CHAPTER - I

GENERAL PROFILE Geographical Area and Forest Cover:

Geographical Area: 155707 sq. kms. Geographical area as percent of total area of the country: 4.74 Cultivable area : 74730 sq km (47.99% of total geographical area as per Agriculture Statistics at a Glance 2007) Gross Cropped Area (2006-07) : 89600 sq. kms.(57.54% of geographical area) Net Sown Area (2006-07) : 56540 sq. kms (36.31% of geographical area) Forest cover: 48374 sq. kms. Forest cover as a percent of states geographical area: 31.07 (ranked 4th amongst 28 States) Percent of total area under forest in the state was 30.25 in 1995, 30.21 in 1999, 31.05 in 2003 and 31.07 in 2005.
% of Forest Cover Area 16.13 5.92 41.32 58.45 7.51 3.59 28.34 18.38 40.13 24.66 15.43 31.07 3.09 4.63 17.72 5.86 13.99 20.60

Table 1.1 : Geographical Area and Forest Cover of the General Category States Total Forest % of Total S. Geographical Cover States Geographical Rank No. Area (Sq. Km) Area of India (Sq. Km.) 2005 1 Andhra Pradesh 275,069 8.37 4 44,372 2 Bihar 94,163 2.86 11 5,579 3 Chhattisgarh 135,191 4.11 9 55,863 4 Goa 3,702 0.11 17 2,164 5 Gujarat 196,022 5.96 6 14,715 6 Haryana 44,212 1.34 15 1,587 7 Jharkhand 79,714 2.42 13 22,591 8 Karnataka 191,791 5.83 7 35,251 9 Kerala 38,863 1.18 16 15,595 10 Madhya Pradesh 308,245 9.38 2 76,013 11 Maharashtra 307,713 9.36 3 47,476 12 Orissa 155,707 4.74 8 48,374 13 Punjab 50,362 1.53 14 1,558 14 Rajasthan 342,239 10.41 1 15,850 15 Tamil Nadu 130,058 3.96 10 23,044 16 Uttar Pradesh 240,928 7.33 5 14,127 17 West Bengal 88,752 2.70 12 12,413 All India 3287263 100.00 677088 Source: State Forest Report, 2005, Forest Survey of India

Rank 9 13 2 1 12 16 5 7 3 6 10 4 17 15 8 14 11

Among the general category states, Goa (58.45), Chhattisgarh (41.32) and Kerala (40.13) have the highest percentage of forest cover. In 2005, only 1.11% forest area was classified as very dense while 57.17 percent and 41.72 percent of the forest area were respectively categorized moderately dense forest

and open forest.1 The following table shows the year-wise change in the quality of forests in the state:
Table 1.2: Forest Cover Year 1999 2001 2003 2005 1.01 1.11 Dense Forest Very Dense Mod. Dense 55.44 57.28 57.31 57.17 Open Forest 44.11 42.72 41.68 41.72

Note: Dense forest refer to all lands having tree cover canopy density of more than 40%.

Population: Census 2001

Total population: 368.05 lakhs (3.58 percent of the population of the country) (The state is ranked 11th amongst the 17 general category states) Female population: Rural population: Urban population: SC population: ST population: 181.44 lakhs (49.30 percent) 312.87 lakhs (85.01 percent) 55.17 lakhs (14.99 percent) 16.5 percent 22.1 Percent

Forest Survey of India defines Very dense forest as all lands having tree cover with canopy density of more than 70%; Moderately dense forest as all lands having tree cover with canopy density between 40 and 70%; and Open forest as all lands having tree cover with canopy density between 10 and 40%.

Population projection (as on 1st March 2008): Projected population: 396.54 lakhs of which female population is 49.4%

Table 1.3: Population

S. No.

Population 2001 States Total (in lakhs) Andhra Pradesh Bihar Chhattisgarh Goa Gujarat Haryana Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal All India 762.10 829.99 208.34 13.48 506.71 211.45 269.46 528.51 318.41 603.48 968.79 368.05 243.59 565.07 624.06 1,661.98 801.76 10286.11
Rank

Percent Population Share 2001 Male 50.6 52.1 50.3 51.0 52.1 53.7 51.5 50.9 48.6 52.1 52.0 50.7 53.3 52.1 50.3 52.7 51.7 51.7 Female 49.4 47.9 49.7 49.0 47.9 46.3 48.5 49.1 51.4 47.9 48.0 49.3 46.7 47.9 49.7 47.3 48.3 48.3 SC 16.2 15.7 11.6 1.8 7.1 19.3 11.8 16.2 9.8 15.2 10.2 16.5 28.9 17.2 19.0 21.1 23.0 16.2 ST 6.6 0.9 31.8 0.0 14.8 0.0 26.3 6.6 1.1 20.3 8.9 22.1 0.0 12.6 1.0 0.1 5.5 8.2

Projected Population March 1, 2008 Percent Total (in lakhs) Female 823.75 936.33 232.69 15.96 566.26 241.71 301.81 575.50 338.02 687.37 1079.72 396.54 267.21 645.33 661.06 1902.53 869.94 11447.34 49.7 48.1 49.8 47.8 47.6 46.0 48.5 49.2 51.3 47.8 47.8 49.4 46.4 47.8 49.8 47.3 48.5 48.2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

5 3 16 17 10 15 13 9 12 7 2 11 14 8 6 1 4

Source: Registrar General of India and National Commission on Population, Min. of Health & Family Welfare

Sex ratio, population density and population growth: Sex ratio: 972 as compared to an all India figure of 933. (ranked 5th among general category states) Sex ratio in the age group 0-6 years in 2001: 953. (It declined from 967 in 1991). The fall in sex ratio in this age group was 14 per thousand between 1991 to 2001. Population Density: 236 persons per square km as compared to an all India average of 325. The state was ranked 14th amongst the general category states. Urban population density: 1974 persons per square km. as compared to an all India average of 3663. Decadal growth of population: 16.25 percent compared to all India figure of 21.54%.

Table 1.4: Sex ratio, population density and decadal population growth rate
S. No.

States Andhra Pradesh Bihar Chhattisgarh Goa Gujarat Haryana Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal All India

Sex Ratio (2001) Per 1000 Rank Males 978 919 989 961 920 861 941 965 1058 919 922 972 876 921 987 898 934 933 4 13 2 7 12 17 8 6 1 14 10 5 16 11 3 15 9

Population Density Per Sq. Rank Km. 277 881 154 364 258 478 338 276 819 196 315 236 484 165 480 690 903 325 11 2 17 8 13 7 9 12 3 15 10 14 5 16 6 4 1

Popl. Growth Rate (%) 1991-2001 14.59 28.62 18.27 15.21 22.66 28.43 23.36 17.51 9.43 24.26 22.73 16.25 20.10 28.41 11.72 25.85 17.77 21.54 Rank 15 1 10 14 8 2 6 12 17 5 7 13 9 3 16 4 11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Infant Mortality Rate (IMR) and Literacy Rate: Infant mortality rate (IMR): 65 as compared to 57 for India. (Rank 12th amongst general category states) Literacy Rate: 63.1 as compared to 65 % for all India.(Rank 12th amongst general category states) Female literacy rate: 50.5 percent (Rank 20th amongst All States) Male literacy rate : 75.3 percent(Rank 17th amongst All States) Difference in Male-Female literacy rate: 24.8percent (Rank 7th amongst All States) Maternal Mortality Rate (2001-03): 358* per lakh live birth as compared to all India figure of 301 per lakh live birth. Table 1.5: Infant Mortality Rate (IMR) and Literacy Rate Infant Mortality Rate (Per thousand) SN States 2004 @ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Andhra Pradesh Bihar Chhattisgarh Goa Gujarat Haryana Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal All India 59 61 60 17 53 61 49 49 12 79 36 77 45 67 41 76 46 58 1994-98 $ 66 73 81 37 63 57 54 52 16 86 44 81 57 80 48 87 49 2005-06 # 53 62 71 15 50 42 69 43 15 70 38 65 42 65 31 73 42 57 Rank (200506) 10 11 16 1 9 5 14 8 1 15 4 12 5 12 3 17 5 Literacy Rate (2001 census) (%) 60.5 47.0 64.7 82 69.1 67.9 53.6 66.6 90.9 63.7 76.9 63.1 69.7 60.4 73.5 56.3 68.6 65 Rank 13 17 10 2 6 8 16 9 1 11 3 12 5 14 4 15 7

Source: * Report of NRHM, Ministry of Health & Family Welfare (Based on SRS 2001-2003) @ Office of the Registrar General of India. IMR for smaller states based on three years period 20002002 $ National Family Health Survey (Round-2) # National Family Health Survey (Round-3), National Reports

Poverty Estimates: Highest poverty ratio among all States & UTs. Poverty ratio (URP): 46.4 as against all India figure of 27.5 for 2004-05. Poverty ratio (MRP): 39.9 as against all India figure of 21.8 for 2004-05.

Table 1.6: Poverty Estimates Percentage People below Poverty Line SN States 1993-94 22.19 54.96 14.92 24.21 25.05 33.16 25.43 42.52 36.86 48.56 11.77 27.41 35.03 40.85 35.66 35.97 1999-00 (MRP) 15.77 42.6 4.4 14.07 8.74 20.04 12.72 37.43 25.02 47.15 6.16 15.28 21.12 31.15 27.02 26.1 2004-05 (Based on URP) Rural 11.2 42.1 40.8 5.4 19.1 13.6 46.3 20.8 13.2 36.9 29.6 46.8 9.1 18.7 22.8 33.4 28.6 28.3 Urban 28.0 34.6 41.2 21.3 13.0 15.1 20.2 32.6 20.2 42.1 32.2 44.3 7.1 32.9 22.2 30.6 14.8 25.7 Total 15.8 41.4 40.9 13.8 16.8 14.0 40.3 25.0 15.0 38.3 30.7 46.4 8.4 22.1 22.5 32.8 24.7 27.5 2004-05 (Based on MRP) Rural Urban Total 7.5 32.9 31.2 1.9 13.9 9.2 40.2 12.0 9.6 29.8 22.2 39.8 5.9 14.3 16.9 25.3 24.2 21.8 20.7 28.9 34.7 20.9 10.1 11.3 16.3 27.2 16.4 39.3 29.0 40.3 3.8 28.1 18.8 26.3 11.2 21.7 11.1 32.5 32.0 12.0 12.5 9.9 34.8 17.4 11.4 32.4 25.2 39.9 5.2 17.5 17.8 25.5 20.6 21.8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Andhra Pradesh Bihar Chhattisgarh Goa Gujarat Haryana Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal All India

Note: URP: Uniform recall period, MRP: Mixed recall period Source: Planning Commission

Table 1.7: Gross State Domestic Product at factor cost (GSDP)

GSDP/GDP (2006-07) (Rs cr) (current prices) Orissa India (Q.E.)
Source: CSO

Per capita GSDP (2006-07) (Rs.) (current prices) 23,227 33,780 (1999-00 prices) 17,245 25,529

(1999-00 prices) 67,676 28,64,309

91,151 37,90,063

See Annex-I for details

Trend growth rate (TGR) of GSDP for the period 1999-07 at current prices was 12.23 percent as compared to 11.29 percent of that of Indias GDP. Orissas per capita GSDP of Rs.23227 (2006-07) is significantly lower than the national per capita of Rs.33780. Per capita GSDP of Orissa as per cent of per capita GDP of India is as under :
1999-00 70.57 2000-01 67.63 2001-02 68.16 2002-03 66.61 2003-04 73.20 2004-05 77.02 2005-06 77.43

Per capita GSDP of State as % of per capita GDP of India

Graph 1.1 Annual Growth Rates of GSDP & GDP (%)

Orissa - Annual growth rate of GSDP (%)

25 20 15 10 5 0 -5 -1.14 2000-01 2001-02 -0.06 2002-03 2003-04 2004-05 2005-06 2006-07
1.36 7.94

Constant Prices
22.30

Current Prices

16.29 9.95

16.06

14.71
6.98

12.61 9.35 6.35

6.25

India - Annual Growth Rate of GDP (%)

18 16 14 12 10 8 6 4 2 0 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 4.35 5.81 3.84 8.97 7.75 7.80 8.52 9.40 7.45 9.62 12.24 Constant Current 15.70 13.38 13.83

The GSDP estimates prepared by Directorate of Economics & Statistics (DES), Orissa were higher than the estimates prepared by the CSO in the year 2001-02 to 2004-05 which reversed in the year 2005-06. The difference in these estimates varied between 0.12% in the year 2001-02 and -5.20% in 2005-06. (See Annex I A) Reason of differences given by the State Govt. are as under : 7

The Directorate of Economics and Statistics (State/Deptt. of Statistics) Orissa, Bhubaneswar is the only authorized Organization to prepare the estimation of GSDP for the State. Accordingly every year they prepare the estimation adopting the methods and procedures supplied by the Central Statistical Organization (CSO,) Govt. of India, New Delhi. After preparing the estimation, the Directorate of Economics and Statistics (DES) submit the estimation to CSO for approval. Those approved figures in respect of the Domestic Products of the State are published for use. The CSO never estimates the Domestic Products for the State. The State of Orissa publishes the same figures in its publication so also the CSO publishes the same in their publication in a compiled version in respect of all States. However sometimes the figures appear to be different in their publication. This is due to non-receipt of revised ones in time by CSO for which the earlier figures are repeated and the same are corrected in their next publication after receipt from DES, Orissa. The ESO estimates in primary sector were 3.13% lower than CSO estimates. Similarly the secondary sector ESO estimates for the year 2005-06 were 15.6% lower than the CSO Estimates mainly due to lower (40%) estimates in construction, mining and quarrying (15.2%). The ESO estimates of 2005-06 were higher than CSO estimates in storage(18%) and communication(12%) but for the tertiary sector as a whole the ESO estimates are lower by 1.11%. Difference in all these sectors amounts to an overall increase of 5.20% in comparable GSDP visvis the ESO figure. The sector-wise details of difference in GSDP estimates are shown in Annex-1A.
Graph: 1.2: Share of primary, secondary and tertiary sector in GSDP at current prices Sectorwise Composition of GSDP at current prices (%)
50 45 40 35 30 25 20 15
1999-00
Source: CSO

Primary

Secondary

Tertiary

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

Though the GSDP in primary sector increased from Rs. 15178 crore in 1999-2000 to Rs. 29387 crore in 2006-07, it share in total GSDP declined from 35.4 % to 32.2% during the same period. The share of secondary sector in GSDP ranged between at 20-24% during 1999-2000 to 2006-07. The share of tertiary sector in total GSDP remained almost constant at 44.5% in 1999-2000 to 44.3% in 2006-07 after touching a high of 48.1 in 2002-03. 8

CHAPTER - II REVIEW OF STATES FISCAL PERFORMANCE

General Comments A. Revenue Receipts Total Revenue Receipts (TRR) As a percent of GSDP: 13.71 in 1999-2000 16.80 in 2002-03, 21.26 in 2007-08
00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 (BE)

TRR TRR (Rs. In Crores) Annual Growth Rate As a % to GSDP Annual Buoyancy

99-00

5885 29.21 13.71

6902 17.29 15.87 12.72

7048 2.11 15.01 0.27

8439 19.73 16.80 2.83

9440 11.87 15.37 0.53

11850 25.53 16.59 1.57

14085 18.86 17.93 1.89

18033 28.03 19.78 1.75

21967 21.82 21.26 1.64

23270 5.93 19.93 0.46

Rs. In Crore
Items Total Revenue Receipts Own Tax Revenue Own Non-Tax Revenue Transfer from Centre % of Transfer from Centre to TRR 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 (BE)

5885 1704 716 3464 58.87

6902 2184 685 4033 58.43

7048 2467 692 3889 55.18

8439 2872 961 4606 54.58

9440 3302 1095 5044 53.43

11850 4177 1346 6328 53.40

14085 5002 1532 7551 53.61

18033 6065 2588 9379 52.01

21967 6856 2654 12458 56.71

23270 7272 2135 13863 59.57

Total Revenue Receipts of the state increased from Rs. 5885 crore in 1999-2000 to Rs.21967 in 2007-08 at trend growth rate of 17.89% per annum with a buoyancy of 1.42. The Own Tax Receipts increased from Rs.1704 crore in 1999-2000 to Rs. 6856 crore in 2007-08 at trend growth rate of 18.97% per annum with a buoyancy of 1.51. The Own Non-Tax Receipts increased from Rs.716 crore in 1999-2000 to Rs. 2654 crore in 2007-08 at trend growth rate of 20.42% per annum with a buoyancy of 1.62. Total Revenue receipts increased by Rs.3948 crore in 2006-07 over the previous year due to rise in Own Tax Revenue (Rs.1063 crore), Non Tax Revenue (Rs.1056 crore), Transfer from Centre (Rs.1828 crore). In 2007-08 it increased by Rs.3934 crore mainly due to increase in Transfer from Centre (Rs.3079 crore). 9

On an average, as a proportion of TRR, about 45% of the revenue came from the States own resources, while the Central transfers and grants in aid together contributed 55% of the total revenue receipts during 1999-2008. Total Revenue Receipts as a % age of GSDP

25 20

Revenue Receipts as % age of GSDP

21.3 19.8 15.9 16.8 15.0 15.4 16.6 17.9 19.9

15 10 5 0

13.7

99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 SOTR SONTR Central Transfer TRR/GSDP

Composition of Total Revenue Receipts

Compositionof Revenue Receipts

25000 20000 15000 10000 5000 0
99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09

(Rs. in Crore)
Central Transfer SONTR SOTR

Note: Transfers from Centre (CT) includes share in central taxes, plan and non-plan grants

10

(i) Transfers from Centre (CT):

As a percent of TRR: 58.87 in 1999-2000, 54.58 in 2002-03 56.71 in 2007-08
99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 (BE)

Central Transfers (Rs. Crore) Annual Growth Rate As a % of TRR of which

Plan Grants Non Plan Grants Share in Central Taxes

3464 38.02 58.87

4033 16.41

3889 -3.55

4606 18.42

5044 9.51

6328 25.46 53.40

7551 19.32 53.61

9379 12458 13863 24.22 52.01 32.82 56.71 11.28 59.57

58.43 55.18

54.58 53.43

834 876 1754

961 468 2604

927 313 2649

1405 395 2806

1451 266 3328

1952 399 3978

1607 1067 4877

2073 1086 6220

3459 1152 7847

4413 1205 8245

The central transfers to the State increased from Rs. 3464 crore in 1999-2000 to Rs. 13863 crore in the year 2008-09. The increase was mainly due to increase in share in Central taxes and plan grants. The share of central transfers to the total revenue receipts of the state ranged between 52 to 60 percent during this period. The grants-in-aid from Govt. of India increased from Rs.1710 crore in 1999-2000 to Rs. 4611 crore in 2007-08 as per details given below:

Grants in Aid
Non-Plan State-Plan Schemes Central-Plan Schemes Centrally Sponsored Plan Schemes Total

99-00

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

08-09 (BE)

876 555 65 214

1710

468 601 36 324

1429

313 650 63 214

1240

395 1021 32 352

1800

266 1049 62 340

1717

399 1392 38 521

2350

1067 1079 46 483

2675

1086 1284 62 726

3158

1152 2232 116 1111

4611

1205 2677 539 1197

5618

In 1999-2000 the State received a very high Non-plan grant (Rs. 876 crore) due to disbursement of Calamity Relief Fund. This came down in the subsequent years. In 2005-06 due to award of the Twelfth Finance Commission there was a sharp increase in the Non-Plan grant over the previous year. The grants for State Plan schemes increased sharply during 2007-08 mainly due to rise in Accelerated Irrigation Benefit Programme(Rs.490 Crore), Back District Initiative Grant (Rs.291 Crore) and JNNURM (Rs. 128 Crore).

11

(Rs. Crores) Particulars Share in Taxes & Duties As percent of total Taxes & Duties to all States Aggregate grants As percent of total FC grants to all States Total FC transfers As percent of Total FC transfers to all States X FC 8783 4.3 923 4.5 9707 4.3 XI FC 19027 5.1 1728 2.9 20755 4.8 XII FC 31669 5.2 5273 3.7 36943 4.9

Note: FC transfers include Grants-in-aid and share in central taxes and duties.

Orissa has been the only General Category State to have received NPRD Grants in the all the Commissions. The amounts received are as under:
Orissa 1st 2nd 16.75 3rd 4th 5th Finance Commissions 6th 7th 8th 9th (1) 9th (2) 10th 11th 12th

NPRD Grant (Rs. Crore)

3.75

64.00 145.90 104.67 304.73 136.92 207.60 57.14 528.48 371.74 673.60 488.04

The recommended share of the State in devolution of taxes increased from 4.3% in Xth FC to 5.2% in XIIth FC whereas the share in grants decreased from 4.5% in Xth FC to 3.7% in XIIth FC. However, the share of the State in total FC transfers has increased from 4.3% in Xth FC to 4.8% in XIth and 4.9 in XIIth FC.

Own Revenue Receipts (ORR):

As a percent of GSDP: 5.64 in 1999-2000 7.63 in 2002-03 9.21 in 2007-08

Trend Growth Rate (TGR) of own revenue receipts: 19.33 for the period 1999-08 with buoyancy of 1.54.
ORR

99-00 2421 18.39 5.64

00-01 2869 18.55 6.60 13.65

01-02 3159 10.08 6.73 1.27

02-03 3833 21.35 7.63 3.06

03-04 4396 14.69 7.16 0.66

04-05 5522 25.61 7.73 1.57

05-06 6534 18.33 8.32 1.84

06-07 8653 32.43 9.49 2.02

07-08 9510 9.90 9.21 0.74

08-09 (BE)

Rs. In Crore Annual Growth Rate As a % to GSDP Annual Buoyancy

9407 -1.08 8.06 -0.08

12

Composition of Own Revenue Receipts

Composition of Own Revenue Receipts (Rs. in Crore)

10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 SONTR SOTR ORR

Note: Own revenue receipts (ORR) includes own tax and own non-tax revenues.

Own revenue receipts increased from Rs.2421 crore in 1999-2000 to Rs. 9510 crore in 2007-08 at TGR of 19.33% per annum with buoyancy of 1.54. The ORR/GSDP ratio increased from 5.64% in 1999-2000 to 9.49% in 2006-07. However, in 2007-08 and 2008-09 the ratio came down to 9.21% % 8.06% respectively.

Own Tax Revenue (SOTR): As a percent of GSDP: 3.97 in 1999-2000 5.72 in 2002-03 6.64 in 2007-08

Trend Growth Rate (TGR) of own tax revenue: 18.97 for the period 1999-08 with buoyancy of 1.51.
SOTR 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 (BE)

OTR (Rs. Crore) Annual Growth Rate As a % to GSDP Annual Buoyancy As a % of TRR As a % of ORR

1704 14.59 3.97

2184 28.16 5.02 20.72

2467 12.95 5.25 1.63 35.00 78.10

2872 16.42 5.72 2.35 34.03 74.92

3302 14.97 5.38 0.67 34.98 75.10

4177 26.50 5.85 1.63 35.24 75.63

5002 19.77 6.37 1.99 35.52 76.56

6065 21.25 6.65 1.32 33.63 70.09

6856 13.04 6.64 0.98 31.21 72.10

7272 6.07 6.23 0.47 31.25 77.30

28.93 70.40

31.64 76.11

13

Own tax revenue increased from Rs. 1704 crore in 1999-2000 to Rs.6856 crore in 200708 at TGR of 18.97% with buoyancy of 1.51. Own tax accounted for about 72% of the Own Revenue Receipts in 2007-08. OTR/GSDP ratio increased from 3.97% in 1999-2000 to 6.64% in 2007-08.

