-XII]

The FC has estimated the average per capita gross state domestic product [GSDP] at Rs 21,280 ahead of three states, namely Bihar [Rs 8851], Uttar Pradesh [Rs 15,548] and Madhya Pradesh [Rs 18,137].

There was considerable improvement in the finances of the state following higher growth of its own tax revenues and increased transfers from the Centre. The revenue account of states turned surplus in 2005-06 and continued to remain in surplus till date. This is ahead of the target date of 2008-09 recommended by FC-XII. The process of fiscal consolidation in the states was helped in no small measure by the enactment of Fiscal Responsibility and Budget Management Act [FRBMA] by the state by bringing in rule-based management of public finances.

The state, however, is still not out of the woods as in some fiscal measures it has not achieved the target set by FC-X11. It continues to have a low tax-base. For instance, the average tax –GSDP ratio of the state was estimated at 6.1% against 7.6% for Chatisgarh, 10.2% for Jharkhand and 7.6% for Madhya Pradesh. This indicates that Orissa’s tax collection accounts for a lesser share of GSDP comparative to the above mentioned states.

FC-XII recommended that the debt-GSDP ratio be brought down to 28% over a period of time so as to be consistent with the fiscal deficit target. Though the state managed to bring down the net debt stock from 51.5% of GSDP in 2003-04 to 29.82% of GSDP in 2008-09, it still remains behind the target of 28% as recommended by FC-X11.

The state government had demanded 50% of the net proceeds of sharable central taxes on the ground that its fiscal deficiency evident from being the fourth largest per capita GSDP and fourth lowest tax –GSDP ratio limiting itself to provide equitable service to the people compared to the development states. The share of states in net proceeds of sharable central taxes has been increased to 32% from the level of 30.5%.

The percentage share of Orissa in central taxes has decreased by 0.38% (from 5.16% to 4.78%) in comparison to the recommendations of FC-X11. The share of all low income States like Orissa, Bihar, Jharkhand, Chhatishgarh has decreased but the share of UP, Rajasthan and MP has increased although they belong to the low income category. The decrease in relative share is owing to the higher weights assigned to new devolution criteria like fiscal capacity distance and fiscal discipline.

The FC-X111 has retained the existing sharing pattern of 75:25 for Calamity Relief Fund in case of the State Disaster Response Fund for general category states as against the sharing pattern of 90:10 demanded by the state government. The FC-X11 recommended the corpus of CRF at Rs.1599.16 crore, which has been enhanced to Rs.2163.75 crore although the state had demanded to increase the corpus to Rs.4000 crore in view of the vulnerability of the State to natural calamities and disasters. This factor has not been appreciated by the Commission while determining the corpus of State Disaster Response Fund.

Targeted growth rate of 9% in 11th Five year plan for Orissa

The Eleventh Five-Year Plan has envisaged a growth rate of 9% in the Orissa with a projected outlay of Rs 32,225 crore during the period, according to Governor Murlidhar Chandrakant Bhandare.

In his address to the Assembly on Monday, Mr Bhandare said that the state government had endeavoured to achieve a sustainable and inclusive higher economic growth, accelerated overall development, reduction of regional, social and gender disparities and a faster rate of poverty reduction.

The Governor attributed higher growth rate to the fiscal reform measures undertaken by the state government, which led to perceptible improvement in the financial condition of the state. Improvement in the finances of the State has not only resulted in increase of capital outlay but has considerably increased the size of the annual plan.

The state has been a revenue surplus state since 2005-06. “Improved fiscal situation has made it possible for my government to increase the state’s share of centrally sponsored schemes [CSS] from Rs 388.73 crore in 2005-06 to Rs 1900.48 crore in 2009-10 so as to access central assistance for CSS at a much higher scale”, he added.

The net debt stock has been reduced from 51.50% of GSDP into 2003-04 to 29.82% of GSDP in 2008-09 and the state is closing in to achieve the desired level of 28% as recommended by 12th Finance Commission, he remarked.

“With improvement in fiscal situation, the state government has not resorted to open market borrowings during 2006-07 to 2008-09 as a result of which the state government is on the threshold of achieving debt sustainability”, the Governor said.

10% of India investments has gone to Orissa

More than 10% of total investments announced by both government and private sectors in India as on March 2009 have gone to Orissa. The state has attracted Rs 9,28,834 crore of the total of Rs 88,71,867 crore announced in the country.

This has been revealed in a report by the Associated Chamber of Commerce and Industries of India (ASSOCHAM), one of the apex industry bodies in the country.

Releasing the report-- ASSOCHAM Strategy "Creating and Sustaining Growth Momentum in Orissa -- ASSOCHAM president Swati Piramal said here on Thursday there were 486 live investment projects worth Rs 9.4 lakh crore in Orissa at the end of September, 2009. Over 32.6% of these proposals worth about Rs 3,06,575 crore are under implementation, she said, adding, more than 65% of investment proposals for the government of Orissa, declared in recent times, are at announcement stages due to the global economic downturn during 2008 and 2009, she said. According to the report, she added, the investments under implementation are higher in Orissa compared to other states.

The paper says the respective shares of power, manufacturing, mining and services sector in total live investment are respectively 42.8%, 34.7%, 56.6% and 6.3%.

It is indicative of the fact that power, manufacturing and mining activities would become more prominent in Orissa in the near future.

The paper, however, clarifies that lower implementation rate of projects, of late, has become a phenomenon across states in India.

It may be noted that owing to the prevalence of global recessionary trends and slowdown of the Indian economy, investments across states have been kept on hold during 2008 and 2009. In the case of Orissa, besides the slowdown of the economy, land acquisition has become a major hurdle of implementation of investment projects.

Finding out that poor infrastructure is a bottleneck in industrialisation, ASSOCHAM has recommended that a separate department be set up for obtaining support of the central government for infrastructure development.

A Rs 10,000 crore infrastructure development fund needs to be set up jointly by the state and central governments.