Behind Odisha’s transformation

The industry sector’s contribution towards the strengthening of the state economy stands out

Today, the state is a pioneering leader in disaster management across the Globe.

By Pradeep Jena

Odisha is one of the fastest-growing states in the country now. According to the state’s recently released economic survey, its economy is estimated to have grown at a robust rate of 10.1% in FY22. This is higher than the national growth rate of 8.8% in FY22 as per the first advance estimate. The state’s per capita income has reached Rs 127,383 in 2021-22, growing significantly at 16.8% from Rs 109,071 in FY21. Between FY16 and FY22, the per capita income in the state has increased at a CAGR of 11.6% against the 8% CAGR at the national level. A decade ago, the per capita income in the state was Rs 48,499—roughly about Rs 4,000 per month. Now, the same stands at Rs 10,615—a whopping rise of more than 250%! This sounds remarkable when viewed against the backdrop of the 1999 ‘supercyclone’ that had devastated the state’s economy. The financial situation was in a shambles. Odisha was one of the poorest states in the country then. Even the state government was not in a position to pay salaries to its employees. The supercyclone exposed the state’s vulnerability to violent natural disasters, as also its poor preparedness and lack of capacity to respond to such situations. The poor financial health of the state delayed restoration and rehabilitation work as warranted then. However, the journey of the last two decades has been different. A lot of lessons have been learnt. Today, the state is a pioneering leader in disaster management across the Globe. Further, the state has learned to manage its resources by tightening the expenditure controls wherever required with a strong fiscal stance, hiving off many unnecessary posts and lossmaking public enterprises and following a strict governance approach to bring the state’s economy to shape.

While the state has seen several major cyclones post 1999, it has been able to reduce their negative impact through better response and restoration measures through a well-oiled institutional system of OSDMA and ODRAF along with the Odisha Fire Services whose capacity has been augmented over the years to meet such eventualities. Besides, the state’s finance has been brought back to a stable path, which is helping the government discharge its responsibilities in addressing the adverse impacts of these natural disasters on human lives in Odisha. The CM’s ‘Mission Zero Casualty’ is being realised with pro-active support of various government departments and effective participation of communities and their institutions. During last 20 years, given its effective and prudent financial management, the state is today in a strong position to manage growth successfully and overcome the adverse impacts of natural as well as man-made disasters more effectively. Further, this has been amply demonstrated in the way the state government has addressed the COVID-19, not only by saving lives providing free treatment but also ensuring that the various sectors in the economy re-bounce at the earliest.

Because of better management, the industrial sector grew at 14.5% in FY22. During the same period service sector, which accounts for 40% of Gross State Value Added (GSVA), grew at 7.9%. This high growth has been possible despite the agricultural GSVA contracting by 3.4% due to the unfortunate occurrence of three severe cyclones, namely Yaas, Bulbul and Jawad, and unseasonal rain severely affecting the Kharif crop in FY22. The state has been performing consistently better in comparison to India’s economic growth over last several years. Between FY16 and FY20, Odisha’s overall economic growth was 8.7% vis-a-vis the national average growth rate of 6.6%. The industrial sector in Odisha grew significantly higher at 10.3% when compared to the 5.4% national growth rate. However, Covid has been a disrupter across the world. Even during the Covid year FY21, though there was a contraction across the states in India, Odisha’s contraction was much smaller, at -5.3% vis-a-vis -6.6% at the national level. Similarly, the rebound of the economy of the state has been much faster than many other states. Odisha’s real GDP is likely to have grown by 10.1% in FY21 against 8.8% for India. The per capita income growth was much faster relative to the national average. During FY16 to FY22, Odisha’s per capita income grew by 11.6% in comparison to 8% for India in current terms.