Major Components of States Own Tax Revenue Items

Rs. Cr.

99-00
1108 65.0 115 6.7 190 11.1 102 6.0 127 7.5 63 3.7 1704 100.0
AGR % Rs. Cr.

00-01
1342 21.2 61.5 135 17.8 6.2 372 96.2 17.0 109 6.4 5.0 147 15.3 6.7 79 26.1 3.6 2184 28.2 100.0

01-02
1402 4.5 56.8 197 45.9 8.0 468 25.8 19.0 110 1.1 4.4 137 -6.6 5.6 152 92.0 6.2 2467 13.0 100.0

02-03
1605 14.5 55.9 246 24.6 8.6 570 21.8 19.9 136 23.8 4.7 172 25.7 6.0 142 -6.5 4.9 2872 16.4 100.0

03-04
1864 16.1 56.5 256 4.2 7.8 657 15.2 19.9 153 12.7 4.6 200 16.4 6.1 171 20.1 5.2 3302 15.0 100.0

04-05
2471 32.6 59.2 307 19.6 7.3 723 10.0 17.3 198 29.3 4.7 262 30.7 6.3 216 26.4 5.2 4177 26.5 100.0

05-06
3012 21.9 60.2 389 27.0 7.8 869 20.2 17.4 236 19.3 4.7 353 34.8 7.1 143 -33.8 2.9 5002 19.8 100.0

06-07
3765 25.0 62.1 430 10.5 7.1 1001 15.1 16.5 260 10.3 4.3 283 -20.0 4.7 327 128.6 5.4 6065 21.2 100.0

07-08
4118 9.4 60.1 525 22.1 7.7 1086 8.6 15.8 405 55.4 5.9 327 15.9 4.8 394 20.7 5.7 6856 13.0 100.0

08-09
4400 6.8 60.5 601 14.4 8.3 1172 7.9 16.1 351 -13.4 4.8 380 16.0 5.2 369 -6.4 5.1 7272 6.1 100.0

Sales Tax

State Excise Taxes on Vehicles, Goods & Passengers Stamps & Registration Fees Taxes & Duties on Electricity

AGR % Rs. Cr. AGR % Rs. Cr. AGR % Rs. Cr. AGR % Rs. Cr. AGR % Rs. Cr.

Other Taxes

SOTR

AGR %

Tax on Sales/Trade is the major source of States Own Tax Revenue contributing about 60% of the tax revenue followed by Taxes on Vehicle Goods and Passenger (16%) State Excise (8%), Stamp and Registration (6%) and Taxes and Duties on Electricity (5%), in the year 2007-08.

Decline in growth rate of taxes on sales, trade etc., in 2007-08 was due to settlement of claims of input tax after introduction of VAT and reduction in rates of CST.

Growth in State Excise has been due to increase in fee and duty structure in certain types of liquor. Steep growth under Stamps and Registration in 2007-08 was due to collection of registration fees in respect of transfer of land to Indian Federation o f Farmers Corporation and allotment of land to new industries etc. 14

Impact of introduction of VAT on the Revenues of the State VAT was introduced in the State w.e.f. 1.4.2005 by replacing the erstwhile Sales Tax. After introduction of VAT, the collections increased by 22.46%, 20.53% and 18.59% in 2005-06, 2006-07 and 2007-08 respectively. The revenue collection on account of Sales Tax/VAT after implementation of VAT in the State for the last four years (2004-05 under Sales Tax regime) and 2005-06 to 007-08 (under VAT regime) are as under:Rs. In Crore Year 2004-05 2005-06 2006-07 2007-08 Sales Tax/VAT (excluding CST) Increase in Collection %age of increase

2061 2524 3042 3608

463 518 566

22.46 20.53 18.59

State Government has claimed Rs. 77.49 crore and Rs. 97.63 crore as VAT loss compensation from GOI for the years 2006-07 and 2007-08 respectively. No claim was made for the initial year 2005-06.

Collection of taxes under Major Head 0040 Taxes on Sale, Trade etc.
(Figures in Bracket are growth rate over previous year) Particulars Sales Tax on Petroleum Products VAT other than Petroleum Products Central Sales Tax (MH 0040) Taxes on Sales, Trades etc. 2004-05
669 (25.4%) 982 (21.9%) 410 (18.9%) 2471 (21.9%) 3012 (25.0%) 488 (48.2%) 3765 1198 (8.9%) 722

2005-06
839

2006-07
1016 (21.1%) 1304

The growth rate of VAT on petroleum and non petroleum products decreased from 25.4% & 21.9% in 2005-06 to 21.1% & 8.9% respectively in 2006-07.

Impact of changes in CST State Government reported that due to reduction in rate of CST, a compensation of Rs.131.53 crore was received towards CST loss upto October, 2007. The State Government has also claimed Rs 380.17 crore as compensation towards CST loss during 2007-08. There has been a further reduction of CST to 2% w.e.f. 1.6.2008 which will have an impact on collection of CST during the financial year 2008-09. The estimated compensation on the account in around Rs. 1050 crore and Rs. 1681 crore

15

during 2008-09 & 2009-10 respectively. As per the State, the calculations and details are based on the methodology prescribed by MoF as under: As per letter F.No.28/4/2007-ST Dt.10th October, 2007 of the Ministry of Finance, Department of Revenue, the loss accruing out of the phasing out of CST will be compensated by the Government of India through Budgetary support during 200708, 2008-09 and 2009-10. The loss will be estimated by computing the Compounded Annual Growth Rate (CAGR) of collection for the period from 2003-04 to 2006-07, applying the Growth rate to the actual collection of 2006-07 and deducting the actual collections in the subsequent years. Accordingly, the loss has been computed as shown below: Year * Rate of CST Collection (Rs. in crore) Growth rate Compounded Annual Growth Rate (CAGR)

T h 2003-04 4% 317.50 i 2004-05 4% 410.16 29.18% s 35.22% 2005-06 4% 487.55 18.87% 2006-07 4% 784.99* 61.01% T This is the Departmental figure of collection of CST for 2006-07. There is variation from the figure reflected in the AG Accounts i.e Rs.722.48 crore.

Anticipated Loss (Rs. in crore) % of CST in Actual/ Estimated Loss the anticipated in the proposed collection in the proposed scheme of proposed scheme scheme of CST CST phaseof CST phase-out phase-out out 2007-08 1061.46 3% 648.99 412.47 2008-09 1435.31 2% 384.95** 1050.36 2009-10 1940.82 1% 260.26*** 1680.55 ** Receipt from CST estimated in 2008-09(BE) ***35.22% growth rate applied to half of CST receipt (for rate reduction) estimated in 2008-09 (BE) Year Anticipated Collection @4% CST rate and 35.22% growth rate

(a) Own Non Tax Revenue (ONTR):

As a percent of GSDP: 1.67 in 1999-2000 1.91 in 2002-03 2.57 in 2007-08

Trend Growth Rate (TGR) of own non tax revenue: 20.42 for the period 1999-08 with buoyancy of 1.62.

16

ONTR ONTR (Rs. Crore) Annual Growth Rate As a % to GSDP Annual Buoyancy As a % of TRR As a % of ORR

99-00

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

08-09 (BE)

716 28.52 1.67

685 -4.33 1.58 -3.18

692 0.92 1.47 0.12 9.81 21.90

961 38.95 1.91 5.58 11.39 25.08

1095 13.88 1.78 0.62 11.59 24.90

1346 22.93 1.88 1.41 11.35 24.37

1532 13.85 1.95 1.39 10.88 23.44

2588 68.95 2.84 4.29 14.35 29.91

2654 2.53 2.57 0.19 12.08 27.90

2135 -19.53 1.83 -1.50 9.18 22.70

12.18 29.60

9.93 23.89

The high growth rate of Non Tax Revenue during 2006-07 was mainly due to receipt of debt waiver under DCRF (Rs. 764 crore), royalty from minerals (Rs. 132 crore), interest receipts (Rs. 100 crore), receipts from forest produce (Rs. 72 crore). As per information provided by the state government the receipts from sale of forest produce are as under: Rs. in Crores
Forest Produce 2002-03
2003-04 2004-05 2005-06 2006-07

2007-08

200809 (BE)

A. TIMBER B. NON-TIMBER Total Revenue from Forest Produce

9.63 76.50 86.13 8.96

3.29 34.06 37.35 3.41

8.22 27.26 35.48 2.64

6.65 47.40 54.05 3.53

9.94 116.63 126.58 4.89

7.00 49.45 56.46 2.95

14.34 101.89 116.23 5.44

%age to ONTR

Revenue from Royalty on Major Minerals:

Major Minerals Coal Chromites Iron ore Bauxite Others Total %age to ONTR 2002-03 310.7 18.2 42.3 27.7 18.4 417.4 43.42 2003-04 386.0 27.2 59.3 25.4 21.6 519.6 47.47 2004-05 441.9 44.0 72.9 29.0 31.2 619.1 46.01 2005-06 460.1 83.8 101.3 37.6 34.0 716.7 46.79 2006-07 516.1 111.3 127.8 50.1 31.4 836.8 32.33 2007-08 NA NA NA NA NA NA NA 2008-09 (BE) NA NA NA NA NA NA NA

Revenue from royalty of major minerals was only Rs.417 crores in 2002-03 which increased to Rs 837 crore in 2006-07. Major part of the revenue is due to royalty on on coal, chromite & iron ore. Following West Bengal, Orissa levied a cess on coal. However, consequent upon the judgment of the Supreme Court, this cess was discontinued with effect from the 5th September, 1991. The Honble Supreme Court in The State of West Bengal Vrs. Keshoram Industries Ltd. and others held that the vires of the Orissa Rural Employment, Education and Production Act, 1992 (Orissa Act 36 of 1992) was not correctly decided in The State 17

of Orissa versus Mahanadi Coalfield Ltd. The competence of the State Legislature to levy cess on land was upheld and it was further held that the impugned legislation did not touch upon the field covered under the MMRD Act, 1957. On the model of the 1992 Act, the State Government enacted the Orissa Rural Infrastructure and Socio Economic Development Act, 2004 for levy of tax on all mineral bearing land with the objective of providing additional resources for development of infrastructure, promotion of education, employment and for the socio-economic development in rural, backward and mining areas of the State. In this regard, letter written to JS (Ministry of Coal & Mines), GOI is placed at Annex XI. B. Expenditure I. Total Expenditure (Revenue + Capital)
Total Expd. Total Expr. (Rs. Crore) Annual Growth Rate As a % to GSDP Annual Buoyancy 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 (BE)

9734 20.49 22.68

10304 5.86 23.69 4.31

11148 8.19 23.75 1.03

11432 2.55 22.76 0.37

13286 16.22 21.63 0.73

13633 2.61 19.09 0.16

14709 7.89 18.73 0.79

17495 18.94 19.19 1.18

20971 19.87 20.30 1.49

26054 24.24 22.32 1.86

Of which
Revenue Expenditure Capital Expenditure

8459 1275

8834 1470

9882 1266

10015 1417

10861 2425

12372 1261

13604 1105

15772 1723

17723 3248

22707 3348

II. Total Revenue Expenditure (TRE) As a percent of GSDP: 19.71 in 1999-2000 19.94 in 2002-03 17.16 in 2007-08

TRE

Trend Growth Rate (TGR) of total revenue expenditure: 9.69 for the period 1999-08 with buoyancy of 0.77.
99-00 8459 24.09 19.71 00-01 8834 4.44 20.31 3.26 86.90 85.73 01-02 9882 11.86 21.05 1.49 88.64 02-03 10015 1.35 19.94 0.19 87.60 03-04 10861 8.45 17.68 0.38 81.75 04-05 12372 13.91 17.32 0.85 90.75 05-06 13604 9.95 17.32 1.00 92.49 06-07 15772 15.94 17.30 0.99 90.15
07-08 08-09 (BE)

TRE (Rs. Crore) Annual Growth Rate As a % to GSDP Annual Buoyancy As % of TE Of which Plan Non-Plan

17723 12.37 17.16 0.93 84.51

22707 28.12 19.45 2.16 87.15

1828 6631

1824 7010

1816 8066

1571 8444

1644 9218

1956 10416

2113 11491

2727 13045

4089 13634

5368 17339

18

Total Revenue Expenditure exceeded total Revenue Receipts during 1999-2000 to 200405. From 2005-06 onwards, total revenue receipts exceeded total revenue expenditure which resulted in revenue surplus for the state. Total revenue expenditure increased from Rs. 8459 crore in 1999-2000 to Rs. 17723 crore in 2007-08 at a trend growth rate of 9.69%. The Revenue expenditure was about 85% of the total expenditure during the year 200708. Of this Non-plan expenditure was about 77%, while the plan expenditure was only 23%.

Revenue & Expenditure Trends (Rs. Crore)

TRE 25000 20000 15000 10000 5000 0 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 TRR

AGR of Revenue Expenditure

Annual Growth Rate of Revenue Expenditure

60 50 40 30 20 10 0 -10 -20 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 PRE NPRE

19

ii) (PRE) As a percent of GSDP: 4.26 in 1999-2000 3.13 in 2002-03 3.96 in 2007-08

Trend Growth Rate (TGR) of plan revenue expenditure: 8.60% for the period 1999-08 with buoyancy of 0.68.
PRE

99-00
1828 11.00 4.26

00-01
1824 -0.18 4.19 -0.13

01-02
1816 -0.45 3.87 -0.06 18.38 16.29

02-03
1571 -13.51 3.13 -1.94 15.68 13.74

03-04
1644 4.64 2.68 0.21 15.13 12.37

04-05
1956 19.01 2.74 1.17 15.81 14.35

05-06
2113 8.01 2.69 0.81 15.53 14.36

06-07
2727 29.05 2.99 1.81 17.29 15.58

07-08
4089 49.97 3.96 3.75 23.07 19.50

08-09 (BE)
5368 31.27 4.60 2.41 23.64 20.60

PRE (Rs. Crore) Annual Growth Rate As a % to GSDP Annual Buoyancy As % of TRE As % of TE

21.61 18.78

20.65 17.70

Plan Revenue Expenditure increased sharply during 2006-07 and 2007-08 mainly due to more expenditure in Education, Health, Water Supply, Urban Development, Power & Other Rural Development etc. New Plan schemes viz. Biju Gram Jyoti Yojana (Rs.157.50 crore) and State Employment Mission (Rs.16 crore) were launched during the year 2007-08.

Non-Plan Revenue Expenditure (NPRE) As a percent of GSDP: 15.45 in 1999-2000 16.81 in 2002-03 13.20 in 2007-08 Trend Growth Rate (TGR) of non-plan revenue expenditure: 9.90 for the period 1999-08 with buoyancy of 0.79.
NPRE

99-00 6631 28.25 15.45

00-01 7010 5.71 16.12 4.20

01-02 8066 15.07 17.18 1.90 81.62 72.35

02-03 8444 4.69 16.81 0.67 84.32 73.86

03-04 9218 9.16 15.01 0.41 84.87 69.38

04-05 10416 13.01 14.58 0.80 84.19 76.41

05-06 11491 10.31 14.63 1.04 84.47 78.12

06-07 13045 13.53 14.31 0.84 82.71 74.57

07-08 13634 4.51 13.20 0.34 76.93 65.01

08-09 (BE) 17339 27.17 14.85 2.09 76.36 66.55

NPRE (Rs. Crore) AGR As a % to GSDP Annual Buoyancy As % of TRE As % of TE

78.39 68.13

79.35 68.03

20

Non-plan Revenue Expenditure as percentage of Total Revenue Expenditure increased from 78.4% in 1999-2000 to 84.5% in 2005-06, and then declined to 76.93% in 2007-08. Trend of Interest Payment, Pension and Salaries Interest Payments, Pensions & Salary as % of NPRE
50 40 30 20 10 0 01-02 02-03 03-04 04-05 05-06 06-07 07-08 Salary 08-09 Interest Payments Pension

AGR of Interest Payments, Pensions and Salary

Items
Rs. Crore

2002-03
AGR % (NPRE) Rs. Crore

2003-04

2004-05

2005-06

2006-07

2007-08

Interest Payments Pension Salary (AG Figures) Subsidy (AG Figures)

Total Committed Expr.

AGR % (NPRE) Rs. Crore AGR % (NPRE) Rs. Crore AGR % (NPRE)

2886 1.8 34.2 1030 2.6 12.2 3929 5.2 46.5

2860 -0.9 31.0 1158 12.5 12.6 3726 -5.2 40.4 230 2.5 7975 87

%age to NPRE

0.0 7844 93

3332 16.5 32.0 1260 8.8 12.1 3778 1.4 36.3 94 -59.1 0.9 8464 81

3697 11.0 32.1 1339 6.3 11.6 4002 5.9 34.8 83 -11.7 0.7 9121 79

3188 -13.8 24.4 1485 10.9 11.4 4028 0.6 30.9 170 104.8 1.3 8871 68

3169 -0.6 23.2 1801 21.3 13.2 4582 13.8 33.6 148 -12.9 1.1 9701 71

The interest payment as percentage of NPRE steadily declined from 34 % to 24% during the years 2002-07, whereas the expenditure on pension remained between 11-13% during the same period. The expenditure on salary as a percentage of NPRE declined from 46.5% in 2002-03 to 30.9% in 2006-07. This decline is significantly due to ban on creation of new post and filling up of base level vacant posts and implementation of VRS. A total of 41685 posts in Government Departments and 3876 posts in Grant in Aid/Urban Local Bodies have been abolished since till 1.11.2008 As a result, the number of employees has come down to

21

3,74,825 in 2007-08 from 4,18,474 in 2002-03. Average Salary per employee in Orissa is detailed Rs. 1,20,744 (Annex-X). This compares favourably with other states. Total committed expenditure was 93% of the non-plan revenue expenditure in 2002-03 which gradually came down to 68% in 2006-07 and was 71% in 2007-08. Subsidy payments were in the areas of power, industry, food, social welfare and nutrition. However power subsidy was nil in the year 2007-08.

14.00 13.00 12.00 11.00 10.00 9.00 8.00 7.00 12.82

Average Rate of Interest (%)

11.32 10.08 10.48 10.83

8.74

8.50

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

(Note: While calculating Average rate of Interest we exclude noninterest bearing obligations)

The interest payments on central loans declined from Rs 1164 crore in 2003-04 to Rs 656 crore in 2007-08 leading to fall in interest rate on Central loans from 12.18% in 2003-04 to 7.50% in 2007-08. This resulted in steady decline of average interest rate from 10.08% in 2003-04 to 8.50% in 2007-08.

Service-wise composition of Total Revenue Expenditure (%) TRE

General Services Social Services Economic Services

99-00 33.13 48.32 18.30

00-01 44.77 36.13 17.41

01-02 47.48 35.43 15.58

02-03 48.23 34.30 16.00

03-04 46.84 34.81 16.31

04-05 51.85 32.70 14.17

05-06 49.46 35.10 14.36

06-07 46.52 34.15 17.60

(in percent) 08-09 07-08 (BE) 39.66 37.32 21.04 43.51 34.72 20.11

The higher share of social services in 1999-2000 due to more expenditure under Calamity relief.

22

The Service wise break-up & AGR of Total Revenue Expenditure

(Rs. Crore)
TRE
General Services AGR Social Services AGR Economic Services AGR Compensation & Local Assignments 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 (BE)

2803 4.8 4087 45.9 1548 17.6 16

3955 41.1 3192 -21.9 1538 -0.7 120

4692 18.6 3501 9.7 1539 0.1 127

4830 2.9 3435 -1.9 1603 4.1 146

5087 5.3 3781 10.1 1771 10.5 153

6415 26.1 4046 7.0 1753 -1.0 144

6728 4.9 4775 18.0 1953 11.4 161

7337 9.1 5386 12.8 2776 42.1 272

7029 -4.2 6615 22.8 3729 34.3 351

9879 40.5 7883 19.2 4567 22.5 377

The expenditure on General Services ranged between 33-52% of the total revenue expenditure during 1999-2000 to 2007-08 whereas the expenditure on social and economic services ranged between 33-48% and 14-20% respectively during the same period.

Annual Growth Rate of Services (TRE)

40 30 20 10 0 -10 -20 -30 -40 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 General Social Economic

Capital Expenditure TGR of capital expenditure for the period 1999-08 is 6.59 with buoyancy 0.52.
99-00 1275 1.05 2.97 00-01 1470 15.28 3.38 11.24 13.10 14.27 01-02 1266 -13.88 2.70 -1.75 11.36 02-03 1417 11.96 2.82 1.71 12.40 03-04 2425 71.10 3.95 3.19 18.25 04-05 1261 -48.01 1.76 -2.95 9.25 05-06 1105 -12.33 1.41 -1.24 7.51 06-07 1723 55.91 1.89 3.48 9.85 07-08 3248 88.48 3.14 6.64 15.49 08-09 (BE) 3348 3.07 2.87 0.24 12.85

Capital Expd Capital Expenditure Annual Growth Rate As a % to GSDP Annual Buoyancy As % of TE

Break-up of Capital Expenditure

Capital Outlay Loan & Advances

799 476

834 636

887 379

1074 343

853 1572

1056 205

1038 67

1451 272

2815 433

3020 328

23

The loan and advance increased from Rs. 272 Crore to Rs. 433 Crore in 2007-08 due to repayment of state plan loans (Rs.382 Crore) consolidated on recommendations of Twelfth Finance Commission.

