After completing three years in office, Orissa finance minister Prafulla Ghadei is a satisfied man. For, in the last three years, the position of state finances has improved considerably. From a regime that ran its day-to-day affairs with ways and means advances and overdrafts, the state has reached a stage where it is now able to manage its own finances without this help. A revenue-deficit state for over 20 years, Orissa has become revenue surplus. Ghadei, a veteran politician, spoke to FE on the strategy that helped the government consolidate its fiscal position and the road ahead.
Ghadei said as part of the strategy, steps were taken for fiscal consolidation through several correction measures. The Medium Term Fiscal Plan and the Fiscal Responsibility and Budget Management Act were the guiding force. Measures like debt restructuring and a prudent guarantee policy helped in consolidating the fiscal position further. In addition, structural adjustment support received from the Centre for the Orissa Socio Economic Development Programme helped in retiring the high-cost debt and meet the cost of reform.
Among the achievements, Ghadei said the endeavour to arrest revenue expenditure and step up revenue receipts resulted in state finances achieving revenue surplus of Rs 481.20 crore in 2005-06, which is 0.64% of gross state domestic product. For the first time in over 20 years, the annual budget for 2007-08 has projected a revenue surplus of Rs 1,045.76 crore. Higher capital expenditure was achieved in 2006-07. This fiscal, the outlay has been increased substantially, he added.
Also, adequate fiscal space could be created for launching three key state Plan schemes?the Biju KBK Yojana, Gopabandhu Gramina Yojana, and Biju Gramjyoti Yojana. The state’s share in centrally-sponsored programmes also rose. The level of funding went up from Rs 113.61 crore in 2001-02 to Rs 662.67 crore in 2007-08.
On the path ahead, Gadhei said he planned to raise the revenue surplus so as to step up capital outlay with a view to building infrastructure for agriculture and industry. Social sector spending would also be stepped up. Also, there would be capacity building for quicker absorption of resources generated for development works. Reform in public expenditure management and greater financial accountability were also a priority, he added.