The contribution of industry in this transformation stands out. Between FY13 to FY 21, it contributed an average of 46.7% to growth, followed by the service sector (43.4%) and the agriculture and allied sectors (9.9%). An array of policy reforms–such as the Industrial Policy Resolution, Tourism Policy, Apparel Policy, Bio-Technology Policy, Food Processing Policy, Health Care Investment Promotion Policy, Pharmaceutical Policy, ICT Policy, Fishery Policy, Renewable Energy Policy, SEZ Policy, Start-up Policy, MSME Development Policy, Electronic Policy and Data Centre Policy–has been undertaken in the right earnest. All these policies have been designed keeping the investor’s perspective at the forefront while ensuring the growth of the state GDP and increasing opportunity for the youth in terms of employment. Diversification in industrial investment has become a mantra for Odisha’s industrial success. According to the Economic Survey FY22, 339 projects with a cumulative investment of Rs 8.47 trilion in 29 sectors have been approved by the government which will enable creation of employment for 3.5 lakh persons.

Odisha’s fiscal management is the most prudent in the country. With sustained increase in revenue collection and better expenditure management, the state has consistently been revenue-surplus and its fiscal deficit is well within the FRBM mandated limits. The surplus stood at 0.95% of GSDP, and the fiscal deficit was contained at 3.2% of GSDP in FY22. Prudent fiscal management always gives room and creates opportunities for enhancement of capital expenditure to propel further growth; the state has been very effectively following this. As per the Periodic Labour Force Survey (PLFS), the employment situation is steadily improving in the state. Be it labour force participation or workers population ratio, three successive rounds of survey have highlighted improvement. Female labour force participation in the state, at 33.1%, was higher than the all-India 30% in FY20. The share of agriculture in total employment (48.3% in FY20) appears to be high in comparison to some of the high-income states. This indicates the need for creating opportunities for labour force participation in other sectors with higher productivity to enable better per capita income levels. The Odisha Skill Development Authority, Odisha Livelihood Mission, Mission Jeevika and Mission Shakti in particular are spiritedly working to enable more labour force participation in various sectors, including manufacturing, service sectors like health, education, tourism, IT and financial services, etc.

Inflation always has a serious adverse impact, particularly on the economically weaker sections of the society. During FY21, the state–like the other states in the country–experienced higher inflation due to Covid 19 induced supply-side constraints and pressure of oil price increase. However, during April 2021 to January 2022, the average headline CPI inflation in the state was a low 2.7%, compared to 5.3% at the all-India level. Rural inflation in Odisha was 2.3% while the average inflation in urban areas was 3.8% during this period. While, as per the MPI report released by NITI Aayog, the state has a poverty headcount of 29.35%, it is worth noting that the incidence of absolute poverty has declined significantly in the state. The poverty intensity or depth as compared to all-India level is lower. This could possibly have been achieved due to the implementation of several proactive, path-breaking, progressive and flagship schemes like KALIA, BALARAM, MAMATA, BSKY, Odisha Millet Mission, Mission Shakti, Social Security Pension, Subsidized food grains, provision of housing, drinking water and electricity, etc. Odisha has been doing well when it comes to the health and social sectors. In terms of reduction in MMR, Odisha has been consistently performing better than other states. Similarly, it is performing better in terms of dealing with undernutrition, wasting and stunting.

Transformative governance, with a philosophy of radical rather than incremental change when it comes to delivering programmes, entitlements to the citizenry, is the cornerstone of ‘New Odisha and Empowered Odisha’. Higher investment in education and health, along with farmers’ welfare and women’s empowerment, will lead to just, equitable and inclusive growth. Several progressive schemes have been designed to cater to the poor and the needy. The BSKY cards enable the poor to access the highest standards of health services at no cost, thus creating a sense of security and confidence. Further, it helps in changing health-seeking behavior of the people and reduces the massive expenditure burden on the households. School transformation and alumni participation in improving the school ecosystem have been another pioneering government effort. Timely delivery of public service through a transparent system–using technology along with strong teamwork–results in transformation. Odisha’s ‘5 T’ governance process will certainly lead to transformation of the state and meet the increased aspiration of its people. This is what the ‘New Odisha and Empowered Odisha’ is going to achieve for its people.

(The author is development commissioner, Govt of Odisha. Views are personal. )

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First published on: 19-04-2022 at 18:22 IST