Capital Expenditure (Rs. Crore)

4000 3500 3000 2500 2000 1500 1000 500 0 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09

Capital Outlay on Major Sectors:

Rs.in Crore (Figures in brackets are %) Capital Outlay

99-00 0 15 9 6 22 8 43 522 8 118 49 (6.1) 799

00-01 14 (1.7) 15 (1.8) 19 (2.3) 26 (3.1) 55 (6.6) 16 (1.9) 37 (4.4) 464 (55.7) 17 (2.1) 149 (17.9) 21 (2.5) 834

01-02 58 (6.5) 17 (1.9) 22 (2.5) 28 (3.2) 74 (8.4) 16 (1.8) 26 (2.9) 448 (50.5) 5 (0.6) 115 (12.9) 78 (8.8) 887

02-03 10 (0.9) 11 (1) 20 (1.8) 38 (3.5) 45 (4.2) 49 (4.6) 33 (3) 507 (47.2) 19 (1.7) 302 (28.2) 40 (3.7) 1074

03-04 9 (1) 30 (3.5) 18 (2.1) 41 (4.8) 47 (5.5) 17 (2) 47 (5.5) 399 (46.7) 11 (1.3) 196 (23) 39 (4.6) 853

04-05 6 (0.6) 23 (2.2) 2 (0.2) 3 (0.3) 47 (4.4) 21 (2) 45 (4.2) 481 (45.6) 11 (1.1) 358 (33.9) 58 (5.5) 1056

05-06 21 (2.1) 31 (3) 2 (0.2) 16 (1.6) 70 (6.8) 17 (1.7) 40 (3.9) 473 (45.6) 14 (1.4) 318 (30.6) 34 (3.2) 1038

06-07 13 (0.9) 51 (3.5) 4 (0.3) 33 (2.3) 127 (8.8) 17 (1.2) 46 (3.2) 681 (46.9) 13 (0.9) 392 (27) 74 (5.1) 1451

07-08

08-09 (BE)

Police Public Work Education Health Water Supply Housing Forest Irrigation Cooperation Road & Bridges Others Total

0 (0) 132 (4.7) 6 (0.2) 20 (0.7) 441 (15.7) 72 (2.6) 42 (1.5) 1353 (48.1) 6 (0.2) 522 (18.6) 220 (7.8)
2815

25 (0.8) 109 (3.6) 3 (0.1) 23 (0.8) 529 (17.5) 87 (2.9) 18 (0.6) 1240 (41.1) 12 (0.4) 692 (22.9) 280 (9.3) 3020

24

Capital Outlay was Rs.2815 crores of the total expenditure of Rs.20971 crores in 200708. Of this, 48% was allocated for irrigation, 19% for Road & Bridges, 16% for Water Supply, 5% for Public works and 3% for Housing etc. Allocation for Health and Education sectors remained very low.

C. Public Debt Outstanding Debt & Guarantees

Outstanding Debt & Guarantees as % of GSDP

70 60 50 40 30 20 8.61 10 0 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 4.23 11.18 10.42 8.29 47.3 55.0 59.3 61.2 55.4 50.5 49.0 43.3 37.3

5.35

4.45

2.90

2.10

Outstanding Debt

Outstanding Guarantees

The outstanding liabilities of the State increased 1.90 times from Rs. 20289 crore in 1999-00 to Rs. 38525 crore in 2007-08 over a period of 8 years. The ratio of debt to GSDP increased from 47.3% in 1999-00 to 61.2% in 2002-03 and thereafter decreased to 37.3% in 2007-08. Though there is increase in outstanding liabilities of the State Government in all the years, the outstanding Debt/GSDP ratio dropped during the years 2003-04 onwards due to the higher growth rate of GSDP during these years.

The following table gives the composition of outstanding debt in 2007-08. Composition of Outstanding Debt (2007-08) Total Outstanding Debt Internal Debt (of which) a) Market Loans b) NSSF Securities Loans & advances from Central Government Small Savings & Provident Funds Other Obligations 25 Amount
Rs. Cr.

Percent 100 44.6 20.8 17.5 21.8 27.8 5.7

38525 17185 8024 6756 8402 10727 2212

Internal Debt forms the largest component of outstanding debt i.e. about 45% of total debt. The share of NSSF securities is 18% of the outstanding liabilities of the Government.

As per the analysis of CAG in their Report of 2006-07, the following issues relating to the debt of the State were highlighted: Debt Sustainability The debt sustainability is defined as the ability to maintain a constant debt-GDP ratio over a period of time. In simple terms, public debt is considered sustainable as long as the rate of growth of income exceeds the interest rate or cost of public borrowings subject to the condition that the primary balance is either positive or zero. Given the rate spread (GSDP growth rate interest rate) and quantum spread (Debt*rate spread), debt sustainability condition states that if quantum spread together with primary deficit is zero, debt-GDP ratio would be constant or sustainable. On the other hand, if PD>QS, debt- GDP ratio would be rising and if PD<QS, it would be falling. Debt Stabilisation A necessary condition for stability states that if the rate of growth of economy exceeds the interest rate or cost of public borrowings, the debt-GDP ratio is likely to be stable provided primary balances are either zero or positive or are moderately negative. Given the rate spread (GSDP growth rate interest rate) and quantum spread (Debt*rate spread), debt sustainability condition states that if quantum spread together with primary deficit is zero, debt-GSDP ratio would be constant or debt would stabilise eventually. On the other hand, if primary deficit together with quantum spread turns out to be negative, debt- GSDP ratio would be rising and in case it is positive, debt-GSDP ratio would eventually be falling. Trends in fiscal variables indicating the progress towards the debt stabilisation are indicated in below table: Debt SustainabilityInterest Rate and GSDP Growth (in per cent)
Average Interest Rate GSDP Growth Interest Spread Quantum Spread (Rs. In crore) Primary Deficit (Rs. In crore)

2001-02 10.95 7.48 (-)3.47 (-)830 (-)1133

2002-03 9.85 6.09 (-)3.76 (-)1047 70

2003-04 8.83 21.78 12.94 3477 (-)713

2004-05 9.51 13.04 3.54 1204 1966

2005-06 9.92 9.66 (-)0.28 (-)101 3421

2006-07 8.18 9.66 1.47 565 4012

Table reveals that quantum spread together with primary deficit remained negative during 2001-02 and 2002-03 resulting an increase in debt-GSDP ratio during 2002-03. Since 2003-04, quantum spread together with primary deficit consistently remained positive resulting in a continuous decline in debt/GSDP ratio from 55.7 in 2003-04 to 26

47.5 per cent in 2006-07. These trends indicate the State is moving towards the debt stabilisation which in turn improves the debt sustainability position of the State. Sufficiency of Non-debt Receipts Another indicator for debt stability and its sustainability is the adequacy of incremental non-debt receipts of the State to cover the incremental interest liabilities and incremental primary expenditure. The debt sustainability could be significantly facilitated if the incremental non-debt receipts could meet the incremental interest burden and the incremental primary expenditure. Belo tableindicates the resource gap as defined for the period 2002-07. Incremental revenue receipts and Revenue Expenditure (Rs. In crore) Resource Gap Total Exp. 284 1854 347 1076 2787 1152 -757 2207 1090 1099

Period Non-Debt Receipts 1436 1097 2554 2166 3886

2002-03 2003-04 2004-05 2005-06 2006-07

Incremental Primary Interest Exp. Payments 233 51 1880 -26 -125 472 711 365 3296 -509

The trends in above table reveal that the incremental non-debt receipts of the State had been able to meet the incremental interest liabilities and incremental primary expenditure in four years out of the five year period 2002-07. Moreover, the persistent positive resource gap during the last three years (2004-07) is a pointer towards the fiscal and debt sustainability of the State. Net Availability of Borrowed Funds The debt sustainability of the State also depends on (i) the ratio of the debt redemption (Principal + Interest Payments) to total debt receipts and (ii) application of available borrowed funds. The ratio of debt redemption to debt receipts indicates the extent to which the debt receipts are used in debt redemption indicating the net availability of borrowed funds. The solution to the Government debt problem lies in application of borrowed funds, i.e. they are (a) not being used for financing revenue expenditure; and (b) being used efficiently and productively for capital expenditure which either provides returns directly or results in increased productivity of the economy in general which may result in increase in Government revenue. The position of the receipt and repayment of internal debt and other fiscal liabilities of the State as well as the net availability of the borrowed funds over the last six years is given below:

27

Net Availability of Borrowed Funds

(Rupees in crore)
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Internal Debt Receipt Repayment(Principal +Interest) Net Fund Available Net Fund Available (%) Loans & Advances from GOI Receipt Repayment(Principal +Interest) Net Fund Available Net Fund Available (%) Other obligations Receipt Repayment(Principal +Interest) Net Fund Available Net Fund Available (%) Total liabilities Receipt Repayment(Principal +Interest) Net Fund Available Net Fund Available (%) 4654 4457 197 4.23 6085 5203 882 14.49 7154 6136 1018 14.22 6050 6862 -812 -13.42 4837 6076 -1239 -25.61 4123 6518 -2395 -58.08 1994 1838 156 7.82 2020 1843 177 8.76 1675 1793 -188 -7.04 1938 2092 -154 -7.95 2742 2753 -11 -0.40 2077 2270 -193 -9.29 973 1632 -659 -67.73 1769 2062 -293 -16.56 1141 2509 -1368
-119.89 1687 987 700 41.49 2296 1298 998 43.47 4338 1834 2504 57.72 2689 2344 345 12.83 2105 2043 62 2.95 1305 2768 -1463 -112.11

1423 2426 -1003 -70.48

-10 1280 -1290

-12900

741 1480 -739 -99.73

The net funds available on account of the internal debt and loans and advances from Government of India and other obligation after providing for the interest and repayments remained negative during the last four years 2003-07. During the current year, the Government repaid principal plus interest on account of internal debt of Rs 2768 crore; Government of India loans of Rs 1480 crore and also discharged other obligation of Rs 2270 crore as a result of which payments exceeded the receipts during the year. During the recent years, in view of the large cash balances, the focus of the Government seems to be on discharging the past debt obligations both on account of principal and interest payments on loans raised from the market as well as from the Government of India. D. Debt Swap Scheme Central Government introduced Debt swap scheme in September 2002 to give debt relief to states on the high cost debt owed by the states to the Central Government. High cost debt was defined as the debt which carried interest rate of 13% or above. Only state plan loans and small saving loans given up to 31.3.99 qualified for debt swap. 28

The State Government pre-paid high cost market borrowings (Rs. 551 crore) and NSSF (Rs. 200 crore) loans under the debt buy back scheme introduced by RBI during 2006-08. Reduction in NSSF loan component of internal debt receipts during the year 2007-08 was due to recommendation of the sub-committee of NDC to reduce the States share of net collection from 100 to 80 %. Debt Consolidation and Relief Facility (DCRF) The TFC has projected Rs 7005.17 crore for consolidation under DCRF against which Rs 7637.97 crore was consolidated. The base Revenue deficit as estimated by TFC (2001-04) was Rs 2457 crore. It may be noted that for estimating the base revenue deficit (2001-04) the TFC has taken the revised estimates (RE) for the year 2003-04, where as the FCD has taken the Actuals for computing the eligible amount of debt waiver. Annual repayment schedule prior to consolidation 613.36 643.87 674.80 478.59 515.09 Interest payment due prior to consolidation 886.41 815.95 741.62 663.54 607.98 New amortization schedule after consideration 381.90 381.90 381.90 381.90 381.90 Schedule of interest payment after reset of interest at 7.5% per annum 572.85 544.20 515.56 486.92 458.28

Year

2005-06 2006-07 2007-08 2008-09 2009-10

Details of debt write-off availed (Rs. in crore) Revenue Deficit (+)/ Surplus (-)
Minimum Reduction in RD required from the base year (Rs 2457 crore)/ previous year for full debt waiver Fiscal Deficit/ Surplus as % of GSDP Amount of debt waiver received

Year

Whether Actual / RE / BE Actual Actual Actual BE

Fiscal

Deficit (+)/ Surplus (-) 276.46 -823.18

-1351.25

2005-06 2006-07 2007-08 2008-09

-481.20 -2260.60 -4243.92 -563.87

2938.20 4717.60 6700.92 3020.87

0.35 -0.90 -1.31 2.17

381.90 381.90 381.90

2537.0

The State had achieved the deficit targets as laid down in FRBM Act by 2005-06 and maintained thereafter which has enabled the state to avail full debt waiver under DCRF for the period 2005-08. 29

The state has also drawn an amount of Rs 315.35crore (Part- A & B) under fiscal reform facility (2000-05) from the incentive fund as recommended by EFC. However as per the State Government, they are eligible to receive more funds under this scheme.

E. Deficit Indicators

Deficits as a percent of GSDP

Year NPRD SORD RD GFD PD RD/GFD
99-00 3.68 14.07 6.00 8.73 5.85 0.69 00-01 2.46 13.71 4.44 7.65 2.39 0.58 01-02 4.14 14.32 6.04 8.45 2.41 0.71 02-03 2.81 12.31 3.14 5.61 -0.14 0.56 03-04 2.00 10.53 2.31 5.82 1.16 0.40 04-05 0.73 9.59 0.73 1.91 -2.75 0.38 05-06 -1.26 9.00 -0.61 0.35 -4.36 -1.74 06-07 -3.20 7.81 -2.48 -0.90 -4.40 2.75 07-08 -4.72 7.95 -4.11 -1.31 -4.38 3.14 08-09 (BE) -1.30 11.39 -0.48 2.17 -1.52 -0.22

Non-Plan Revenue Deficit= NPRE (TRR-Plan Grants); States Own Revenue Deficit = TRE-ORR

Besides achieving a revenue surplus in the years 2005-08 the state has also shown a fiscal surplus in 2006-07 and 2007-08.

Deficit Indicator as % of GSDP

Revenue Deficit 10.00 8.00 6.00 4.00 2.00 0.00 -2.00 -4.00 -6.00 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 Gross Fiscal Deficit Primary Deficit

30

F.

Guarantees

The State Government has not passed any law under Article 293 of the Constitution for laying down the limits within which the Government may give guarantees on the security of the Consolidated Fund of the State. However, Administrative ceiling has been imposed in the year 2002 which states that the total outstanding Government guarantees as on 1st day of April every year shall not exceed 100 percent of the State revenue receipts of the second preceding year as reflected in the books of accounts maintained by Accountant General. It also states that attempts should be made to bring this gradually own to the level of 80 per cent over the next five years. For this purpose the States revenue receipts would include, States Own tax Revenue, States Own Non-Tax Revenue and Devolution of shared Tax under the Award of the Finance Commission. Guarantees given by the State Government: Orissa (Rs. crore) Maximum amount guaranteed 8487 9343 9297 9252 8589 8587 Outstanding amount of guarantees as on 1st April 5231 5094 3823 3496 2648 2168 States revenue receipts of second preceding year (TRR)* 5473 5807 6639 7724 9500 11411 % age of outstanding guarantees to States revenue receipts of second preceding year 95.57 87.71 57.59 45.26 27.87 19.00

Year

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

*(TRR Grant-in-aid)

The total outstanding guarantees as on 1st April of the year maintained within stipulated administrative ceiling.

Since 2002-03, a total expenditure of Rs.629.36 crore has been incurred by the State Government to settle defaults in repayment of guaranteed loans. During the year 2007-08 (upto December) Rs.146.04 crore has been paid for discharging guarantee obligations. This has been paid to HUDCO and several nationalised banks (Central Bank, Union Bank) out of One Time Settlement (OTS) provision made by the State Government.

31

CHAPTER - III ISSUES RELATING TO TFC RECOMMENDATIONS

1. Transfers from Centre
Items Share in Central Taxes A TFC Projections Actuals* Total Grants B=(B1+B2) TFC Projections Actuals Gap Grants B1 TFC Projections Actuals Other TFC Grants B2 TFC Projections Actuals Total Transfers C D TFC Projections Actuals Deviations 5715 5872 157 6447 7262 815 7260 8368 1108 8208 8245 9314 36943 29747 2081 507 507 1044 1041 1060 1007 1078 1097 4785 2555 488 488 488 488 995 995 1044 1041 1060 1007 1078 1097 5273 4719 4877 5403 6220 6200 7362 7130 8245 8217 31669 26704 2005-06 (Act) 2006-07 (Act) 2007-08 (Act) 2008-09 (BE)

(Rs. Crore)
2009-10 (Est) 2005-10 (Tot)

Source: TFC Reports and FCD of DEA of Ministry of Finance, Govt. of India *Statement-2 Provided by State Govt.

The actual transfers are higher by Rs. 157 crore, Rs 815 crore and Rs 1108 crore in 2005-06, 2006-07 and 2007-08 respectively due to higher tax devolution on account of higher tax revenue buoyancy than that projected by TFC. Other TFC Grants
Items Roads & Bridges Public Buildings Forests Heritage State Specific Needs Local Bodies Calamity Education Health Total TFC Recommendation 2005-06 2006-07 2007-08 2005-06 (Rs. In Crore) Actual Releases 2006-07 2007-08

15.00 181.40 226.16 53.49 31.22 507.27

368.77 97.28 15.00 12.50 42.50 181.40 232.68 58.57 34.81 1043.51

368.77 97.28 15.00 12.50 42.50 181.40 239.53 64.13 38.81 1059.92

15.00 181.40 226.16 53.46 31.22 507.24

368.77 48.64 15.00 12.50 40.50 171.00 291.34 58.57 34.81 1041.13

368.77 145.92 15.00 12.50 39.50 160.60 180.87 64.13 19.41 1006.7

Source: TFC Reports and FCD of DEA of Ministry of Finance, Govt. of India

State has not drawn 2nd installment of TFC grants under health in 2007-08 (Rs.19 Crore & Calamity Relief (Rs. 59 Crore) and Local Bodies (Rs.21 Crore) aggregating Rs. 99 32

Crore. This was due to delay in submission of Utilisation certificates (UCs). In case of the Health Sector this was due to shortfall in achieving the desired NPRE level.

Fiscal Responsibility and Budget Management Act

The state government enacted FRBM Act in May, 2005. The act prescribes three fiscal indicators namely (1) Revenue Deficit as a percentage of GSDP, (2) Fiscal Deficit as a percentage of GSDP, (3) Prudent debt management

The salient features of the Act are:

a) Reduce revenue deficit to nil within a period of five financial years beginning from the initial financial year on the 1st day of April, 2004 and ending on the 31st day of March, 2009. b) Reduce fiscal deficit to by 1.5 per cent of GSDP in each of the financial years beginning on 1st April, 2004 to bring it down to not more than 3 per cent of the gross state domestic product within a period of five financial years ending on 31stMarch, 2009. c) Generate a primary surplus of over two percent of GSDP by the year ending 31st March, 2008. d) In order to bring the debt stock to a sustainable level, interest payment as a percentage of revenue receipts to be limited from 18 25%. e) The total debt stock shall be limited to 300 % of the total revenue receipt of the state by the year ending 2007-08. f) The ratio of salary to States own revenue is to be reduced to 80 percent by the year ending 31-03-2008.

g) The ratio of non-interest committed revenue expenditure to States own and mandated revenue was to be reduced to 55 percent by the year ending 31-03-2008.

Provided that while revenue deficit and fiscal deficit exceed the limits specified under this sub-section due to unforeseen demands on the finances of the State Government because of natural calamity, such excess shall not exceed the actual fiscal cost that can be attributed to the natural calamities. 2. Major Recommendations of Twelfth Finance Commission and Progress thereon
Recommendations I A Core Recommendations (non-negotiable) Eliminating revenue deficit by 2008-09 The state has achieved revenue surplus since 2005-06 and has also budgeted for Revenue Surplus in 2008-09. Reducing fiscal deficit to 3% of GSDP or its Fiscal Deficit was 0.37 in 2005-06 which equivalent as ratio of interest payment to revenue improve to surplus of 0.90 and 1.31 in receipt 2006-07 and 2007-08 respectively. Bringing out annual reduction targets of revenue The State enacted FRBM Act in May, 2005. and fiscal deficits Progress/Action Taken

33

Recommendations D

Progress/Action Taken

Bringing out annual statement giving prospects for Economic Survey and Medium Term Fiscal the State economy and related fiscal strategy Policy is being brought out regularly. Bringing out special statements along with the The salary figures of the State Govt. budget giving in detail number of employees in employees have been incorporated in Government, Public Sector, aided institutions and Finance Accounts w.e.f. 2005-06. related salaries Other Recommendations States should follow recruitment and wage policy, in a manner such that the total salary bill relative to revenue expenditure net of interest payments and pensions does not exceed 35 per cent. (Salaries) / {TRE - (IP + Pen)} Has been: 2005-06 46.71% 2006-07 36.29% 2007-08 35.93% 26.25% 17.68% 14.43% 18.53%

II A

In the case of States, the level of interest payment IP/TRR relating to the revenue receipts would fall to 15% 2005-06 by 2009-10. 2006-07 2007-08 2008-09(BE) The pension liabilities in the case of States account for a larger share of its revenue receipts. This share may increase further in view of the increasing longevity and the number of appointments in the late sixties and early seventies, when the size of the state governments was expanding. State Govts. need to take up initiative similar to those of the central Government for pension reforms. This would also be facilitated by the appointment of a regulator. Setting up a sinking fund for amortization of all loans including loans from banks, liabilities on account of NSSF, etc. The fund should be maintained outside the consolidated fund and the Public Account and should not be used for any other purpose, except for redemption of loans. Pension/TRR 2005-06 2006-07 2007-08 2008-09(BE)

9.50% 8.23% 8.20% 12.01%

The new contributory pension scheme has been implemented w.e.f. 1st January, 2005 The Consolidated Sinking Fund has been set up in 2003-04 to be utilized as an Amortization Fund for redemption of liability arising out of Open Market Borrowing at the rate of 2% of the total outstanding debt at the end of each year. The State has transferred an amount of Rs. 3837.84 crore to the fund by 2007-08. The Guarantee Redemption Fund has been set up and a sum of Rs 480.00 crore has been transferred during 2002-03 to 2007-08. 2005-06 2006-07 2007-08 48.98% 43.30% 37.29%

Setting up of guarantee redemption fund through ear marked guarantee fees. This should be preceded by risk weighting of guarantees. The quantum of contribution of the fund should be decided accordingly. Debt GSDP ratio to be brought down to 28%.

34

3. Calamity Relief Fund The Finance Accounts of Orissa for the years 2002-03 to 2007-08 depicted the following position of CRF Accounts:Year Total expenditure on calamity relief Expenditure met from CRF Transfer from Centre

State share

Funds required to be transferred to the CRF

Funds actually transferred to CRF (As per Finance Account)

CRF

NCCF

CRF

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Total

206.7 345.8 303.6 396.5 457.7 245.6 1956.0

216.6 324.5 275.9 238.2 458.1 287.2 1800.6

90.5 95.0 99.8 226.2 291.3 180.9 983.8

21.7 104.4 53.4 0.0 25.0 0.0 204.6

30.2 31.7 33.3 75.4 97.1 60.3 327.9

142.4 231.2 186.5 301.5 413.5 241.2 1516.2

142.4 339.7 186.5 301.5 425.3 241.1 1636.5

As per Finance Account after meeting out expenditure from the CRF the balance at the end of each year will be as per details given below:
Year Opening Balance 172.6 98.3 113.5 24.1 87.4 54.7 Transfer to CRF 142.4 339.7 186.5 301.5 425.3 241.1
Expr. met from CRF as per Finance Account

Closing Balance 98.3 113.5 24.1 87.4 54.7 8.6

st

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

216.6 324.5 275.9 238.2 458.1 287.2

The balance in the CRF should have been Rs.8.6 crore as on 31 March 2008 as is evident from the above table. However as per Statement no. 16 of the finance account there is a balance of Rs.95.53 crore in CRF as on that date. The CRF balance was transferred from MH 8121 to 8235 as per the CRF Scheme in the year 2005-06. The State Government transferred an amount of Rs. 1636.5 crore in the Calamity Relief Fund during the period 2002-08 against Rs. 1516.2 crore required to be transferred during that period. State has clarified that the additional transfer of Rs 108.5 crore in 2003-04 due to interest earning of Rs. 45.31 crore on balance and amount deposited by Co-operation Department of Rs 63.14 crore. The additional transfer of Rs 11.8 crore in 2006-07 due to interest earning on investment. The expenditure met from CRF was higher than the funds actually transferred due to a positive opening balance in 2002-03. During the period 2002-07, the State Govt. incurred an expenditure of Rs.1956 crore on calamity relief. However, an amount of Rs. 1800 crore was met from the CRF during that period, the balance expenditure might have been ineligible for meeting from CRF. As on 31.3.2008 balance in CRF Investment was Rs. 39.29 Crore. 35

Comparison of fiscal indicators among 12th FC projections, States Own projections and Actual /BE for Orissa.

