Odisha Budget 2018-19: Disappointing for Social Sector

In an attempt to look at the budget from the perspective of the common people, students and research scholars of the Department of Analytical and Applied economics, Utkal University along with the civil society organization Youth for Social Development (YSD), Berhampur analyzed the Odisha state budget 2018-19. While the current budget has received wide appreciation among the popular media for being pro-people, the team from Utkal University and the civil society find the budget one of the most disappointing in the entire five year term of the Government. While both the organizations are planning to present a detailed analysis of the budget on 26th March before a wider audience, a quick response is herewith released by the team.
The Finance Minister of Odisha presented the State Budget 2018-19 on 23rd March 2018 with an estimated allocation of Rs. 1 lakh 20 thousand 28 crores, which is around 12.26 percent higher than the previous allocation in 2017-18. The allocations for the current year stood at around 27 percent of the GSDP compared to a little less than 26 percent previous year. On the face of it, this is a welcome move as it indicates an increasing involvement of the State in the overall macro-economy. However, a deeper look at the figures reveals that there is a significant gap between the budgeted estimates to the actual expenditure in last several years, 7.6 percent in 2018-19. This raises concerns that the 12.26 percent hike in the current year’s allocation may actually turn to be effectively a 5-6 percent increase only and if the inflation figures are accounted for, the real increase in the allocations may actually be much lesser.
Moreover, it is worthwhile to mention that in the year of the last assembly election, the government actually increased its allocations by around 32 percent over 2013-14. This was widely regarded as a pro people budget given the huge developmental deficits facing the state at that time. The ruling party actually came out with a promising manifesto in the last election guaranteeing basic physical infrastructure in each village, rural transformation, urban amenities, education and health for all, guaranteed housing for the homeless and so on. An increased allocation was therefore was necessary to comply with the promises made to the masses. However, the same year also witnessed the highest gap of (-17 %) between the budgeted and actual expenditure. Going by the experience in last several years, whether the current increase of 12.26 percent allocation will be realized at all, is a serious question to ponder on.
On the revenue front, the government actually proposed a surplus of Rs. 9980 crores (2.25 % of GDP)up by around 49 percent from Rs.6694 crores in last year’s budget. In a state like Odisha starving for resources to meet its developmental needs, having such a huge surplus in the revenue budget also raises concerns. Not only that, a careful observation of the trends revealed that the proposed revenue surpluses in previous years have actually increased during implementation. This indicates that the fund absorbing capacity of the economy has also shrunk in last years. Such things usually happen when the government withdraws from its usually activities, recent vacancies remain unfilled, fails to maintain the assets and therefore reduced revenue burden and so on.
Coming to core social sectors, there has been a 7.6 percent increase proposed on health from Rs. 5670 crores in 2017-18 to around Rs. 6092 crores in the current fiscal. Similarly, in education, there is an increase of around 4 percent from Rs.16506 crores to Rs.17153 crores. But both in terms of a percentage of GSDP as well as the total estimated expenditures, it is less than the proposals last year. In both the sectors, the current budget is going to disappoint the people in recent years. In most social services, there is a decline in the allocation as a percentage of GSDP indicating a shrinking space for the welfare of the masses.
The government’s own sources of revenue supporting the budget has shrunk from 51.63 % in 2013-14 to 38.77% in 2018-19 this indicates an increasing dependence on the central sources. While the government has every reason to be happy for the increasing support from the centre, the increasing revenue surplus along with the increasing support from the centre seems paradoxical.

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