Comparison of Own Revenue Receipts (Rs. Cr.)

12000 Projections by 12th FC 10000 8000 6000 4000 2000 0 2005-06 2006-07 2007-08 2008-09 BE 2009-10 Est. Projections by State Actual

Table: Own Tax and Non-tax Revenue Receipts (Rs. in Crore) 2005-06 Projections by 12th FC Own Tax Revenue Own Non Tax Revenue Projections by State Own Tax Revenue Own Non Tax Revenue* Actual Own Tax Revenue Own Non Tax Revenue 5002 1532 6065 2588 6856 2654 7272 2135 8200 2142 4358 1190 3832 995 2006-07 4933 1357 4234 1052 2007-08 2008-09 (BE) 6322 1747 5169 1169 2009-10 (Est.) 7156 1979 5712 1268

5585 1541 4678 1107

* The figures are inclusive of Lotteries. While for TFC projections and Actual are net of lotteries. The actual of Own Tax and Non Tax Revenue exceeded TFC as well as State projections in all the years.

36

Comparision of NPRE (Rs. cr.)

30000
Projections by 12th FC Projections by State Actual

25000 20000 15000 10000 5000 0 2005-06 2006-07 2007-08 2008-09 2009-10

Service-wise Non-Plan Revenue Expenditure 2005-06 2006-07 Projections by 12th FC 6367 6817 General Services 3570 3802 Interest Payment 1758 1934 Pension 3034 3308 Social Services 1160 1218 Economic Services
GIA TO Local Bodies & Committed Liabilities

(Rs.in Crore)
2007-08 7307 4049 2127 3608 1279 1049 13244 7950 4121 1984
5202 2751 2008-09(BE) 2009-10(Est.)

Total Projections by State General Services Interest Payment Pension Social Services Economic Services
GIA TO Local Bodies & Committed Liabilities

196 10756 6932 3580 1708

4319 1991

220 11563 7491 3858 1885

4736 2334

7839 4312 2340 3936 1344 1140 14259 8469 4331 2183
5724 3261

8489 4593 2574 4295 1412 1240 15436 9072 4531 2393
6314 3887

Total Actual General Services Interest Payment Pension Social Services Economic Services
GIA TO Local Bodies & Committed Liabilities

445 13687 6721 3697 1339 3439 1183 147 11491

479 15040 7325 3188 1485 3873 1575 272 13045

1685 17588 6999 3169 1801 4296 1988 351 13634

1840 19294 9818 4312 2796 5055 2089 377 17339

2025 21298 12067 4593 4612 10903 5529 434 28933

Total

Non-Plan Revenue Expenditure has been higher than what was projected by the TFC but lower than by the States own projections till 2008-09. 37

Pre-Devolution NPRE Deficit/Surplus

20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2005-06 2006-07 2007-08 2008-09 2009-10 Projections by 12th FC

(Rs. Crore)

Projections by State

Actual/RE/BE/Est.

Table 3.6: Pre-Devolution NPRE Deficit (+) / Surplus (-) 2005-06 Projections by 12th FC Projections by State Actual 5207 8858 4957 2006-07 5273 9752 4392 2007-08 6118 11801 4125 2008-09 (BE) 6190 12954 7932

(Rs. in Crore) 2009-10 (Est.) 6300 14316 18590 Total 29089 57681 39995

The TFC and the States projection of pre devolution deficit are higher than the Actuals
for 2005-06 to 2007-08. However in 2008-09 (BE) the figures are higher than TFC projections but lower than that projected by the State.

38

4. Comparison between Information on Important Fiscal Parameters as Projected in the XI th Five Year Plan# (2007-12) and provided as State Forecast to XIII th Finance Commission Table: Comparative Fiscal Parameters
(Rs. In Crore) SN 1 I a b A a b B a b II a b III a b Items
2007-08 2008-09

Current Prices
2009-10 2010-11 2011-12 2007-12

2 State's Own Revenue Receipts Planning Commission (XI th Plan) Submitted to Finance Commission by State Variation (b-a) State's Own Tax Revenue Planning Commission (XI th Plan) Submitted to Finance Commission by State Variation (b-a) State's Non Tax Revenue Planning Commission (XI th Plan) Submitted to Finance Commission by State Variation (b-a) Non-Plan Revenue Expenditure Planning Commission (XI th Plan) * Submitted to Finance Commission by State Variation (b-a) Pre-devolution NPR Deficit Planning Commission (XI th Plan) Submitted to Finance Commission by State Variation (b-a)

8012 9510 1498 6616 6856 241 1396 2654 1257 14907 13634 -1273 6895 4125 -2771

9098 9407 309 7608 7272 -336 1491 2135 645 16901 17339 438 7803 7932 129

10366 10342 -24 8749 8200 -549 1617 2142 525 18682 28933 10250 8316 18590 10274

11817 11026 -790 10061 8760 -1301 1755 2266 511 20265 29681 9416 8448 18655 10206

13480 12027 -1453 11571 9628 -1943 1910 2399 490

52773 52313 -461 44604 40716 -3888 8169 11596 3427

21900 92656 33540 123127 11640 30471 8420 21513 13093 39883 70814 30932

The State has projected lower receipts between 2009-10 to 2011-12 to the Finance Commission than to the Planning Commission. The State has projected higher NPRE during the same period to the Finance Commission than to the Planning Commission. This results in an overestimation of Rs. 30932 Crore Pre-Devolution Non-Plan Revenue Deficit for the period 2007-12 to the Finance Commission when compared to the projection made to the Planning Commission. As per the State Government, this difference in projected receipts is due to the emerging global recession and phasing out of CST which were not taken into account while making the projections for Planning Commission. On the expenditure side the implications of pay revision, enhanced expenditure on food subsidy due to the introduction of the Rs.2/ per kg rice scheme, provision of higher maintenance expenditure and expenditure on calamity relief were not provided for in the Planning Commission estimates.

39

CHAPTER - IV COMPARISON WITH OTHER GENERAL CATEGORY STATES

(Haryana & Punjab Lottery & Road Transport, Goa Power & lottery, West Bengal, Karnataka, Kerala &, Maharashtra Lottery are netted but other States not done)

Revenue Receipts: TGR of States Total Revenue Receipts (2001-2007) Orissa 20.27 percent General Category States 16.95 percent Rank among General Category States 3 States Total Revenue Receipts as a percent to GSDP (2005-06) Orissa 17.93 percent General Category States 14.06 percent Rank among General Category States 2
TRR/GSDP 2005-06 Sl.No. General Category States % Rank

TGR of TRR (2001-07) % Rank

1 2 3 4 5 6
7

Andhra Pradesh Bihar Chhattisgarh Goa Gujarat Haryana Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal
Total (1 to 17)

14.77 22.38 17.02 13.38 11.57 12.22 13.45 16.81 12.71 17.71 11.02 17.93 12.39 16.78 15.19 16.21 10.05 14.06

9 1 4 11 15 14 10 5 12 3 16 2 13 6 8 7 17

14.84 18.55 20.32 17.85 13.50 20.01 17.98 19.82 14.43 17.90 15.59 20.27 20.84 15.72 17.12 18.52 13.84 16.95

14 6 2 10 17 4 8 5 15 9 13 3 1 12 11 7 16

8 9 10 11 12 13 14 15 16 17

40

TGR of Transfers from Centre (CT) (2001-07) Orissa 19.08 percent General Category States 19.15 percent Rank among General Category States 9

Share of Transfers from Centre (CT) in the States Total Revenue Receipts (2006-07) Orissa 52.01 percent General Category States 36.95 percent Rank among General Category States 3 TGR of States Own Revenue Receipts (ORR) (2001-2006) Orissa 19.95 percent General Category States 14.25 percent Rank among General Category States 1
General Category

Sl.No.

States Andhra Pradesh Bihar Chhattisgarh Goa Gujarat Haryana Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal
Total (1 to 17)

TGR of CT 2001-07 % Rank 13.62 20.78 22.89 18.86 17.94 19.66 22.89 18.93 16.90 20.12 29.22 19.08 29.25 16.19 18.63 19.12 14.83 19.15 17 5 3 11 13 7 4 10 14 6 2 9 1 15 12 8 16

*CT/TRR 2006-07 % Rank 31.26 80.31 43.27 19.22 24.48 14.10 55.65 27.92 29.50 48.89 23.75 52.01 20.82 42.38 23.76 51.27 49.93 36.95 9 1 7 16 12 17 2 11 10 6 14 3 15 8 13 4 5

TGR of ORR (2001-06) % 12.96 11.83 17.81 17.52 9.77 16.53 13.97 19.22 12.97 17.69 10.97 19.95 16.13 15.35 15.48 15.03 13.60 14.25 Rank 14 15 3 5 17 6 11 2 13 4 16 1 7 9 8 10 12 Buoyancy 1.18 1.48 1.17 1.03 0.65 1.27 0.82 1.57 1.14 2.13 0.89 1.35 1.92 1.69 1.40 1.52 1.25 1.24

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

* CT-Central Transfers

41

States Own Revenue Receipts to GSDP (2005-06) Orissa 8.32 percent General Category States 8.98 percent Rank among General Category States 13

Share of States Own Revenue Receipts (ORR) in the Total Revenue Receipts (2006-07) Orissa 47.99 percent General Category States 63.05 percent Rank among General Category States 15 ORR/GSDP (2005-06) % Rank 10.13 6 5.12 10.17 11.00 8.79 10.04 6.65 12.21 8.86 9.73 8.95 8.32 9.26 10.16 11.60 7.79 4.83 8.98 16 4 3 12 7 15 1 11 8 10 13 9 5 2 14 17 ORR/TRR (2006-07) % Rank 68.74 9 19.69 56.73 80.78 75.52 85.90 44.35 72.08 70.50 51.11 76.25 47.99 79.18 57.62 76.24 48.73 50.07 63.05 17 11 2 6 1 16 7 8 12 4 15 3 10 5 14 13 TGR of ORR (2001-06) % 12.96 11.83 17.81 17.52 9.77 16.53 13.97 19.22 12.97 17.69 10.97 19.95 16.13 15.35 15.48 15.03 13.60 14.25 Rank 14 15 3 5 17 6 11 2 13 4 16 1 7 9 8 10 12

Sl. No . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Special Category States Andhra Pradesh Bihar Chhattisgarh Goa Gujarat Haryana Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal
Total (1 to 17)

1.18 1.48 1.17 1.03 0.65 1.27 0.82 1.57 1.14 2.13 0.89 1.35 1.92 1.69 1.40 1.52 1.25 1.24

42

States Own Tax Revenue to GSDP (2005-06) Orissa 6.37 percent General Category States 7.64 percent Rank among General Category States 14

Share of States Own Tax Revenue (SOTR) in the States Total Revenue Receipts (2006-07) Orissa 33.63 percent General Category States 51.55 percent Rank among General Category States 15 SOTR/GSDP (2005-06) % Rank 8.14 7 4.47 7.80 8.38 7.25 8.53 4.38 10.91 8.22 7.84 7.76 6.37 8.19 7.95 10.44 6.74 4.40 7.64 15 10 4 12 3 17 1 5 9 11 14 6 8 2 13 16 SOTR/TRR (2006-07) % Rank 54.08 8 17.47 44.05 61.95 59.56 63.29 31.85 63.85 66.37 40.76 65.33 33.63 49.33 46.75 67.88 37.95 45.32 51.55 17 12 6 7 5 16 4 2 13 3 15 9 10 1 14 11

Sl. No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Special States

Category

TGR of SOTR (2001-06) % 13.55 11.08 19.08 18.09 14.60 16.15 15.21 18.37 12.83 16.95 12.79 19.58 15.51 15.11 15.81 15.14 13.54 14.92 Buoyancy 1.24 1.39 1.26 1.06 0.97 1.24 0.89 1.50 1.13 2.04 1.03 1.32 1.84 1.66 1.43 1.53 1.25 1.30 Rank 13 17 2 4 12 6 9 3 15 5 16 1 8 11 7 10 14

Andhra Pradesh Bihar Chhattisgarh Goa Gujarat Haryana Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal
Total (1 to 17)

43

Revenue Expenditure: TGR of States Total Revenue Expenditure (2001-2007) Orissa 10.16 percent General Category States 10.26 percent Rank among General Category States 11

Share of Total Revenue Expenditure in the Total Expenditure (including Total Revenue
Expenditure, Capital Outlay and Loans & Advances) (2006-07) Orissa 90.15 percent General Category States 82.16 percent Rank among General Category States 15

Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Special Category States

TRE/TE 2006-07 % 79.31 78.84 74.78 75.39 78.05 85.72 82.88 78.42 94.28 78.50 82.99 90.15 84.18 82.74 83.22 78.93 91.10 82.16 Rank 8 6 1 2 3 14 10 4 17 5 11 15 13 9 12 7 16

TGR of TRE 2001-07 % 10.54 13.12 11.64 11.63 5.51 14.11 14.47 11.93 11.04 9.60 9.68 10.16 8.52 8.68 12.05 11.24 8.55 10.26 Rank 10 3 6 7 17 2 1 5 9 13 12 11 16 14 4 8 15

Andhra Pradesh Bihar Chhattisgarh Goa Gujarat Haryana Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal Total (1 to 17)

44

TGR of States Non-Plan Revenue Expenditure (2001-2006) Orissa 9.61 percent General Category States 8.42 percent Rank among General Category States 11

Share of Non Plan Revenue Expenditure in the Total Revenue Expenditure (2006-07) Orissa 82.71 percent General Category States 82.06 percent Rank among General Category States 11 NPRE/TRE 2006-07 % 77.03 80.25 70.37 75.10 81.67 84.35 73.17 75.72 88.81 75.62 86.40 82.71 94.74 84.34 80.44 82.59 85.93 82.06 Rank 6 7 1 3 9 13 2 5 16 4 15 11 17 12 8 10 14 TGR of NPRE (2001-06)

Sl. No.

General Category States

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Andhra Pradesh Bihar Chhattisgarh Goa Gujarat Haryana Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal Total (1 to 17)

% 9.59 9.47 9.49 8.70 0.37 9.93 13.64 9.29 11.01 9.86 7.86 9.61 9.70 7.57 7.97 10.54 7.40 8.42

Rank 10 8 9 6 1 14 17 7 16 13 4 11 12 3 5 15 2

Buoyancy 0.88 1.19 0.62 0.51 0.02 0.76 0.80 0.76 0.97 1.19 0.63 0.65 1.15 0.83 0.72 1.07 0.68 0.73

45

Deficit Indicators: Own Revenue Deficit(+)/ Surplus(-) to GSDP Ratio (2005-06) Orissa Rank among General Category States 9.00 percent 16

Revenue Deficit(+)/ Surplus(-) to GSDP Ratio (2005-06) Orissa Rank among General Category States -0.61 percent 5

Fiscal Deficit(+)/ Surplus(-) to GSDP Ratio (2005-06) Orissa Rank among General Category States ORD/GSDP 2005-06 % Rank 4.67 9 17.16 4.19 2.55 2.96 1.04 6.84 3.24 6.48 7.94 2.96 9.00 4.27 7.15 2.72 8.87 8.35 5.48 17 7 2 4 1 11 6 10 13 5 16 8 12 3 15 14 0.35 percent 2 RD/GSDP 2005-06 % Rank 0.03 8 -0.10 -2.66 0.17 0.18 -1.14 0.04 -1.35 2.63 -0.03 0.89 -0.61 1.13 0.53 -0.87 0.45 3.13 0.40 6 1 10 11 3 9 2 16 7 14 5 15 13 4 12 17 FD/GSDP 2005-06 % Rank 3.52 9 4.64 0.84 4.61 2.89 0.27 8.90 2.16 3.51 3.93 4.08 0.35 2.42 4.15 1.01 3.60 4.06 3.21 16 3 15 7 1 17 5 8 11 13 2 6 14 4 10 12

Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

General Category States Andhra Pradesh Bihar Chhattisgarh Goa Gujarat Haryana Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal Total

The ORD/RD/FD to GSDP ratio for 2005-06 was 9.00, -0.61 and -0.35 percent respectively and it was 7.81,-2.48 and -0.90 in 2006-07.

46

Debt Indicators: Interest Payments to Total Revenue Receipts (2006-07) Orissa General Category States Rank among General Category States 17.68 percent 18.47 percent 10

Outstanding Debt to GSDP ratio (2005-06) Orissa General Category States Rank among General Category States 48.98 percent 38.47 percent 15

Average Rate of Interest (ARI) on the Outstanding Debt (2006-07/2005-06) Orissa 8.289 percent General Category States 8.48 percent Rank among General Category States 9 General Category States Andhra Pradesh Bihar Chhattisgarh Goa Gujarat Haryana Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal Total IP/TRR 2006-07 % Rank 16.45 8 14.80 8.95 20.47 22.36 13.12 16.12 11.61 23.29 15.68 18.99 17.68 22.71 21.72 13.43 17.29 42.16 18.47 5 1 12 14 3 7 2 16 6 11 10 15 13 4 9 17 OD/GSDP 2005-06 % Rank 33.70 58.35 25.56 38.35 37.56 25.40 27.58 30.59 40.20 42.25 32.53 48.98 46.81 53.46 27.88 46.91 47.61 38.47 7 17 2 9 8 1 3 5 10 11 6 15 12 16 4 13 14 ARI 2006-07 % Rank 9.15 15 7.35 7.73 8.51 8.52 8.38 9.29 8.11 8.76 8.20 8.286 8.289 8.08 8.12 8.82 7.98 9.68 8.48 1 2 11 12 10 16 5 13 7 8 9 4 6 14 3 17

Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

47

CHAPTER - V STATES FORECAST

GSDP
Items 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 78536 91151 103304 116734 129575 143828 159649 177210 196704 218341 GSDP Growth 10.0 16.1 13.3 13.0 11.0 11.0 11.0 11.0 11.0 11.0 Rate TGR for the period 1999-2008 is 12.59

The State Government has projected 11% growth for forecast period 2009-15 as against the TGR of 12.59% during 1999-2008. Revenue Receipts
05-06 06-07 8653 32.4 2.0 07-08 9510 9.9 0.7 08-09 9407 -1.1 -0.1

09-10
10342 9.9 0.9

10-11
11026 6.6 0.6

11-12
12027 9.1 0.8

12-13
13127 9.1 0.8

13-14
14336 9.2 0.8

14-15
15665 9.3 0.8

Own Receipts Growth Rate Buoyancy

Revenue

6534 18.3 1.8

TGR for the period 1999-2008 is 19.33 with buoyancy of 1.54

Own Tax Revenue Growth Rate Buoyancy

5002 19.8 2.0

6065 21.2 1.3

6856 13.0 1.0

7272 6.1 0.5

8200 12.8 1.2

8760 6.8 0.6

9628 9.9 0.9

10584 9.9 0.9

11638 10.0 0.9

12799 10.0 0.9

TGR for the period 1999-2008 is 18.97 with Buoyancy of 1.51 Own Non-Tax Revenue Growth Rate Buoyancy

1532 13.9 1.4

2588 68.9 4.3

2654 2.5 0.2

2135 -19.5 -1.5

2142 0.3 0.0

2266 5.8 0.5

2399 5.9 0.5

2543 6.0 0.5

2698 6.1 0.6

2865 6.2 0.6

TGR for the period 1999-2008 is 20.42 with buoyancy of 1.62

The projected growth rate of own tax revenue in 2010-11 is lower mainly due to lesser projected growth rate of Taxes on Trade, Sales etc (5%). As per the State Government, in the projection for Own Revenue Receipt, the growth rate applied to Own Tax Revenue is about 10% and growth rate applied to Own Non-Tax Revenue is about 6%. However, due to the decision taken by Government of India to completely phase out the Central Sales Tax (CST) after 200910, the estimate of resource from CST amounting to Rs.226.77crore for the year 2009-10 is not taken while projecting the Resource for 2010-11. This is the reason for which the TRR has dropped to 6.6% in 2010-11.

48

Total Revenue Expenditure 05-06 06-07 07-08 08-09 09-10 10-11 17723 22707 35346 36885 12.4 28.1 55.7 4.4 11-12 41824 13.4 33540 13.0 8284 15.0 12-13 49255 17.8 39733 18.5 9522 14.9 13-14 55690 13.1 44749 12.6 10941 14.9 14-15 63191 13.5 50619 13.1 12572 14.9

Total Revenue 13604 15772 Expenditure 9.9 15.9 Growth Rate TGR for the period 1999-2008 is 9.69 Non-Plan Revenue 11491 13045 Expenditure 10.3 13.5 Growth Rate TGR for the period 1999-2008 is 9.90 Plan Revenue 2113 2727 Expenditure 8.0 29.1 Growth Rate TGR for the period 1999-2008 is 8.60

13634 17339 28933 29681 4.5 4089 50.0 27.2 5368 31.3 66.9 6413 19.5 2.6 7204 12.3

The TGR of Non plan revenue expenditure was 9.90% for the period 1999-2008. State has projected variable growth rate in NPRE during the award period ranging 3 to 13% which is at variance than the TGR (9.90%) for the period 1999-2008. In the Budget Estimate for 2008-09, the NPRE was estimated at Rs.17338.85crore against the Revised Estimate of Rs.15333.52crore for 2007-08 and the increase is Rs.2005.33 crore. Apart from the normal increase in provision for DA, maintenance expenditure and other contingency, provision of Rs.900.00 crore was made in the lump to meet a portion of the likely impact of the 6th CPC during the year. However, as per the recommendation of the fitment committee on the recommendations of the 6th CPC, Government took decision to allow the benefits of the revised pay and pension to the State Government employees and pensioners w.e.f. 1.1.2006 with the condition to pay the current dues from 1st December, 2008 and the arrears in two doses of 40% and 60% respectively during 2008-09 and 2009-10. To meet the additional liability accruing out of the pay revision (3 months current dues and 40% arrear), necessary provision was made in the supplementary stage and the NPRE in the Revised Estimate for 2008-09 has further increased to Rs.19938.14crore. The volatility in the projected growth rate for NPRE is mainly because of one time impact of 60% arrear salary and pension falling in one Financial year 2009-10. Due to the impact of 40% and 60% arrear pension during 2008-09 and 2009-10, the pension expenditure has increased significantly during these two years. In 2010-11, it has reduced since there is no arrear component in the pension expenditure. As per decision of the Government, 60% arrear salary and Pension is to be paid in 2009-10. Apart from this, the enhancement in current Salary and Pension, maintenance Expenditure estimated as per the norms recommended by the Norms committee set up by the Government, increased food subsidy on account of the newly introduced Rs.2/- per Kg. Rice scheme. In the Finance Accounts prepared by the Accountant General, only normal salary is captured. Apart from the normal salary, the State Government also discharges liability under Grants-in-Aid Salary, Work Charge Salary, NMR/DLR Salary, Wages 49

salary etc. As reflected in the Finance accounts for 2007-08, the Normal salary is of the order of Rs.4582crore. Salary Expenditure on other categories of employees for the year 2007-08 is of the order of Rs.900.00crore. So the total Salary expenditure for 2007-08 is of the order of Rs.5500crore. This base is used for forecasting the Salary Expenditure as may be seen at p-4-6 and p-16-17 in the document, Forecast of Receipt & Expenditure for Thirteenth Finance Commission. Taking into account the 60% arrear and enhanced current salary accounts for about Rs.5000crore additionality in NPRE and similarly 60% arrear and enhanced current Pension account for about Rs.2000crore additionality in NPRE. Plan expenditure is projected to growth at the average rate of 15% during 2010-15 as against TGR of 8.60% during 1999-2008. The state projection appears to be highly optimistic when compared to its earlier performance.

Interest Payments & Pension

05-06

Interest Payments

Growth Rate TGR for the period 1999-2008 is 9.48 Pension Growth Rate TGR for the period 1999-2008 is 11.19

3697 11.0 1339 6.3

06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 3188 3169 4312 4593 4937 5307 5705 6133 6593 -13.8 -0.6 36.1 6.5 7.5 7.5 7.5 7.5 7.5 1485 10.9 1801 21.3 2796 55.2 4612 65.0 3938 -14.6 4447 12.9 5001 12.5 5601 12.0 6287 12.2

The state projected a low growth rate of 7.5% during 2010-15 as against the TGR of 9.48% during 1999-2008.

The reason for projected higher growth rate in Pensions during 2007-08 to 2009-10 is not known and needs to be validated. The pension figure for 2009-10 includes the arrear on account of revision of pension.

50

Capital Expenditure
05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15

Capital Expenditure

Growth Rate TGR for the period 1999-2008 is 6.59

1105 -12.3

1723 55.9

3248 88.5

3348 3.1

3929 17.4

4385 11.6

4892 11.6

5460 11.6

6096 11.7

6809 11.7

Capital expenditure is projected to grow at the average rate of 11.6% during 2010-15 as against TGR of 6.59% during 1999-2008. The state projection appears to be highly optimistic when compared to its earlier performance. Deficit
05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15

Own Revenue Deficit Pre-Dev. Non-Plan Revenue Deficit

7069 4957

7119 4392

8214 4125

13299 25003 25858 29797 36128 41354 47526 7932 18590 18655 21513 26606 30414 34954

Own Revenue Deficit is projected to grow from Rs 7069 crore in 2005-06 to Rs 47526 crore by 2014-15. Pre-devolution NPRD is projected to grow from Rs 4125 crore in 2007-08 to Rs 34954 crore by 2014-15.

51

CHAPTER VI STATE SPECIFIC ISSUES A. Power

Orissa was the first State in the country to introduce reforms in the power sector. The main objective of the reforms in the state power sector is to unbundle generation, distribution and transmission along with assured supply of power to the consumer at affordable rate. The Orissa Electricity Reforms Act, 1995 was effective from 1st April 1996. Orissa State Electricity Board was dissolved and two new Corporations, namely; (i) GRID Corporation of Orissa (GRIDCO) and (ii) Orissa Hydro Power Corporation (OHPC) were created on 1st April, 1996. The existing transmission and distribution systems were entrusted to GRIDCO and all hydro power stations including projects under construction were transferred to OHPC. The State Govt. have entrusted the trading work to the existing GRIDCO and have set up the Orissa Power Transmission Corporation Ltd. (OPTCT) on 9th June, 2005 to undertake transmission of power. The Orissa Power Generation Corporation (OPGC), which was incorporated in 1984, is looking after the thermal power projects in the State. Particulars 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

OWN INSTALLED CAPACITY(MW): Hydro Thermal-Coal Fired Total 1862 420 2282 1862 420 2282 1862 420 2282 1878 420 2298 1878 420 2298 1878 420 2298 2028 420 2448

NET OWN GENERATION(MKWH): Hydro 3114 Thermal-Coal Fired 2327 Total 5441 POWER PURCHASE(MKWH) Energy Available(MKWH) Energy Sold(MKWH)
Source: Statement: 36

5925 2676 8601 19797 28399 26059

6839 2833 9671 21593 31264 28858

4995 2772 7767 20991 28758 26127

7149 2973 10122 23490 33613 30840

7748 2725 10473 26138 36612 33449

7044 2924 9968 25383 35351 32207

16082 21523 19076

52

 Own installed capacity of the state has increased only 166 MW in last 7 years i.e.
from 2282 MW in 2002-03 to 2448 MW by 2008-09. Thermal installed capacity accounts for 17% and Hydro installed capacity accounts for 83% in 2008-09 of the own installed capacity. Though the Thermal installed capacity accounts for 18% in 2006-07 the generation from it accounts for 29% of net own generation. Own generation was only 25% of total energy available for sale in 2002-03, it increased to 30% in 2006-07

Power Source Composition (MKWH)

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Net Own Generation Power Purchase

Data relating to availability of power during the year 2002-03 to 2008-09 reveals that
net generation of power by the state from own sources has remained in the range of 25% to 31% of the total energy available for sale. Cost of Production: (Rs./Kwh) Generation Cost Thermal Hydro 2002-03 1.0542 0.7061 2003-04 0.9165 0.3884 2004-05 0.8648 0.3461 2005-06 0.9283 0.4914 2006-07 0.9068 0.3622 2007-08 RE 0.9481 0.3663 2008-09 BE 0.9775 0.4592

The Unit thermal cost of generation has decreased from Re 1.05 in 2002-03 to Rw 0.98 in 2008-09 and the Unit hydro cost of generation decreased from Re 0.71 in 2002-03 to Re 0.46 in 2008-09. The unit hydro cost of generation was less than half of the unit thermal cost of generation in 2008-09.

53

The combined financial position of all the electricity supply companies of the state including Genco, Transmission, Distribution and Holding Company for the years 2005-06 to 2008-09 is as under: Combined Financial Position of Power Utilities (Rs Crore) Sl. No. 1 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 3 4 Particulars Revenue Expenditure Generation Cost Purchase of Power Repairs&Maintenance Employees Cost Adm. & General Expr. Depreciation Interest & Other Expr. Profit Before Tax Profit After Tax
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

4,291 5,048 127 3,080 81 458 173 323 807 -757 -779

5,510 5,225 154 3,155 98 513 210 330 764 285 268

5,902 5,722 163 3,370 100 645 192 554 698 180 161

6,237 6,145 167 4,104 95 574 201 382 621 92 72

6,936 6,707 174 4,162 146 719 238 394 875 229 197

7,591 7,268 166 5,063 201 703 161 427 548 322 286

7,490 7,877 189 5,340 296 791 169 565 527 -387 -409

T&D losses: The overall AT&C losses has been reduced from 56.7% in 1999-2000 to 40.9% in 2007-08 and overall distribution loss has been reduced from 43.9% to 37.5% during the same period. The Government is not providing any budgetary support to the power sector utilities.

54

Year-wise Power Consumption by different Sectors in Orissa from 2000-01 to 2006-07

( In MU)

Consumption Sector Total consumption Public water works

117 (1.92 120 (2.08) 117 (1.73) 120 (1.66) 126 (1.66) 129 (1.58) 134 (1.44)

Commercial

Irrigation & Agriculture

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

6090 (100.00) 5769 (100.00) 6745 (100.00) 7208 (100.00) 7598 (100.00) 8144 (100.00) 9288 (100.00)

2173 (35.68) 2258 (39.14) 2441 (36.19) 2491 (34.56) 2352 (30.96) 2483 (30.49) 2525 (27.19)

548 (9.00) 607 (10.52) 468 (6.94) 488 (6.77) 482 (6.34) 558 (6.85) 640 (6.89)

2622 (43.06) 2184 (37.86) 2971 (44.05) 3270 (45.37) 3742 (49.25) 3941 (48.39) 4967 (53.48)

41 (0.67) 38 (0.66) 37 (0.55) 39 (0.54) 41 (0.54) 55 (0.68) 45 (0.48)

186 (3.05) 162 (2.81) 139 (2.06) 133 (1.84) 147 (1.93) 137 (1.68) 131 (1.41)

201 (3.30) 213 (3.69) 263 (3.90) 302 (4.19) 355 (4.67) 384 (4.72) 525 (5.65)

202 (3.32) 187 (3.24) 309 (4.58) 366 (5.07) 353 (4.65) 457 (5.61) 321 (3.46)

Domestic consumption decreased from 35.68% in 2000-01 to 27.19 in 2006-07. Industrial consumption increased from 43.06% in 2000-01 to 53.48% in 2006-07. Agriculture form less than 1.5% of total consumption.

55

Bulk supply & others

Year

Industrial

Domestic

Railways

Public lighting

Villages Electrified The table given below indicates the position of villages electrified in all the states as on 31st October, 2008:-

Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

State Andhra Pradesh Arunachal Pradesh Assam Bihar Jharkhand Goa Gujarat Haryana Himachal Pradesh Jammu & Kashmir Karnataka Kerala Madhya Pradesh Chhattisgarh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Utter Pradesh Uttaranchal West Bengal Total (States)

No. of Villages as per 2001 census 26613 3863 25124 39015 29354 347 18066 6764 17495 6417 27481 1364 52117 19744 41095 2315 5782 707 1278 47529 12278 39753 450 15400 858 97942 15761 37945 592857

Villages Electrified as on 31-10-08 26613 2195 19741 20620 9119 347 18014 6764 17183 6304 27126 1364 50218 18877 36296 1981 3428 570 823 26535 12278 27163 425 15400 491 86450 15213 36462 488000

Percentage of Villages Electrified 100.0 56.8 78.6 52.9 31.1 100.0 99.7 100.0 98.2 98.2 98.7 100.0 96.4 95.6 88.3 85.6 59.3 80.6 64.4 55.8 100.0 68.3 94.4 100.0 57.2 88.3 96.5 96.1 82.3

In Orissa 55.8 percent villages have been electrified as compared to the all India figure of 82.3 percent.

56

B. State Road Transport Corporations (SRTCs) Orissa State Road Transport Corporation (OSRTC) provides Passenger Road Transport Services by Stage and Contract carriage in the State. There is no route in the State which has been earmarked for exclusive right of operation by OSRTC. The share of passengers carried by OSRTC is only 5 per cent of those carried by the private operators. A passenger per day has remained stagnant since 2002-03 while revenue earned per day has increased only marginally (from Rs.10.47 lakhs to Rs.11.08 lakhs) during this period. There has also not been any significant addition to the fleet size. The operating non-operating costs of Orissa State Road Transport Corporation during 2004-07 were as below:
Particulars Operating Revenue Expenditure Surplus / deficit (-) Non-Operating Revenue Expenditure Surplus / deficit (-) Total Revenue Expenditure 34.13 33.79 37.81 36.88 40.55 39.68 3.43 1.83 1.60 3.68 1.29 2.39 3.69 1.29 2.40 30.70 31.96 (-) 1.26 34.13 35.59 1.46 36.86 38.39 (-)1.53 2004-05 2005-06 (provisional) (Rupees in crore) 2006-07 (Provisional)

As against a loss of 60 paise per kilometer in 2004-05, the loss had decreased to 55 paise per kilometer in 2005-06 and again increased to 60 paise per kilometer in 2006-07 mainly due to decrease in effective kilometer operated. A Voluntary Retirement Scheme had been introduced to downsize the staff strength of the Corporation and a private agency ticketing system has been introduced to expand income and restrict pilferage. To compensate the loss of revenue annual subsidy @ Rs. 1.60 crore released annually to the Corporation from 2002-03 to 2006-07. OSRTC has finalised the accounts up to the year 2005-06 only.

57

C. Public Sector Undertakings (PSUs) As on 31st March 2008, there were 54 Government companies and 4 statutory corporations in the state as per details given below:Functional/ Ownership type Working Non-working Total Government companies 23 31 54 Statutory corporations 4 0 4 Investment (Rs. Crore) 9056 141 9197

Out of 31 non-working Government Companies 20 were in the process of liquidation/under liquidation and balance 11 were non-operational. Investment in the power sector accounted for almost 77 per cent of total investment. Orissa State Road Transport Corporation and Orissa State Financial Corporation earned an aggregate profit of Rs.4.52 crore for the latest year of accounts finalized but their accumulated loss (Rs.611.13 crore) was more than their paid-up capital (Rs.495.11 crore).
(Rs. in crore) 2007200808 09 1.85

Financial Results of each Undertaking in terms of Profit And Loss.

Sl No 1 2 3 4 Statutory Corporation Orissa State Financial Corporation. Orissa State Warehousing Corporation. IDCO Orissa State Road Transport Corpn. Government Companies 5 6 7 8 9 10 11 12 GRIDCO Orissa Mining Corporation Orissa Agro Industries Corporation Orissa Construction Corporation Orissa Forest Development Corporation Industrial Dev. Corporation of Orissa Orissa Small Industries Corporation. IPICOL. 607.69 17.60 -2.41 0.13 -22.60 -1.87 -3.10 -3.78 411.12 121.23 -2.31 0.15 -11.96 -46.43 -1.98 0.76 348.56 328.40 -0.42 0.23 -23.22 -2.77 -2.84 0.48 25.82 211.74 -1.14 1.03 -18.35 0.72 -4.77 10.07 236.88 442.47 -0.95 0.78 0.94 5.00 -2.16 2.50 2.25 0.72 1.51 393.92 -239.13 200203 1.30 1.16 3.28 0.55 200304 -4.68 0.33 4.45 0.65 200405 -8.04 5.36 25.09 0.34 200506 2.22 5.70 35.30 0.76 200607 1.12 5.94 61.94 0.87 70.00 2.67 54.00 1.27

58

Sl No 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Statutory Corporation Orissa Film Development Corporation Orissa State Seeds Corporation Orissa Pisciculture Dev. Corporation Orissa Tourism Dev. Corporation Orissa State Cashew Dev. Corporation Orissa State Civil Supplies Corporation Orissa State Police Housing & Welf. Corpn. Orissa Bridge & Construction Corpn. Orissa Power Generation Corporation Orissa Lift Irrigation Corporation Orissa Rural Housing & Dev. Corporation Orissa Hydro Power Corporation APICOL Orissa State Beverages Corporation Orissa Power Transmission Corporation Ltd. Aggregate Profit/Loss

200203 0.03 0.30 -0.24 -0.09 1.04

200304 0.03 0.0029 -0.11 0.16 1.54

200405 0.08 0.003 -0.09 0.40 1.70

200506 0.03 0.05 -0.24 0.52 0.94

200607 0.06 0.69 -0.16 1.18 1.32

200708 0.06 3.38

200809 0.07 2.41

1.98 1.71

0.32 -0.96 198.64 -0.05 -0.90 -41.80

2.30 -0.15 135.11 0.38 -0.55 8.37

0.18 -0.74 143.39 0.21 -1.59 59.05

0.20 -13.60 147.85 0.65 -1.94 -24.17

0.63 -14.12 156.78 0.83 -3.25 53.93 95.05 30.26 147.85 104.04

0.38

0.63

1.80

1.25 -24.95

12.87 -7.88
958.21

2.59 -31.03
694.51

-74.40
-121.48

-460.76

619.04

875.56

355.69

59

The status of audit of accounts for working companies and statutory corporations:

Sl. No . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Name Of The Corporation Statutory Corporation Orissa State Financial Corporation. Orissa State Warehousing Corporation. IDCO Orissa State Road Transport Corpn. Government Companies GRIDCO Orissa Mining Corporation Orissa Agro Industries Corporation Orissa Construction Corporation Orissa Forest Development Corporation Industrial Dev. Corporation of Orissa Orissa Small Industries Corporation. IPICOL. Orissa Film Development Corporation Orissa State Seeds Corporation Orissa Pisciculture Dev. Corporation Orissa Tourism Dev. Corporation Orissa State Cashew Dev. Corporation Orissa State Civil Supplies Corporation Orissa State Police Housing & Welf. Corpn. Orissa Bridge & Construction Corpn. Orissa Power Generation Corporation Orissa Lift Irrigation Corporation Orissa Rural Housing & Dev. Corporation Orissa Hydro Power Corporation APICOL Orissa State Beverages Corporation Orissa Power Transmission Corporation Ltd.

AUDIT OF ACCOUNTS COMPLETED 2006-07 2005-06 2006-07 2005-06 2006-07 2006-07 2002-03 2005-06 2005-06 2006-07 2005-06 2006-07 2005-06 2004-05 2000-01 2006-07 2005-06 2004-05 2003-04 2004-05 2006-07 2005-06 2002-03 2006-07 2006-07 2004-05 2005-06

PERIOD OF ARREARS No arrear 2006-07 No arrear 2006-07 No arrear No arrear 2003-04 to 200607 2006-07 2006-07 No arrear 2006-07 No arrear 2006-07 2005-06 to 200607 2001-02 to 200607 No arrear 2006-07 2005-06 to 200607 2004-05 to 200607 2005-06 to 200607 No arrear 2006-07 2003-04 to 200607 No arrear No arrear 2005-06 to 200607 2006-07

NO. OF ACCOUNTS IN ARREAR 0 1 0 1 0 0 4 1 1 0 1 0 1 2 6 0 1 2 3 2 0 1 4 0 0 2 1

While 10 companies/statutory corporation have no delay in finalizing the accounts for others the backlog varies from six year(Orissa Pisciculture Development Corporation) to one year. PSU Reforms

During the implementation of the Orissa Public Enterprise Reform Programme, 34256 employees/workers were separated from 42(forty two) State Public and Co-Operative Enterprises. Due to concerted efforts of the State Government, 11(eleven) Public and

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Co-operative Enterprises were privatized with Rs.241 crore earnings to the State exchequer as per detail given below: PRIVATIZATION / DISINVESTMENT ACHIEVED DURING 1999-TILL DATE.
No.
1 2 3 4 5 6 7 8 9 10 11

Name of Enterprise IDCOL Cement Limited IDCOL Piping & Engineering Works Ltd Co-operative Sugar Mill, Nayagarh S N Corporation Ltd IDCOL Rolling Mill Ltd Co-operative Sugar Mill, Baramba Hirakud Industrial Works Limited Orissa State Commercial Transport Corporation Aska, Baripada and Sonepur Spinning Mill Orichem Ltd Orissa Timber & Engineering Works

Year of Transaction 2003-04 (Share transfer) 2005-06 (Asset sale) 2004-05 (Asset sale) 2004-05 & 2005-06 (Asset sale) 2005-06 (Share transfer) 2005-06 (Asset sale) 2006-07 (Share transfer) Sale of 47 lots of movable assets 2006-07 (Asset sale) 2007-08 (Share transfer) Employee Buy Out

Proceeds (Rs. crore) 182.00 4.70 5.22 8.50 5.33 8.28 5.25 0.84 15.65 5.34

Total

241.11

The State Government had constituted a Cabinet Sub-Committee for restructuring the State Public Sector Undertakings so as to function on the self-sustained and profitable basis in the changed economic scenario. One of the recommendations of the committee was to downsize the surplus staff through voluntary retirement scheme (VRS). The State Government had introduced a Model Voluntary Retirement Scheme for the State Public Sector Enterprises (PEs) in the year 1998. In the year 2001, the State Government introduced the modified Model Voluntary Retirement Scheme to overcome major constraints in the original scheme and there by extended wide coverage to the employees of State PSUs & Cooperative Enterprises. Besides, a Model Voluntary Separation Scheme was also designed for the employees of closed/liquidated enterprises and the enterprises slated for substantial restructuring to pave the way for privatization.

D. Mineral Resources
Orissa is endowed with a variety of vast mineral deposit both in terms of deposit and production. The State has abundant reserves of high grade Iron-ore, Coal, Bauxite, Chromites. Other minerals such as Nickel, Gemstone, Granite, Graphite etc. are also 61

extensively available in the state which is nearly 17% of the total mineral reserve of India.
Coal Reserves of India (in Million Tonnes) Proven 8791 31 314 0 10182 36960 7872 4856 118 4 17712 0 766 11454 99060

State Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Jharkhand Madhya Pradesh Maharashtra Meghalaya Nagaland Orissa Sikkim Uttar Pradesh West Bengal Total

17.9% of Indias proven coal reserves are located in Orissa. Govt. of India revised royalty rates to a partial ad valorem regime w.e.f 01.08.07. Prior to the revision, the royalty rates on Coal were Rs 65 to 250 per Metric Tonne depending upon the grade. The Twelfth Finance Commission had recommended a shift from specific to ad valorem rates of royalty. Mining sector contributes about 7.25% to the GSDP during 2006-07 at 1999-2000 prices. The increase in income generated in mining sector is about 2.27 times between 1999-200 and 200607. As per the report of Directorate of Geology, the total mineral reserve in the State is about 72051 million tones in 2005-06 of which coal alone comprises 86% followed by iron ore 7.45% and Bauxite 2.42% but exploitation is not commensurate with the potential. Details of production and value of Minerals/Ores are as indicated in the below table :

Year

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07(P)

Production (in lakh tone) 689.24 749.81 873.62 1080.00 1270.48 1396.78 1614.45

% increase over previous year

Value (Rs. In crore) 2776.15 2910.47 3694.17 3877.75 6130.93 6604.41 7629.63

% increase over previous year

6.88 8.79 16.51 23.62 17.64 9.94 15.58

6.57 4.84 26.93 4.97 58.56 7.73 15.52

Source State Economic survey 2007-08

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Enhanced rate of exploitation of different mineral reserves will not only improve the financial position of the State but also be helpful in generating sizeable direct and indirect employment. Orissa Mineral Act, 1989 and 1990 had been introduced to prevent theft smuggling illegal mining activities and trading of ores/minerals to prevent leakage of revenue.

E. Justice
Orissa Criminal
702122 4.19% 783513 4.26% 829867 4.32% 834805 4.57%

Year 2004 2005 2006 2007

Civil
155281 2.31% 176063 2.43% 179417 2.44% 181721 2.72%

Total
857403 3.66% 959576 3.74% 1009284 3.80% 1016526 4.08%

Civil
6714408 7254145 7368025 6683742

All India Criminal

16740768 18400106 19196973 18251916

Total
23455176 25654251 26564998 24935658

Number of civil cases has increased from 155281 in 2004 to 181721 in 2007. It appears that the percentage of civil cases in Orissa as compared to All India is lower than the percentage of Orissas population in total population (3.58%). However the percentage of criminal case is higher than the percentage of Orissas population to total population of India. The number of criminal cases has increased from 702122 in 2004 to 834805 in 2007.

Under trials
Upto 3 months 3-6 months 1763 18.67 40682 19.73 42403 19.53 1879 19.33 48967 21.62 50344 21.24 6-12 months 1124 11.90 37509 18.19 39649 18.26 1587 16.33 42287 18.67 43580 18.38 1-2 year 2-3 year 3-5 year Above 5 years 35 0.37 1719 0.83 2069 0.95 44 0.45 1805 0.80 1884 0.79 Total

2004
Orissa
% to total All states % to total All india As % to total 2949 31.23 84111 40.79 88007 40.53 4550 46.81 91236 40.28 97903 41.30 2977 31.52 26431 12.82 28023 12.91 403 4.27 10461 5.07 11272 5.19 355 3.65 11023 4.87 11369 4.80 193 2.04 5292 2.57 5707 2.63 201 2.07 5693 2.51 5971 2.52 9444 100 206205 100 217130 100 9720 100 226528 100 237076 100

2005
Orissa
% to total All states % to total All india As % to total 1104 11.36 25517 11.26 26025 10.98

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2006
Orissa
% to total All states % to total All india As % to total 4562 46.93 97900 41.94 103869 42.35 2253 23.18 50975 21.84 53068 21.64 1563 16.08 40622 17.40 42671 17.40 1253 12.89 25961 11.12 26982 11.00 380 3.91 11034 4.73 11343 4.63 203 2.09 5454 2.34 5742 2.34 33 0.34 1490 0.64 1569 0.64 10247 105 233436 100 245244 100

The percentage of under trials up to 3 months was 31.23% in 2004, 46.81% in 2005 & 46.93% in 2006.

F. Regional/Inter-District Disparities
There exist large scale regional disparities in development in the State. The western part of the State, the tribal pockets and the areas coming under the undivided KBK districts (comprising Koraput, Nawarangpur, Rayagada, Malkangiri, Bolangir, Subarnpur, Kalahandi and Nuapaea) are the most underdeveloped. The coastal region of the State is comparatively more developed. The State Government has constituted a Regional Imbalances Enquiry Commission (RIEC) to look into all aspects of regional disparities in development in the State and suggest remedial measures. Some of the areas in which the disparities are significant are listed below. The State Government has also constituted a Special Area Development Project for effective implementation of the Revised Long Term Action Plan for the KBK districts. Agriculture: The district-wise data for the year 2000-01 & 2003-04 shows that the degree of regional disparity is significant in case of Net area irrigated as percentage of net area sown which has exhibited co-efficient of variation of 0.7568. While district like Ganjam (68.40%), Jagatsinghpur (63.54%), Puri (57.58%), Cuttack (45.07%), Sonepur (44.45%) and Bhadrak (41.67%) have high percentage of net area irrigated to net area sown during 2003-04, the same is low for the districts like Bolangir (4.15%), Nawarangpur (4.69%), Kandhamal (5.26%), Nuapada (5.34%), Sundergarh (5.36%), Angul (6.92%), Jharsuguda (6.78%), Dhenkanal (9.60%), Keonjhar (9.87%), Deogarh (12.07%), Malkangiri (12.96%), & Nayagarh (14.15%). However, as per information given by the State Govt. Inter-district disparities in case of other two agricultural indicators, namely, cropping intensity and productivity per hectare is not significant due to frequent occurrence of natural calamities which decreases the productivity even in the districts with higher irrigation potential. The Irrigation Potential, as reported by the State is 8.8 Million Ha. Agriculture credit plays a critical role in boosting the yield rate and production of crop. The district Baragarh has the highest per capita credit (2003-04) of Rs.527/- followed by Angul (Rs.493/-), Bhadrak (Rs.443/-) and Dhenkanal (Rs.409/-). The per capita agricultural credit for the district of Kalahandi was Rs.50/- the lowest. The districts Kandhamal, Mayurbhanj, Nuapada are also on lower side with per capita credit of about Rs.71/-, Rs.80/- and Rs.93/respectively.

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Industries The high degree of inter-district disparity has been noticed in the industries sector because of wide difference in the industrialization in progressive districts, like Sundergarh, Angul, Jharsuguda, Rayagada and Koraput and backward districts, like Ganjam, Gajapati, Deogarh, Boudh, Kandhamal etc. The indicator Value added by manufacture per capita for Sundergarh (Rs.2655.75/-), Jharsuguda (Rs.992.40/-), Angul (Rs.9399.32/-), Rayagada (Rs.1409.95/-), are highly industrialized districts while districts like Bhadrak (Rs.-622.10/-), Nayagarh ( Rs.-2.54/-), Malkangiri ( Rs.-0.07/-), Sonepur (Rs. 0.00/-) have very low level of industrialization. Education: The District of Khurda has the highest literacy rate with of 79.6%. This is followed by Jagatsinghpur (79.1%), Puri (78%) and Kendrapara (77%). The district of Malkangiri has the lowest literacy rate of about 30.5%. The other districts of Nawarangpur(34%), Rayagada(36%), Koraput(36%), Nuapada(42%) and Kalahandi(46%) all having less than 46% of total literacy rate. There is also disparity among districts in respect of girls literacy. The literacy rate of girls is significantly lower in 7 Districts namely, Nawarangpur(21%), Malkangiri(21%), Koraput(24%), Rayagada((25%), Nuapada(26%), Gajapati(28%) and Kalahandi((29%). The drop-out rate in primary classes also varies considerably among the districts. The dropout rate among girls in the State is about 33%. This is about 1.5 percentage point higher than that of boys. The dropout rate of boys is more than 40% in respect of 9 districts namely Mayurbhanj, Deogarh, Sundargarh, Nawarangpur, Kandhamal, Nuapada, Malkangiri, Kalahandi and Keonjhar. These districts except the district of Koraput have also more than 40% dropout among the girls. Sex Ratio: All 30 districts of Orissa have sex ratio higher than that of the national sex ratio(933). The only exception is Khurda district which has a sex ratio of 902. The decadal growth rate of population was also highest in Khurda district with 24.99%, state average being 16.25. The six districts of Orissa that have sex ratio of more than 1000 namely Kalahandi, Kandhamal, Kendrapara, Nawapara, Rayagada and Gajapati. The Literacy Rate and Sex Ratio: The comparison of data relating to literacy rate and sex ratio shows that 13 (out of a total of 30) districts having higher literacy rate has lower sex ratio and vice-versa.

65

S.No. 1 2 3 4 5 6 7

High Literacy Rate & Low Sex Ratio District Literacy Sex Ratio Khurda 79.59 902 Jagatsinghpur 79.08 963 Puri 77.96 968 Cuttack 76.66 938 Jajpur 71.44 972 Balasore 70.56 953 Nayagarh 70.52 938

Low Literacy Rate & High Sex Ratio S.No. District Literacy Sex Ratio 1 Malkangiri 30.53 997 2 Koraput 35.72 999 3 Rayagada 36.15 1028 4 Nawapara 42 1007 5 Kalahandi 45.94 1001 6 Kandhamal 52.68 1008 Soruce : Economic Survey 2007-08 of the State.

G. Off Budget Borrowings:

The borrowings of a state are governed under article 293 of the Constitution of India. The borrowings made by the state through public sector undertakings and used for state plan programmes are known as the off budget borrowings. As reported by AG, the State Government raised significant amounts by off-budget borrowings through other public sector entities, commonly called Special Purpose Vehicles. These borrowings are guaranteed by State Government and, in form, appear as contingent liabilities. The borrowings of many of these concerns were ultimately the committed liabilities of the state government. Trend in off-budget borrowings
(Rupees in crore)

Year Outstanding Borrowing Added Repayment made (Principal) Balance Principal

2003-04 66.15 -1.63 64.52

2004-05 64.52 0.09 64.43

2005-06 64.43 --64.43

2006-07 64.43 2.50 61.93

2007-08 (as on 1.01.08)

61.93 34.31 27.62

Source: Orissa Budget at a glance (2008-09)

The above table shows that Government has not resorted to off budget borrowings through SPVs since 2002-03. 66

H. Private initiatives in the State:

STATUS OF THE POSCOS PROPOSED 12 MTPA POSCO INDIA (P) LIMITED

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Date of signing of MoU Location Capacity Land (In Acres) Achievement (In MTPA) Investment (Rs. In Crore) Employment (Potential) Employment Generated Tax Paid (Rs. In Crore) Amount Spent for Periphery Development 11. Land : : NIL Land acquisition under process. De-reservation proposal in respect of Forest land has been cleared by Honble Supreme Court. State-I clearance obtained from MoEF. PL application for Iron ore over an area of 2500 hectares in Khandadhar of Sundargarh district has been forwarded to Government of India for approval vide S & M Department letter No. 76/SM dated 09.01.2009. : : : : : : : : : 22.06.2005 Paradeep, Jagatsinghpur 12.00 MTPA Required: 5525 NIL Proposed: 51,000 12000 Direct: 61 State: NIL Indirect: NIL Central: NIL Allotted: 516.74 Made so far: 175.50

12.

Captive Mines

INTEGRATED STEEL PLANT IN ORISSA STUTUS OF PL APPLICATION: The State Government had earlier vide its letter No.18095 dated 19.12.2006 considered and recommended the case of POSCO India Ltd for grant of PL invoking the provision under Section 11(5) Of M&M (D&R) Act, 1957. Government of India, however, returned the same vide letter No.5/186/2006-M-IV dated 16.07.2007 67

directing that State Government should take up hearing of prior applications to take necessary action as per the extant provision of MMDR Act, 1957. Further, Central Revisional Authority while disposing of the revision application dated 25.03.2007 filed by M/s KIOCL challenging above recommendation of State Government dated 19.12.2006 as per the direction of Honble court in WP(C) No 1775/2007 has set aside the State Governments recommendation dated 19. 12.2006 with the direction that State Government should consider all pending applications simultaneously and examine inter-se merit of all the applications and then pass on order as per law after affording opportunities of hearing to all the applicants. Accordingly, Secretary, Department of Steel and Mines has heard the pending applications. The process of hearing is completed and Inter-se merit has been decided strictly in accordance with the provisions of M&M (D&R) Act, 1957 and M.C Rules, 1960. The same has been processed for Government order after receipt of Government order the most meritorious application has been recommended to Government of India for Grant of PL.

STATUS OF LAND FOR STEEL PLANT PROJECT: The total land required for the project is 5525.00 acres which includes Ac. 516 Of private land. Forest land covers Ac.2958.79 for which the Forest Diversion Proposal has been sent to Government of India MoEF. After submission of report by Central Empowerment Committee on the Forest Diversion Proposal. The Honble Supreme Court has heard the matter on 08.08.2008 and passed order favorably allowing the forest diversion for the project. The order of Honble Apex Court has been received. As Per the order, A committee has been constituted vide Steel & Mines Department Notification No. 7428 dated 30.10.2008 to examine the steps to be taken to protect the area from cyclone and other natural calamities due to cutting up large number of trees from the coastal side. The committee constituted of the following members.
1. Shri S.K.Pattanaik Member, Central Empowered Committee Govt. of India 2. PCCF (Wild Life) Forest & Environment Department, Govt. of India 3. Shri B.K.Singh Senior Assistant Inspector General Of Forest MoEF, Government of India

Chairman

Member Convenor

Member

4. Director (ST & SC) ST & SC Development Department Government of Orissa.

Member

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Stage- Clearance has been obtained from MoEF vide their letter dated 19.10.2008 PRESENT POSITION OF LAND: Lease deed of Ac.193.55 is executed in favour of IDCO by Collector, Jagatsinghpur, on 29.08.07 and the same is transferred to POSCO through lease deed for 90 years on 08.10.07. Out of Ac.414.19 of Non-forest Government land, Collector Jagatsinghpur has sanctioned Ac 313.19 on 11.10.07. It is pending for transfer to POSCO for clarification on premium amount by Govt. on Revenue and disaster management department. Ac 7.00 in Village: Sandhakuda within Paradeep Municipality is allotted, lease deed executed & possession handed over to POSCO for construction of Guest House, HR Training Centre ,VIP Residence, Staff Quarters and One Dormitory for Trainees. Further, Ac. 3.00 has been sanctioned by Collector adjacent to above land. It will be transferred to them after execution of lease deed with Collector by IDCO. Pending for rate of premium finalization. AC 10 in Badagabapur is sanctioned by Collector for transit colony to locate the displaced families.

ARCELOR MITTAL (INDIA) LIMITED

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Date of signing of MoU Location Capacity Land (In Acres) Achievement (In MTPA) Investment (Rs. In Crore) Employment (Potential) Employment Generated Tax Paid (Rs. In Crore) Amount Spent for Periphery Development Land Captive Mines

: : : : : : : : : : : :

21.12.2006 Patna Tahasil, Keonjhar 12.00 MTPA Required: 8000 NIL Proposed: 40,000 5000 Direct: 27 State: NIL Indirect: 124 Central: NIL Allotted: NIL Made so far: 60.00

NIL Land acquisition is under process The mineral concessions for captive purposes will be considered after achievement of the criteria by the company as mentioned in the MoU. 69

I.

Status of Public Private Partnership Projects in the State:

The Public Private Partnership (PPP) Projects taken up by Government of Orissa in Road, Education and Health Sectors are outline below:-

Road (a) 4-Laning of Sambalpur-Rourkela Road : The exiting 2-lane road would be expanded to 4-lane. M/s PWC has prepared the project report under World Bank Assistance to Govt. of Orissa (Works Dept.). The cost of upgradation has been estimated to be Rs. 1271 crores. Proposal for VGF assistance from Govt. of India would be sought after approval of the High Level Clearance Authority (HLCA) under the chairmanship of the Chief Minister. (b) Joda-Bamebari Road, Keonjhar: It would be a Greenfield project under BOT mode. M/s PWC has prepared the project feasibility report under World Bank Assistance to Govt. of Orissa (Works Dept.). The project cost has been estimated to be Rs. 138 crores. Few clarifications have been sought from the project consultant. (c) Koira-Tensa-Lahunipara Road, Keonjhar: It would be a Greenfield project under BOT mode. M/s PWC has submitted the final feasibility report under World Bank Assistance to Govt. of Orissa (Works Dept.). The project cost has been estimated to be Rs. 393 crores. The project report would be put up to the Empowered Committee on Infrastructure (ECI) for seeking approval to seek Eol from potential investors. (d) Palaspanga-Bamebari Road, Keonjhar: An SPV has been formed in the name of Keonjhar Industrial Development Corporation (KIDCO) (comprising of Govt. and Private sector entities) to undertake the road construction at an estimated cost of Rs. 68 crores. Construction has started and work on 4K.M. road has been completed. (e) Capital Region Ring Road (CRRR): It would be a Greenfield project under BOT mode. M/s IL&FS has submitted a preliminary report to Govt. of Orissa (Works Dept.). The ECI has cleared the proposal for appointing consultant to prepare DPR.

Education (a) Engineering Colleges in KBK Districts: The PPP Cell has submitted a proposal to set up engineering colleges in PPP mode in 10 locations of KBK districts. The state Govt. would provide land on lease and onetime capital grant. The private party would invest on college infrastructure and education delivery. Necessary land is being

70

identified in consultation with KBK district administration. Expression of interest (EoI) from private parties would be invited shortly. (b) Public Schools in KBK Districts: The PPP Cell has submitted a proposal to set up public schools in PPP mode in 10 locations of KBK districts. The State Govt. would provide land on lease and one-time capital grant. The private party would invest on school infrastructure and education delivery. Necessary land is being identified in consultation with KBK district administration. Expression of interest (EoI) from private parties would be invited shortly. (c) Banking Training Institutions: The PPP Cell has initiated a proposal to set up such institutions in PPP mode in few districts. The state Govt. would provide land on lease. The private party would invest on infrastructure and training delivery. Necessary land is being identified in consultation with district administration. Expression of interest (EoI) from private parties would be invited shortly. (d) ITIs: The PPP Cell in association with the industries Department has initiated a proposal to set up new / upgrade existing ITIs in PPP mode. The project is aimed at facilitating skill enhancement/upgradation of students as required by emerging trends in technology. An expression of interest in this regard would be invited from industries shortly. Health (a) Bio-Medical Waste Management Services: The PPP Cell in association with the Health & Family Welfare Department has initiated a proposal to establish Bio-Medical Waste Management Service through PPP mode. The ECI has approved-in-principle the proposal. The Health Department has recently convened a meeting of interested private parties to explore the market readiness. An expression of interest (EoI) would be invited from private parties shortly. (b) Medical College: The PPP Cell in association with the Health & Family Welfare Department has initiated a proposal to establish Medical College at Balasore through PPP mode. On identification of suitable land and on formal approval of ECI, an expression of interest (EoI) would be invite from private entrepreneurs shortly. (c) Hospitals in KBK and non-KBK Districts: The PPP Cell has submitted a proposal to set up hospital in PPP mode in multiple locations of KBK and nonKBK districts. The state Govt. would provide land on lease and one-time capital grant (for KBK districts only). The private party would invest on hospital infrastructure and services. Necessary land is being identified in consultation with KBK and other district administration. Expression of interest (EoI) from private parties would be invited shortly.

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(d) Diagnostic Centres: The PPP Cell in association with the Health & Family Welfare Department has initiated a proposal to establish Diagnostic Centres at Govt. hospitals in PPP mode. Such centres are aimed at facilitation certain diagnostic facilities (which are presently non-existent in the hospitals) at subsidized rates to patients who otherwise had to pay for the services to private diagnostic centres. Expression of interest (EoI) from private parties would be invite shortly.

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CHAPTER VII SALIENT FEATURES OF THE MEMORANDUM

1. Introduction: The State predominantly consists of rural population and has a high proportion (38.66%) of SC/ST. It is predominantly an agricultural state in terms of employment and is also one of the least urbanized States of the country. It has the highest percentage of population living below the poverty line. It is also one of the most underdeveloped state owing to historical reasons as well as several exogenous policies constraining growth for a long period since independence. The complex interaction between various socio-economic factors has also contributed to the backwardness of the state. In terms of the Human Development Index (HDI) (2001), the State (with a score of 0.404) is below that of the all-India average (0.472). The fiscal situation of the State deteriorated considerably during from revenue surplus one in the early 1980s to persistent deficits by the mid 1980s, and the revenue and fiscal deficits reached a peak around the turn of the century. The situation has improved markedly since 2004-05. The State has taken various revenue step-up, expenditure rationalization and fiscal management measures to improve the financial position. Reforms in the industrial sector, power sector and public sector enterprises have also resulted in significant turnaround in the fiscal health of the State. 2. General Suggestions: The State has made the following general observation with respect to the principles to be followed by the Commission: The Commission should consider the requirements of the States in their totality (ie. including Plan and Capital) and not the Non-Plan Revenue Account only; The expenditure assessment have to be based on some measurement of expenditure needs rather than past trends; Since many of the less developed States are the ones with the highest growth potential, greater allocation of resources to these areas would benefit the entire nation by maximizing national growth and spreading the benefits of high growth; The primary objective of the statutory transfer system is equity; even so, there is a need to build in the right incentives so that the efficiency objective is also met as a secondary one; Commission may recommend a floor level of devolution in absolute terms (which should be equal to 100% of the estimated tax devolution) to insulate States in case the growth of Central revenues is less than the projected figure; Debt restructuring and write-off are still relevant policy options. 3. Vertical Devolution: The State has demanded the following under vertical devolution: The share of Central taxes to the States should be increased from the existing level of 30.5 per cent to 50 per cent of the net proceeds; 73

 The Commission should assess the expenditure needs of the Centre based on the responsibilities envisaged in the Constitution rather than on the basis of committed expenditure. The Commission may thus take an independent view regarding the GBS as referred to in the ToR; Export duty on iron and chrome ore should be passed on fully to the originating State to compensate for pollution, depletion of natural resources and other negative externalities arising out of mining activities; Surcharges, if continued beyond a period of one year, should form a part of the divisible pool.

4. Horizontal Devolution: With respect to inter se devolution the State has suggested the following vis--vis the one recommended by the Twelfth Finance Commission: Criteria Income Distance Population Area Tax Effort Fiscal Discipline Population below poverty line Proportion of SC & ST population Inverse of infrastructure index Weight (percent) Assigned by 12th FC 50 25 10 7.5 7.5 Suggestions for 13th FC 20 50 10 20

5. Grants-in aid : The State has asked for the following under grants-in-aid: While assessing/projecting the revenue potential and expenditure requirement of the State the following factors should be taken into account: a) Effects of employees pay revision following the implementation of the 6 th Central Pay Commission recommendations by the Central Government; b) In view of significant increase in revenue receipts in the recent past due to tapping the available revenue slack and the existence of overall recessionary conditions it will not be possible to mention the revenue growth trends witnessed in the recent past; c) All committed expenditure projected by the State should be retained as they are based on actual requirement. Maintenance cost of plan schemes going to be completed by the end of the 11th Five Year Plan should be considered while projecting the expenditure of the State; d) Financial liabilities arising out of larger developmental needs of the State, the recommendations of the 3rd State Finance Commission and countering the

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threat of Naxalism should also be kept in view while projecting expenditure needs; e) Limitations of revenue raising measures of the State due to policies pursued by the Centre (eg. Freight equalization policy, policies relating to imposition of electricity duty, royalty on minerals, etc.) should also be taken into account by the Commission while assessing revenues. Various decisions of Supreme Court/High Court (relating to luxury tax, entry tax, forest development tax etc.) have further limited the revenue raising potential of the State. These should also be considered while assessing the revenue potential. Full equalisation grants amounting for Education and Health amounting to Rs. 1032.70 crore and Rs.648.86 crore respectively should be given. Equalisation grants should also be extended to economic services like maintenance of roads and bridges, irrigation and flood control work, maintenance of public buildings (residential and non-residential). While the end use of the grants may be monitored, the matching Non-Plan Revenue Expenditure (NPRE) by the States may not be insisted upon. The maintenance expendtiure norms projected by the Twelfth Finance Commission for Irrigation, Buildings, Roads etc. was inadequate. Based on their assessment the state has projected a requirement of Rs.40572.69 crore as maintenance grants; The State has asked for upgradation grants amounting to Rs.12449.35 crore for 36 items. Under State specific grants (32 items) the States demand is of the order of Rs.3136.42 crore. The aggregate demand for these two (i.e. Upgradation and State specific needs) add up to Rs.15585.77 crore; The State has also requested for the Commissions intervention in releasing funds out of the undisbursed portion of the Incentive Fund set up by the Eleventh Finance Commission. 6. Ecology and Environment: In order to maintain ecological and environmental equilibrium and environment assets of the State and to implement the working plans for scientific management of forests, the State has asked for Rs.2907.09 crore. 7. Grants for Local bodies: At least 5 per cent of central tax collections (besides the horizontal tax sharing) should be devolved in favour of the local governments, in lieu of ad-hoc grants and be distributed between the states on a set of distribution criteria based on equity; Weightage for inter-se distribution of these grants among states may be as follows : population - 10%, index of deprivation - 30%, distance from higher per capita income 40% , geographical area 10% and revenue effors 10%; Conditionality of matching share from the States should not be imposed on these grants; The total requirement for local bodies as quantified, amounts to Rs.13820.54 crore (Rs.10841.65 crore for Rural Local Bodies and Rs.2978.89 crore for Urban Local Bodies). 75

8. Debt: The State has demanded: Continuance of DCRF in which NSSF loan repayments should also be included; Waiver of 10 per cent of the consolidated debt stock relating to Government of India at the end of each financial year or writing off 50 per cent of the debt stock at the beginning of the award period; Lowering of rate of interest on NSSF loans to 7.5 per cent after consolidation of the outstanding Government of India loans including NSSF loans as on 31.3.2010; 12th FCs recommendation of fixing an annual borrowing ceiling to finance the State Plan Outlay should not constrain the developmental needs of the States. This has to be ensured by provision of adequate Plan grants to the States. 9. Goods and Service Tax (GST): The State has expressed the following views with respect to GST: Implementation of GST is desirable; An acceptable revenue-neutral rate is to be determined to protect the States revenue interest; As adoption of a unified model of GST at the Central Government level would severely curtail the taxing power of the States and impinge on the Constitutionally guaranteed fiscal autonomy of the States, the Commission should ensure that this autonomy is preserved and the States have ample room for maneuverability for fiscal adjustments. 10. Calamity Relief and Disaster Management: The following suggestions have been made by the State: Centre State contribution to the States Calamity Relief Fund (CRF) should be set at the ratio of 90:10 instead of the present 75:25; The scope of CRF may be enhanced to include items like lightning, heat wave, thunder storm, tornado, maintenance cost of emergency equipments bought out of CRF funds, subsidies to affected farmers, etc. The low income States facing natural calamities on a regular basis should be allocated an additional 30 per cent of the aggregate size of the CRF; Norms for expenditure from the CRF should be relaxed in severe drought conditions; The corpus for Orissas CRF should be Rs.800 crore per year; The corpus of the National Calamity Contingency Fund (NCCF) should be raised to Rs.1000 crore instead of the present Rs.500 core; A sum of Rs.7431.64 crore may be provided to the State for Disaster Mitigation.

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Summary of the proposals for the special purpose grants is indicated below (Rs. in crore) S. No. Proposal/Scheme 1 2 3 4 5 5 6 Upgradation State specific needs Ecology and environment Maintenance Grants Equalisation grants for Health and Education Local Bodies Disaster mitigation Total Amount sought 12449.35 3136.42 2907.09 40572.69 1681.56 13820.54 7431.64 81999.29

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Chapter VIII PANCHAYATI RAJ INSTITUTIONS

1. Structure The Government of Orissa has enacted the Panchayat Samiti (PS) Act (1959), the Gram Panchayat (GP)Act (1964) and the Zilla Parishad (ZP) Act (1991) to provide three-tier structure of Panchayati Raj institutions (PRIs) Gram Panchayat at Village level, Panchayat Samiti at Block level and Zilla Parishad at District level. There are 6234 Gram Panchayats, 314 Panchayat Samitis and 30 Zilla Parishads in Orissa. The average population (2001 census) per GP, PS and ZP are 5120, 101646 and 1063895 respectively. The average area per GP, PS and ZP is 24.59 Sq. Km., 488.22 Sq. Km. and 5110.02 Sq. Km. respectively. The district wise distribution of Block Panchayat and Village Panchayats along with number of villages, rural population and percentage distribution of district-wise rural population are given in the table below: No. of No. of Gram Panchayats Panchayats Samitis 209 285 289 248 193 63 341 60 199 129 475 195 280 78 273 153 230 286 168 226 108 8 14 12 12 7 3 14 3 8 7 22 8 10 5 13 12 9 13 10 14 7 No. of Villages (2001) 1635 1761 2586 1177 1224 1101 1763 697 1060 1460 2762 1318 1560 353 2068 2336 1389 2067 1355 1915 878 Rural Population (2001/Nos.) 981587 1182871 1804140 1242795 1192678 355347 1699964 254012 973964 465949 2604276 953180 1551361 323831 1235275 604107 1227868 1348967 1071689 982188 469582 District-wise % Distribution of Rural Population 3.14 3.78 5.77 3.97 3.81 1.14 5.43 0.81 3.11 1.49 8.32 3.05 4.96 1.04 3.95 1.93 3.92 4.31 3.43 3.14 1.50

Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Name of District

ANUGUL BALANGIR BALESHWAR BARGARH BHADRAK BOUDH CUTTACK DEOGARH DHENKANAL GAJAPATI GANJAM JAGATSINGHAPUR JAJAPUR JHARSUGUDA KALAHANDI KANDHAMAL KENDRAPARA KENDUJHAR KHORDHA KORAPUT MALKANGIRI

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Sr. No. 22 23 24 25 26 27 28 29 30

Name of District

No. of No. of Gram Panchayats Panchayats Samitis 382 169 179 109 230 171 148 96 262 6234 26 10 8 5 11 11 9 6 17 314

No. of Villages (2001)

MAYURBHANJ NABARANGPUR NAYAGARH NUAPADA PURI RAYAGADA SAMBALPUR SONEPUR SUNDARGARH Total

District-wise % Distribution of Rural Population 3718 2067756 6.61 880 966496 3.09 1511 827450 2.64 643 500652 1.60 1584 1298654 4.15 2445 715702 2.29 1247 681835 2.18 808 501767 1.60 1688 1201479 3.84 46989 31287422 100.00 [Source: RGI, Ministry of Panchayati Raj] Rural Population (2001/Nos.)

2. Devolution of Powers

The State Government devolved 21 subjects out of 29 enlisted in the 11 th schedule to the 3 tier PRIs to make them fiscally capable and autonomous. The remaining 8 subjects have not so far been transferred. No funds have been transferred to the PRIs in respect of 21 subjects already transferred to the PRIs.
Table 2.1: Functions / Services transferred to PRIs and Expenditure thereon.

Sr. No.

Name of function/service

Date of transfer

Revenue Expenditure on the function / service in the year preceding the year of transfer Budget Head/s (Sub Head/s) 5 Amount(Rs. in thousands) 6 Funds have not been transferred

1 1 2 3

2 Agriculture Land improvement, Minor Irrigation, water management and watershed development Animal Husbandry, diarying and poultry Fisheries Minor Forest Produce

3 ZP/ PS/ GP ZP/ PS/ GP ZP/ PS/ GP

4 25.10.2005 25.10.2005 25.10.2005

4 5 6

ZP/ PS/ GP ZP/ PS/ GP ZP/ PS/ GP

25.10.2005 25.10.2005 25.10.2005

17-3604-compensation & assignment to local bodies & PRIs-198-

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Sr. No.

Name of function/service

Date of transfer

Revenue Expenditure on the function / service in the year preceding the year of transfer
assistance to GPs-1734compensation & assignment under award of 2nd SFC-29006compensation to GPs719-Minor Forest Produce(NP)

Rural Housing

ZP/ PS/ GP

25.10.2005

17-2505-Rural Employment-State Plan-District Sector60-Other Programmes-102-IAY

2000-012001-022002-032003-042004-05-

1186538 666890 1011081 1334555 2262240

Drinking Water/ Sanitation Roads, Culverts, Bridges, Ferries, Water Ways Non-conventional energy sources Poverty alleviation programmes

ZP/ PS/ GP

25.10.2005

Funds are transferred from 12th Finance Commission grants

ZP/ PS/ GP ZP/ PS/ GP

ZP/ PS/ GP

25.10.2005 25.10.2005
25.10.2005

10 11

2000-012001-022002-032003-042004-05-

1186538 666890 1011081 1334555 2262240

12

13 14 15

16 17 18 19

Education including primary & secondary education Adult & Non-formal education Markets & Fairs Health & Sanitation, Hospital, Primary Health Centre and dispensaries Family welfare
Women & Child Development

ZP/ PS/ GP

25.10.2005

Funds are being placed with PRIs directly Funds are being placed with PRIs directly Funds have not been transferred

ZP/ PS/ GP ZP/ PS/ GP ZP/ PS/ GP

25.10.2005 25.10.2005 25.10.2005

ZP/ PS/ GP ZP/ PS/ GP ZP/ PS/ GP ZP/ PS/ GP

25.10.2005 25.10.2005 25.10.2005 25.10.2005

Funds have not been transferred

Funds are being placed with PRIs directly Funds are being placed with PRIs directly

Social Welfare Social Welfare of weaker sections and in particular of SC & ST Public Distribution System Maintenance of community assets

20 21

ZP/ PS/ GP ZP/ PS/ GP

25.10.2005 25.10.2005

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Activity mapping of 29 subjects of PRIs was done and the State Government divided 21 subjects into 130 sub activities. 3. Transfer of Functionaries to PRIs Project Director, DRDA was designated as Secretary-cum-Executive Officer of ZP and the district level officers of line departments designated as additional executive officers. BDOs at Blocks were designated as the Executive Officers of PS and the Block level officers of line departments made accountable to the BDO. Village Agriculture Worker or Village level Workers were made as Executive Officers of Gram Panchyats and the officials of line departments in villages were made accountable to Gram Panchayats. 4. Sources of funds of PRIs PRIs generally receive funds from the Govt. of India and the State Government in the form of grants. The GOI grants include grants assigned under the recommendations of Eleventh Finance Commission & Twelfth Finance Commission. State government grants are received under the recommendations of State Finance Commission. However, only Gram Panchayats collected some revenue in the form of vehicle tax, water & light charges, drainage tax, market fees and issue of licenses etc. Panchayat Samiti and Zilla Parishads are not permitted to levy any taxes. Professional tax levied and collected by the State Government. However, there is no fixed ratio for distributing this tax to PRIs and they go as a part of total devolution. 5. Transfer of Resources by State Government to PRIs: The status of resources transfer to PRIs by the State Government from the year 2002-03 onwards is as under: (Rs. In Crore) Year Devolution Grant-in-Aid 2002-03 96.21 57.4 2003-04 102.23 49.52 2004-05 97.4 35.55 2005-06 98.27 12.44 2006-07 121.14 37.91 2007-08 149.44 52.57 2008-09 152.53 70.47

Source: As provided by the State Government

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6. Financial Performance of PRIs Table 6.1: Revenue & Expenditure of District Panchayats Rs in Crore) Item 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 0 0 0 9.1 25.97 107.98 0.18 5 148.23 14.99 133.24 148.23 0.00 0.00 0.00 2.75 7.84 32.59 0.05 1.51 44.74 4.52 40.22 44.74 3.3129

Receipts Own Tax 0 0 0 0 0 Own Non-Tax (incl. user charges) 0 0 0 0 0 Total own Revenue 0 0 0 0 0 Assignment + Devolution 3.96 4.44 3.67 6.83 7.2 Grants-in-Aid 2.9 3.26 2.96 1.50 24.72 Transfers from Central Govt. 54.81 49.49 52.23 64.65 20.12 Transfer from TFC/EFC 0.66 0.45 0.24 0.18 0.16 Others 10.73 26.63 23.31 23.82 19.07 Total Revenue Receipts 73.06 84.27 82.41 96.98 71.27 Expenditure Revenue Expenditure 7.79 8.14 12.88 8.71 13.26 Capital Expenditure 65.27 76.13 69.53 88.27 58.01 Total Expenditure 73.06 84.27 82.41 96.98 71.27 Per Capita Receipts (In.Rs.) Own Tax 0.00 0.00 0.00 0.00 0.00 Own Non-Tax (incl. user charges) 0.00 0.00 0.00 0.00 0.00 Total own Revenue 0.00 0.00 0.00 0.00 0.00 Assignment + Devolution 1.25 1.38 1.13 2.09 2.19 Grants-in-Aid 0.91 1.02 0.92 0.46 7.52 Transfers from Central Govt. 17.25 15.43 16.15 19.82 6.12 Transfer from TFC/EFC 0.21 0.14 0.07 0.06 0.05 Others 3.38 8.30 7.21 7.30 5.80 Total Revenue Receipts 22.99 26.28 25.48 29.73 21.68 Per Capita Expenditure (In Rs.) Revenue Expenditure 2.45 2.54 3.98 2.67 4.03 Capital Expenditure 20.54 23.74 21.50 27.06 17.64 Total Expenditure 22.99 26.28 25.48 29.73 21.68 Projected Population 3.178 3.2068 3.2347 3.2615 3.2877 *[Source: Population Projections for India and States 2001-2026 published by National Commission on Population, Ministry of Health & Family Welfare, New Delhi]

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Table 6.2: Revenue & Expenditure of Block Panchayats Rs in Crore) Item Receipts Own Tax Own Non-Tax (incl. user charges) Total own Revenue 0 0 0.00 0 0 0.00 0 0 0.00 0 0 0.00 0 0 0.00 0 0 0.00 109.27 63.15 992.85 1.89 107.49 1274.65 128.11 1146.54 1274.65 0.00 0.00 0.00 32.98 19.06 299.69 0.57 32.45 384.75 38.67 346.08 384.75 3.3129 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Assignment + Devolution 73.83 78.03 75.72 69.68 86.41 Grants-in-Aid 3.33 5.46 6.65 2.78 36.98 Transfers from Central Govt. 155.13 168.73 204.44 229.62 993.12 Transfer from TFC/EFC 1.32 1.53 1.75 1.85 1.83 Others 120.42 139.50 110.42 96.52 111.00 Total Revenue Receipts 354.03 393.25 398.98 400.45 1229.34 Expenditure Revenue Expenditure 70.15 76.00 74.43 68.93 85.21 Capital Expenditure 283.88 317.24 323.56 331.52 1144.13 Total Expenditure 354.03 393.24 397.99 400.45 1229.34 Per Capita Receipts (In.Rs.) Own Tax 0.00 0.00 0.00 0.00 0.00 Own Non-Tax (incl. user charges) 0.00 0.00 0.00 0.00 0.00 Total own Revenue 0.00 0.00 0.00 0.00 0.00 Assignment + Devolution 23.23 24.33 23.41 21.36 26.28 Grants-in-Aid 1.05 1.70 2.06 0.85 11.25 Transfers from Central Govt. 48.81 52.62 63.20 70.40 302.07 Transfer from TFC/EFC 0.42 0.48 0.54 0.57 0.56 Others 37.89 43.50 34.14 29.59 33.76 Total Revenue Receipts 111.40 122.63 123.34 122.78 373.92 Per Capita Expenditure (In Rs.) Revenue Expenditure 22.07 23.70 23.01 21.13 25.92 Capital Expenditure 89.33 98.93 100.03 101.65 348.00 Total Expenditure 111.40 122.63 123.04 122.78 373.92 Projected Population 3.178 3.2068 3.2347 3.2615 3.2877 *[Source: Population Projections for India and States 2001-2026 published by National Commission on Population, Ministry of Health & Family Welfare, New Delhi]

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Table 6.3 Revenue & Expenditure of Village Panchayats Rs in Crore) Item Receipts Own Tax Own Non-Tax (incl. user charges) Total own Revenue 1.28 7.84 9.12 1.30 8.23 9.53 1.30 8.39 9.69 1.30 8.55 9.85 1.37 8.75 10.12 1.41 9.02 10.43 19.55 85.30 28.33 158.52 77.49 379.62 47.65 331.97 379.62 0.43 2.72 3.15 5.90 25.75 8.55 47.85 23.39 114.59 14.38 100.21 114.59 3.3129 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Assignment + Devolution 23.88 24.54 17.55 11.13 20.83 Grants-in-Aid 24.43 21.39 10.81 19.61 86.15 Transfers from Central Govt. 168.12 172.68 197.32 233.37 130.12 Transfer from TFC/EFC 67.14 67.14 67.13 158.57 158.62 Others 118.57 151.17 127.90 91.06 71.98 Total Revenue Receipts 411.26 446.45 430.40 523.59 477.82 Expenditure Revenue Expenditure 48.52 45.31 31.61 34.89 42.33 Capital Expenditure 362.73 401.15 398.78 488.7 435.49 Total Expenditure 411.25 446.46 430.39 523.59 477.82 Per Capita Receipts (In.Rs.) Own Tax 0.40 0.41 0.40 0.40 0.42 Own Non-Tax (incl. user charges) 2.47 2.57 2.59 2.62 2.66 Total own Revenue 2.87 2.97 3.00 3.02 3.08 Assignment + Devolution 7.51 7.65 5.43 3.41 6.34 Grants-in-Aid 7.69 6.67 3.34 6.01 26.20 Transfers from Central Govt. 52.90 53.85 61.00 71.55 39.58 Transfer from TFC/EFC 21.13 20.94 20.75 48.62 48.25 Others 37.31 47.14 39.54 27.92 21.89 Total Revenue Receipts 129.41 139.22 133.06 160.54 145.34 Per Capita Expenditure (In Rs.) Revenue Expenditure 15.27 14.13 9.77 10.70 12.88 Capital Expenditure 114.14 125.09 123.28 149.84 132.46 Total Expenditure 129.41 139.22 133.05 160.54 145.34 Projected Population 3.178 3.2068 3.2347 3.2615 3.2877 *[Source: Population Projections for India and States 2001-2026 published by National Commission on Population, Ministry of Health & Family Welfare, New Delhi]

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Table 6.4: Revenue & Expenditure of Panchayat Raj Institutions (All Tiers) Rs in Crore) Item Receipts Own Tax Own Non-Tax (incl. user charges) Total own Revenue 1.28 7.84 9.12 1.30 8.23 9.53 1.30 8.39 9.69 1.30 8.55 9.85 1.37 8.75 10.12 1.41 9.02 10.43 137.92 174.42 1129.16 160.59 189.98 1802.50 190.75 1611.75 1802.50 0.43 2.72 3.15 41.63 52.65 340.84 48.47 57.35 544.09 57.58 486.51 544.09 3.3129 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Assignment + Devolution 101.67 107.01 96.94 87.64 114.44 Grants-in-Aid 30.66 30.11 20.42 23.89 147.85 Transfers from Central Govt. 378.06 390.90 453.99 527.64 1143.36 Transfer from TFC/EFC 69.12 69.12 69.12 160.60 160.61 Others 249.72 317.30 261.63 211.40 202.05 Total Revenue Receipts 838.35 923.97 911.79 1021.02 1778.43 Expenditure Revenue Expenditure 126.46 129.45 118.92 112.53 140.80 Capital Expenditure 711.88 794.52 791.87 908.49 1637.63 Total Expenditure 838.34 923.97 910.79 1021.02 1778.43 Per Capita Receipts (In.Rs.) Own Tax 0.40 0.41 0.40 0.40 0.42 Own Non-Tax (incl. user charges) 2.47 2.57 2.59 2.62 2.66 Total own Revenue 2.87 2.97 3.00 3.02 3.08 Assignment + Devolution 31.99 33.37 29.97 26.87 34.81 Grants-in-Aid 9.65 9.39 6.31 7.32 44.97 Transfers from Central Govt. 118.96 121.90 140.35 161.78 347.77 Transfer from TFC/EFC 21.75 21.55 21.37 49.24 48.85 Others 78.58 98.95 80.88 64.82 61.46 Total Revenue Receipts 263.80 288.13 281.88 313.05 540.93 Per Capita Expenditure (In Rs.) Revenue Expenditure 39.79 40.37 36.76 34.50 42.83 Capital Expenditure 224.00 247.76 244.80 278.55 498.11 Total Expenditure 263.79 288.13 281.57 313.05 540.93 Projected Population 3.178 3.2068 3.2347 3.2615 3.2877 *[Source: Population Projections for India and States 2001-2026 published by National Commission on Population, Ministry of Health & Family Welfare, New Delhi]

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Table 6.5: Consolidated position of Receipt and Expenditure of the PRIs (Rs. In Crores) 2006-07 2007-08 1778.43 140.80 1637.63 0.00 1802.50 190.75 1611.75 0.00

Item Total Revenue Revenue Expenditure Capital Expenditure Cash Surplus(+)/Deficit(-)

2002-03 838.35 126.46 711.88 0.01

2003-04 923.97 129.45 794.52 0.00

2004-05 911.79 118.92 791.87 1.00

2005-06 1021.02 112.53 908.49 0.00

The consolidated position of the Revenues and Expenditure of PRIs indicates that these Institutes are managing their expenditure within their receipts.

7. Election The General elections for all PRIs were conducted during 13th February to 19th February 2007. 8. Maintenance of Accounts Senior clerks of District Establishment and senior clerks of the Panchayat Samities have been entrusted to maintain the accounts of the Zilla Parishads and the Panchayat Samities. Secretaries/Panchayat Executive Officers of Gram Panchayats maintain the accounts of Gram Panchayats. CAG formats have been adopted by implementation of PAMIS (Panchayat Account Monitoring Information System) for maintaining Cash Book, Journal and Ledger etc. in Panchayat Samiti (Block) and Zilla Parishad (DRDA) level. Accounts upto 2007-08 have been finalised. 9. Audit of Accounts (a) Grampanchayat Orissa Gram Panchayat Act was amended during December, 2003 to get the accounts of Gram Panchayat audited by the Auditors of Local Fund Accounts and by AG orissa. AG orissa has been entrusted to audit 20 percent of the Grampanchayats and the rest GPs are audited by the Local Fund Audit Organisations of Finance Department. At the beginning of each financial year 6234 GP accounts are accruing for audit. As on 1.4.2008, audit of 9233 arrear GP accounts are pending for audit. As such there is a back log of 2999 arrear audits pertaining to GPs. To cover the arrears in audit of GPs, contractual auditors have been appointed for clearing all the arrear audits. (b) Panchayat Samities As per the existing practice, accounts of Panchayat Samiti are audited by the Local Fund Audit, Finance Department. Out of 314 Panchayat Samities of the State (Intermediary

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Panchayats), 157 selected Panchayat samities have been put under pre-audit system since June 1998 and the rest 157 Panchayat Samities under post audit by Local Fund Audit. The accounts of all the 157 Panchayat Samities put under post-audit have been completed up-to the year 2006-07. Audit for the year 2007-08 is in progress. (c) Zilla Parishads There are 30 Zilla Parishads in the State. The audit of Zilla Parishads has not been started. Steps have been taken to audit the accounts of the Zilla Parishads including all the arrear accounts.

10. Computerization of PRIs The smart model of Governance has become the motto of e-Governance System in the Panchayati Raj Department, which has been playing an important role f ICT (Information and Community Technology) usage in Rural Development. Panchayati Raj Department has implemented a good number of e-governance projects like Priya Soft for monitoring of Accounts in 3 tier PRIs and citizen centric Information Projects in Rural Soft for Project Monitoring of Poverty Alleviation Programmes. The Pay Role Software known as BETAN developed by Orissa Computer Application Centre (OCAC) has been implemented in all the Blocks and DRDAs of the State. The salary of the DRDAs, Blocks and Primary Schools Teachers are being drawn using the Pay Roll Software known as BETAN developed by OCAC. This has resulted saving of manpower specifically Teachers who were otherwise engaged for preparation of salary bills. Treasuries have been advised to accept only computer generated Pay bills for the Block staff and Primary School Teachers. To maintain the daily transaction at the Block and DRDA level, the software known as PAMIS developed has been implemented in all the 344 locations and the manual Cash Book has been replaced by Computersied Cash Book. 11. Capacity Building and training The State Institute for Rural Development (SIRD), Bhubaneswar was established in 1964 as one of the core distinguished institutions of the country with objective of becoming a Regional Training Centre in the matter of conducting training programmes in Tribal & Community Development. SIRD is a nodal institute for training, research, evaluation and consultancy in the field of Rural Development under the aegis of Panchayati Raj, Govt. of Orissa. During 2005-06, it conducted 104 Training Programme attended by 6879 Elected Representatives, Officials and NGOs while 33 special off campus training programmes were conducted which were attended by 3825 participants.

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12. Market Borrowings Orissa Gram Panchayat Act, 1964 provides that the Gram Panchayat may with the previous sanction of the State Government and subject to the provisions of this Act and Rules made there under borrow money from the State Government, any Local authority, or any individual or body of individuals corporate to carry out its purposes. Provided that nothing contained in the Local Authorities Loans Act, 1914 and the rules made there under shall apply in respect of money borrowed from the State Government after the commencement of this Act.However, no circular/order authorising the GPs to borrow money from any Authority or individual has been issued from Panchayati Raj Department.

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URBAN LOCAL BODIES

1. Structure Orissa has three levels of Urban Local Bodies (ULBs) namely Municipal Corporations, Municipalities and Notified Area Councils (NACs). The total population covered by the ULBs is 55.17 lakhs which is 15% of the States total population (2001 Census). There are 2 Municipal Corporations (MCs), 37 Municipalities (MPTs) and 64 Notified Area Councils (NACs) in the State covering a population of 55.17 lakhs. The average population (2001 census) per Municipal Corp., Municipalities and NACs are 591343, 68883 and 18070 respectively. The average area per Municipal Corp., Municipalities and NACs is 141.90Sq. Km., 28.63 Sq. Km. and 16.66 Sq. Km. respectively. There are 9 Development Authorities, 7 Improvement Trusts and 19 Special Planning Authorities functioning under the Housing and Urban Development Department of the State. 2. Devolution of Powers/functions As reported by the State Government under Schedule-3B all the functions/services have been transferred to ULBs for ensuring proper and planned growth of cities and towns with adequate infrastructure and basic amenities. 3. Sources of funds of ULBs ULBs generally receive funds from the Govt. of India and the State Government in the form of grants. The GOI grants include grants assigned under the recommendations of Eleventh Finance Commission & Twelfth Finance Commission. State government grants are received under the recommendations of State Finance Commission. However, ULBs collected some revenue in the form of property tax, water charges, lighting tax, fees on registration of dogs & vessels and user charges from water and sewerage etc. Professional tax levied and collected by the State Government. However, there is no fixed ratio for distributing this tax to PRIs and they go as a part of total devolution. 4. Transfer of Resources by State Government to ULBs The status of resources transfer to ULBs by the State Government from the year 2002-03 onwards is as under:

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Table 4.1: Transfer of Resources by State Government to ULBs (Rs. In crore) Grants-in-Aid actual transfer 23.84 25.61 16.36 18.12 40.83 39.84 39.85

Amount actually Devolution Year transfer actual transfer 939.21 105.00 0 2002-03 1131.57 114.82 4.23 2003-04 1154.79 119.51 0.29 2004-05 1390.02 129.26 16.10 2005-06 1722.00 154.40 4.90 2006-07 1808.10 186.98 38.15 2007-08 1742.70 224.38 3.15 2008-09 Source: As provided by the State Government
Collection of from assigned taxes

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5. Financial Performance Table 51: Receipts and Expenditure of Municipal Corporation (Rs in Crore) Item Receipts Own Tax Own Non-Tax (incl. user charges) Total own Revenue 2.59 1.01 3.60 3.87 1.01 4.88 4.74 1.32 6.06 7.47 1.91 9.38 8.50 2.14 10.64 9.29 2.65 11.94 91.76 4.56 121.34 10.08 41.82 281.50 77.29 204.21 281.50 14.57 4.16 18.73 143.91 7.15 190.31 15.81 65.59 375.91 121.22 320.28 441.50 0.6376 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

48.00 55.05 53.58 67.36 61.55 Assignment + Devolution Grants-in-Aid 9.82 7.74 2.91 3.94 4.66 Transfers from Central Govt. 2.39 2.87 3.06 0.47 1.34 Transfer from TFC/EFC 1.20 1.27 1.10 5.46 10.08 Others 0.11 1.31 0.05 0.18 35.68 Total Revenue Receipts 65.12 73.12 66.76 86.79 123.95 Expenditure Revenue Expenditure 31.54 30.04 46.98 49.00 69.07 Capital Expenditure 33.58 43.08 19.78 37.79 54.88 Total Expenditure 65.12 73.12 66.76 86.79 123.95 Per Capita Receipts (In.Rs.) Own Tax 4.53 6.61 7.92 12.22 13.61 Own Non-Tax (incl. user charges) 1.76 1.73 2.21 3.12 3.43 Total own Revenue 6.29 8.34 10.13 15.34 17.04 Assignment + Devolution 83.87 94.05 89.57 110.19 98.57 Grants-in-Aid 17.16 13.22 4.86 6.45 7.46 Transfers from Central Govt. 4.18 4.90 5.12 0.77 2.15 Transfer from TFC/EFC 2.10 2.17 1.84 8.93 16.14 Others 0.19 2.24 0.08 0.29 57.14 Total Revenue Receipts 113.59 122.69 111.52 141.68 141.37 Per Capita Expenditure (In Rs.) Revenue Expenditure 55.11 51.32 78.54 80.16 110.62 Capital Expenditure 58.67 73.61 33.07 61.82 87.89 Total Expenditure 113.79 124.93 111.60 141.98 198.51 Projected Population 0.5723 0.5853 0.5982 0.6113 0.6244 *[Source: Population Projections for India and States 2001-2026 published by National Commission on Population, Ministry of Health & Family Welfare, New Delhi]

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Table 5.2: Receipts and Expenditure of Municipalities (Rs in Crore) 2002-03 2003-04

Item Receipts

2004-05

2005-06

2006-07

2007-08 6.51 2.98 9.49 81.28 18.01 37.70 19.02 3.42 168.92 108.78 60.14 168.92 10.21 4.67 14.88 127.48 28.25 59.13 29.83 5.36 259.57 170.61 94.32 264.93 0.6376

Own Tax 3.85 3.21 3.95 4.59 6.36 Own Non-Tax (incl. user charges) 1.39 1.79 3.44 3.16 2.02 Total own Revenue 5.24 5 7.39 7.75 8.38 Assignment + Devolution 41.97 46.90 47.20 33.97 60.07 Grants-in-Aid 15.88 13.46 4.87 10.68 19.20 Transfers from Central Govt. 2.45 2.97 2.72 8.02 14.23 Transfer from TFC/EFC 2.69 2.88 3.30 10.08 18.78 Others 0.46 1.14 0.45 2.69 2.25 Total Revenue Receipts 68.69 72.35 65.93 73.19 122.91 Expenditure Revenue Expenditure 54.47 55.19 44.96 52.40 87.64 Capital Expenditure 14.22 17.16 20.97 20.79 35.27 Total Expenditure 68.69 72.35 65.93 73.19 122.91 Per Capita Receipts (In.Rs.) Own Tax 6.73 5.48 6.60 7.51 10.19 Own Non-Tax (incl. user charges) 2.43 3.06 5.75 5.17 3.24 Total own Revenue 9.16 8.54 12.35 12.68 13.42 Assignment + Devolution 73.34 80.13 78.90 55.57 96.20 Grants-in-Aid 27.75 23.00 8.14 17.47 30.75 Transfers from Central Govt. 4.28 5.07 4.55 13.12 22.79 Transfer from TFC/EFC 4.70 4.92 5.52 16.49 30.08 Others 0.80 1.95 0.75 4.40 3.60 Total Revenue Receipts 119.22 121.66 109.46 115.33 193.24 Per Capita Expenditure (In Rs.) Revenue Expenditure 95.18 94.29 75.16 85.72 140.36 Capital Expenditure 24.84 29.32 35.06 34.01 56.49 Total Expenditure 120.02 123.61 110.21 119.73 196.84 Projected Population 0.5723 0.5853 0.5982 0.6113 0.6244 *[Source: Population Projections for India and States 2001-2026 published by National Commission on Population, Ministry of Health & Family Welfare, New Delhi]

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Table 5.3: Receipts and Expenditure of Notified Area Councils (Rs in Crore) 2006-07 2007-08 1.89 1.26 3.15 52.09 18.79 8.69 12.95 3.38 99.05 74.03 25.02 99.05 2.96 1.98 4.94 81.70 29.47 13.63 20.31 5.30 155.35 116.11 39.24 155.35 0.6376

Item Receipts

2002-03

2003-04

2004-05

2005-06

1.16 1.25 1.38 1.33 1.15 Own Tax Own Non-Tax (incl. user charges) 0.81 0.89 0.29 1.08 1.70 Total own Revenue 1.97 2.14 1.67 2.41 2.85 Assignment + Devolution 15.03 17.10 19.01 44.04 37.67 Grants-in-Aid 10.41 9.39 12.81 9.20 18.37 Transfers from Central Govt. 1.71 1.79 2.36 5.05 4.09 Transfer from TFC/EFC 4.12 3.94 2.54 5.31 12.70 Others 0.43 1.31 1.52 2.83 1.50 Total Revenue Receipts 33.67 35.67 39.91 68.84 77.18 Expenditure Revenue Expenditure 29.70 34.28 30.49 49.49 58.88 Capital Expenditure 3.97 1.39 9.42 19.35 18.30 Total Expenditure 33.67 35.67 39.91 68.84 77.18 Per Capita Receipts (In.Rs.) Own Tax 2.03 2.14 2.31 2.18 1.84 Own Non-Tax (incl. user charges) 1.42 1.52 0.48 1.77 2.72 Total own Revenue 3.44 3.66 2.79 3.94 4.56 Assignment + Devolution 26.26 29.22 31.78 72.04 60.33 Grants-in-Aid 18.19 16.04 21.41 15.05 29.42 Transfers from Central Govt. 2.99 3.06 3.95 8.26 6.55 Transfer from TFC/EFC 7.20 6.73 4.25 8.69 20.34 Others 0.75 2.24 2.54 4.63 2.40 Total Revenue Receipts 58.83 60.94 66.72 112.61 123.61 Per Capita Expenditure (In Rs.) Revenue Expenditure 51.90 58.57 50.97 80.96 94.30 Capital Expenditure 6.93 2.37 15.75 31.66 29.31 Total Expenditure 58.83 60.94 66.72 112.61 123.61 Projected Population 0.5723 0.5853 0.5982 0.6113 0.6244 *[Source: Population Projections for India and States 2001-2026 published by National Commission on Population, Ministry of Health & Family Welfare, New Delhi]

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Table 5.4: Receipts and Expenditure of ULBs (All tiers) (Rs in Crore) 2006-07 2007-08 16.01 5.86 21.87 159.29 42.23 19.66 41.56 39.43 324.04 215.59 17.69 6.89 24.58 225.13 41.36 167.73 42.05 48.62 549.47 260.10 289.37 549.47 27.74 10.81 38.55 353.09 64.87 263.06 65.95 76.25 790.82 407.93 453.84 861.78 0.6376

A.

Item Revenues

2002-03 7.60 3.21 10.81 105.00 36.11 6.55 8.01 1.00 167.48 115.72

2003-04 8.33 3.69 12.02 119.05 30.59 7.63 8.09 3.76 181.14 119.51

2004-05 10.07 5.05 15.12 119.79 20.59 8.14 6.94 2.02 172.60 122.43

2005-06 13.39 6.15 19.54 145.37 23.82 13.54 20.85 5.70 228.82 150.89

Own Tax Own Non-Tax (incl. user charges) Total own Revenue Assignment + Devolution Grants-in-Aid Transfers from Central Govt. Transfer from TFC/EFC Others Total Revenue B. Expenditure Revenue Expenditure

Capital Expenditure 51.76 61.63 50.17 77.93 108.45 Total Expenditure 167.48 181.14 172.60 228.82 324.04 Per Capita Receipts (In.Rs.) Own Tax 13.28 14.23 16.83 21.90 25.64 Own Non-Tax (incl. user charges) 5.61 6.30 8.44 10.06 9.39 Total own Revenue 18.89 20.54 25.28 31.96 35.03 Assignment + Devolution 183.47 203.40 200.25 237.80 255.11 Grants-in-Aid 63.10 52.26 34.42 38.97 67.63 Transfers from Central Govt. 11.45 13.04 13.61 22.15 31.49 Transfer from TFC/EFC 14.00 13.82 11.60 34.11 66.56 Others 1.75 6.42 3.38 9.32 63.15 Total Revenue 291.65 305.30 287.70 369.62 458.22 Per Capita Expenditure (In Rs.) Revenue Expenditure 202.20 204.18 204.66 246.83 345.27 Capital Expenditure 90.44 105.30 83.87 127.49 173.69 Total Expenditure 292.64 309.48 288.53 374.32 518.96 Projection Population 0.5723 0.5853 0.5982 0.6113 0.6244 *[Source: Population Projections for India and States 2001-2026 published by National Commission on Population, Ministry of Health & Family Welfare, New Delhi]

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Table 5.5: Consolidated position of Receipt and Expenditure of the ULBs (Rs. In Crores) 2006-07 2007-08 324.04 215.59 108.45 0.00 549.47 260.10 289.37 0.00

Item Total Revenue Revenue Expenditure Capital Expenditure Cash Surplus(+)/Deficit(-) 6. Election

2002-03 167.48 115.72 51.76 0.00

2003-04 181.14 119.51 61.63 0.00

2004-05 172.60 122.43 50.17 0.00

2005-06 228.82 150.89 77.93 0.00

The Elections for 3 ULBS held on 2-12-2008, for 91 ULBs held on 19-09-2008, for 7 ULBs held on 7-04-2005 and for 2 ULBs held on 19-9-2003.

7. Maintenance of Accounts The Chief Finance Officer is responsible for maintenance of Municipal accounts in Municipal Corporations whereas the Executive Officer of the concerned Municipalities and NACs maintain the accounts with the assistance of Accountants. The state has not adopted the revised formats of CAG for accounting. Accounts upto 2007-08 have been finalised. Tally 9 accounting software has been introduced and the staffs have been trained to carry out the accrual based double entry accounting system in five major ULBs i.e., Bhubaneswar Municipal Corporation, Cuttack Municipal Corporation, Puri, Sambalpur and Berhampur Municipalities. The Government of Orissa, in principle, has approved introduction of this reform in rest of ULBs in a phased manner. 8. Audit of Accounts The Examiner, Local Fund Audit (LFA) under the Finance Department conducts audit of the three tiers of ULB through the District Audit Officers, Audit Superintendents and Auditors. There are 103 nos. of ULBs in the State. Twenty percent of the ULBs are being audited by the Accountant General of Orissa and the balance by the LFA Organisation of the State Government. There are some backlogs of accounts pending for audit. Steps have been taken to clear the back log on priority basis.

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9. Computerization of ULBs & creation of data base All the 103 ULBs of the state have been supplied with the required computer hardware and softwares like MS Office 2003 and ISM Office version 5.0. At the same time, two representatives of each ULB have been provided training and other handholding support for operation of computers. A Special Purpose Vehicle (SVP), Orissa E-governance Service Limited (OESL) has been created to implement 11 e-governance modules containing property tax, accounting, water supply and other utilities, birth & death registration, citizens grievance monitoring, personnel management system, procurement and monitoring of projects, building plan approval, public health management, licenses, and solid waste management in all the ULBs.

10. Market Borrowings ULBs of Orissa are not permitted to raise funds from open market.

11. Solid Waste Management The state has given instructions to ULBs, as per the recommendations of 12 th Finance Commission to incur expenses upto 50% on the schemes related to Solid Waste Management out of the total releases made to the ULBs. Municipal Corporations/Councils should make consistent efforts to start waste to compost/energy projects in their respective areas. Local bodies must carefully look into various options available and choose the technology for processing of solid waste to compost/energy which suits local conditions and also generate income which can at least repay the cost of collections and disposal of solid waste. Solid waste management should cover cleaning of streets, transportation of solid waste and treatment and disposal of waste. Detail Project Reports (DPR) for Solid Waste Management Programme in respect of individual ULBs has been prepared. The ULBs have procured the required equipments/ vehicles for transporting the wastes to the dumping sites. The ULBs have been identifying lands and taking possession of the same from the Collector concerned for construction of land-fill sites, compost pits, and construction of approach road, boundary wall and development of land-fill sites. The feasibility of Public Private Partnership (PPP) in some of the major cities of the state is being worked out in consultation with subject matter specialists.

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DISTRICT PLANNING COMMITTEES

The State Government created District Planning Committees through an Act of 1998 with a view to consolidate the plan prepared by PRIs and ULBs and also to prepare draft development plan for the district as a whole. The committee was assigned the powers to review the implementation of development programmes. Despite formation of such DPCs since 2001-02, they were not made functional and no technical or secretariat support staff exists for monitoring and review. As such no consolidations of plan for district exist. However, 23 technical support institutions were assigned the work of preparation district plan for different districts.

STATE FINANCE COMMISSIONS

First State Finance Commission (1997-98 to 2004-05) The First State Finance Commission was constituted in 21-9-1996. It submitted its recommendations to Govt. on 30-12-1998. The Cabinet approved the Report of the First Finance Commission on 3-2-1999. Thereafter the Report was laid in the Orissa Legislative Assembly on 9-7-1999. The salient features of recommendation are given as under:a. Surcharge on Stamp Duty should be levied at a uniform rate of 3% both in the areas under Special Planning Authorities, Improvement Trusts and Development Authorities. Proceeds of the proposed new levy of surcharge on stamp duty in rural areas should be passed on the Gram Panchayats. b. Collection and incidental charges should be at uniform rate of 2% for all the areas. c. The entire amount collected from royalty on Minor Forest Produce be given to Panchayat Samitis and Gram Panchayats coming under the Tribal Sub-Plan areas in the ratio of 60:40 respectively. d. Gram Panchayat Act, 1964 to be amended to levy house tax of 4% as the minimum and 8% as the maximum on the annual rental value of buildings in Gram Panchayats after deducting 15% towards maintenance cost. e. GPs/ULBs should be empowered to issue no dues certificate to the aspirant loanee before availing any loan from Govt., Semi- Govt. and any recognized Financial Institutions. Second State Finance Commission (2005-06 to 2009-10) The Second State Finance Commission was constituted in 5-6-2003. It submitted its recommendations to Govt. on 29-9-2004. The principles laid down by the 2ndS.F.C. for which the recommendations are being currently implemented, are :

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i)

For assignment of Taxes -20% increase on the amount of transfer of entry tax to the ULBs against the present level of 10% increase every year. (Accepted by Govt.) For devolution - 10% of the average of States gross own tax revenue from 1999 -2000 to 2001-02, i.e. Rs.211.83 crore per annum to the PRIs and ULBs at the ratio of 80:20 for each of the year during the award period from 2005-06 to 2009-10. (Accepted by Govt) Grants-in-aid10% of the Gross own tax revenue of the State (Rs.383.30 crore) for the year 2002-03 minus the devolvable amount (211.83 crore) i.e. Rs.171.47 crore per annum for the award period 2005-06 to 2009-10. (Accepted by Govt.) Others - The transfers made on account of salaries, allowances, TA etc of the Local Bodies shall flow to the respective Tiers of PRIs irrespective of the funds recommended for devolution. (Accepted by Govt.) The salient features of recommendation are given as under:a. Panchayat Samities and the Zilla Parishads have no power to levy and collect any tax or fees, etc. the Commission recommend that each GP should contribute 5% of its net internal income to the concerned Panchayat Samiti and another 5% to the concerned ZP for strengthening their internal income and the three tier structure. b. The Rural Local Bodies would receive Rs.156.63 crore in 2005-06 and Rs.250.90 crore in 2009-10 at an average of Rs.201.00 crore per annum. This amount would include grants for various items, which the Rural Local Bodies were receiving from the State Government. The existing system of profit from Kendu Leaf Trade will flow to the Rural Local Bodies @ Rs.10.00 crore per annum. c. The Urban Local Bodies would receive Rs.39.17 crore in 2005-06 and Rs.62.73 crore in 2009-10 at an average of Rs.50.26 crore per annum. This would include Rs.25.00 crore per annum for maintenance of roads, Rs.3.00 crore per annum towards surcharge on stamp Duty and Rs.0.15 crore per annum towards surcharge on Entertainment Tax. d. Compensation on Entry Tax will flow to the Urban Local Bodies independent of the above amount hike of 20% per annum as against present level of 10% hike. Out of this 20% hike, 10% hike would be passed on to the Urban Local Bodies as united resources and the balance 10% hike would be released by the State Government to the concerned Urban Local Bodies based on their performance in undertaking various reforms including augmentation of internal non-debt resources. e. Rs. 15.59 crore per year earmarked each for creation of data bank and publication of an annual GP profile regularly & for providing emergent relief at the time of natural calamity etc. Third State Finance Commission (2010-11 to 2014-15) The 3rd S.F.C. has been constituted vide Notification No.41424, dated 10.09.08 and the 3rd SFC has been asked to submit their Report by 30.06.2009 for the period from 2010-11 to 2014-15. An interim report is expected very shortly.

ii)

iii)

iv)

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11th FC grants to Local Bodies (Rs. in Crore) Year Recommended Actually drawn 2000-01 77.11 38.55 2001-02 77.11 115.66 2002-03 77.11 38.55 2003-04 77.11 46.55 2004-05 77.11 146.23 Total 385.55 385.54

12th FC grants to Local Bodies (Rs. in Crore) Year Recommended Actually drawn 2005-06 181.4 181.4 2006-07 181.4 171.0 2007-08 181.4 160.6 Total 544.2 513.0

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Chapter-IX ISSUES FOR CLARIFICATION

1. As pointed out by AG Orissa, there has been a sharp decline in the population of primitive tribal groups (PTGs) in the recent years. Of the 13 PTGs the population of 5 PTGs declined by 65-90 per cent while in the case of two the decline was between 15 to 30 per cent. 2. The human-wild life conflict has increased in the State during the recent years. As per AGs Report, during 2003-08 235 persons and 280 elephants have been killed. Besides this there has also been extensive damage caused to crops and dwelling houses during this period. 3. The State has reported fiscal surplus during the 2006-07 and 2007-08. As per the AGs Report the State also having very large Reserve Funds (as high as Rs.3682 crore in 2006-07 and Rs.4426 crore in 2007-08). However, given the immense developmental needs and the fact that they are very low on the Human Development Index, the State choose not to have increased Capital Outlay on various crucial sectors. The investment of the State in the Treasury Bills is as under : (Rs in Crore) 31.03.2006 2728.17 Investment as on 31.03.2007 4582.79 31.03.2008 5824.62

Investment Treasury Bills

in

However, the State have balance of Rs 3833 crore & Rs 480 crore as on 31.03.2008 in Sinking Fund & Guarantee Redemption Fund respectively. 4. What has been the effect (in terms of financial outgo and number of employees reduced) as a result of the VRS introduced by the State since 1993? What is the rationale to keep such a scheme open-ended? 5. The State is yet to give the list of unfinished projects. 6. Other than POSCO and Arcelor Mittal, information regarding other major private initiatives may also be sought from the State.

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