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Fiscal Developments: Resilience and Adaptive Management
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FISCAL DEVELOPMENTS: RESILIENCE AND ADAPTIVE MANAGEMENT
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CHAPTER 2
Abstract
Odisha is one of the leading states in prudent fiscal management. It was ranked no. 1 by Niti Aayog in Fiscal Health Index. The State has the fiscal capacity to withstand shocks, if any (natural disaster/ macro-economic etc.) and ensure critical infrastructure and service delivery are not impacted. 16th Finance Commission has acknowledged several measures adopted by the State to build fiscal resilience. This includes establishment of Budget Stabilization Fund to build fiscal buffers during revenue surplus years. The Commission also notes that Odisha has highest own revenues scaled for economic size (i.e., GSDP). Comfortable own revenue sources has led to contained reliance on borrowings and limited spending on interest payments. It is lowest among 17 major states, when scaled by revenue receipts.
Odisha also scores well on how it allocates/spend resources so that maximum value for money can be achieved. Innovative practices such as gender budgeting, child budgeting, nutrition budgeting, and just-in-time funding have brought greater purpose and precision to how public resources are allocated and spent.
Total government spending constitute more than ¼ of the State economy size. The Commission has acknowledged that Odisha is one of the leader in capital expenditure (nearly 20 per cent of total expenditure). In 2025-26 BE, the State Budgeted for capital outlay at 6.6 per cent of GSDP, highest in the country. Leading areas of capital outlay allocation are irrigation infrastructure development to further improve agriculture productivity, roads and bridges to further improve last mile connectivity, water and supply infrastructure. Government of India in its Budget 2026-27 has announced building national waterways-5 (a critical infrastructure) in the State to ease logistic costs for transportation of mineral products and boost state’s competitiveness. Comfortable fiscal headroom is expected support long-term growth aspirations of the State.
2.1 INTRODUCTION
2.1.1 Odisha’s fiscal development story reflects resilience achieved through flexible and adaptive fiscal management. Fiscal developments are not merely a reflection of government receipts and expenditures; they embody the dynamic response of state’s fiscal policies to economic and policy shifts. Fiscal innovations have established Odisha as a national leader in public finance management. The state has introduced initiatives such as gender budgeting, child budgeting, nutrition budgeting, and the Just-In-Time Funding System. The state has emerged as a remarkable example of fiscal discipline and management in recent years. The state’s consistent efforts to maintain sound financial health have earned it top recognition. In the Fiscal Health Index (FHI) report of NITI Aayog, Odisha has excelled in fiscal health with the highest overall index score amongst the States. These achievements showcase the state’s commitment to prudent fiscal management over time.
Odisha ranks first in NITI Aayog’s Fiscal Health Index with strongest debt and fiscal sustainability performance.
2.1.2 Odisha’s government expenditure as percentage of GSDP has remained higher than the national average and has increased significantly to 29.3 per cent in 2025-26 BE. The quality of spending has improved over the past few years. This is reflected in the increase in capital outlay as per cent of GSDP, which rose from 5.0 per cent in 2024-25 to 6.6 per cent in 2025-26 BE. This strategic emphasis on infrastructure development, including roads, bridges, irrigation, and social sector investments, demonstrates Odisha’s commitment to building productive assets that will drive future economic growth and enhance public welfare significantly. The state has the highest capital outlay to GSDP ratio among all major Indian states.
2.1.3 A greater portion of spending is directed toward development initiatives, including the delivery of essential services like health, education, water, housing, roads, and power for all. These allocations have increased from 18.1 per cent of GSDP in 2024-25 to 21.3 per cent in 2025-26 BE. The allocation for education and health has increased significantly in 2025-26 BE.
2.1.4 Social sector spending demonstrates unwavering commitment to human development. The total social sector spending stood at ₹ 121.7 thousand crore in 2025-26 BE, growing 6.6 per cent annually. The state exceeds all UNDP benchmarks for human development expenditure ratios, with substantial investments in education (3.8 per cent of GSDP), health (2.3 per cent of GSDP), and water sanitation, ensuring comprehensive welfare coverage for citizens.
State maintains fiscal deficit at 3.5% of GSDP, well within FRBM limit.
2.1.5 Odisha leads in healthcare progress with increased budget allocation. Odisha’s public healthcare system has significantly improved, surpassing national averages in key health indicators of the SDG Goal 3, which focuses on health and well-being. In 2018, Odisha’s score rose from below 64 in 2018 to 73 in 2024 among all major States. This is because Odisha decided to spend 8.4 per cent of its total budget on healthcare adhering to 15th FC recommendations (8 per cent). This is much higher than the 5.7 per cent average spending by all States/UTs.
2.1.6 Odisha’s revenue system is well balanced. It includes a growing own-resource base and transfers from the central government. The state collects about 54.3 per cent of its total revenue from its own sources. The rest, 45.7 per cent, comes from central transfers. This mix provides a strong fiscal foundation to support ongoing development projects.
2.1.7 Odisha kept its fiscal deficit at 2.8 per cent of GSDP in 2024-25. For 2025-26 BE, the fiscal deficit widened to 3.5 per cent. Increased capital expenditure contributed to the expansion of the deficit. This is within the 3.5 per cent limit set by the Fiscal Responsibility and Budget Management (FRBM) Act. Hence, the government has maintained strong fiscal discipline, ensuring a resilient fiscal position.
2.2 FISCAL OVERVIEW
2.2.1 Odisha demonstrates robust fiscal health with total revenue receipts growing by 26.1 per cent to ₹ 2,32,000 crore, underpinned by strong own tax revenue growth of 16.8 per cent. This reflects enhanced tax compliance, economic expansion, and improved administrative efficiency. The state’s fiscal self-reliance is evident through total own revenue reaching ₹ 1,26,000 crore, representing 54.3 per cent of total revenue receipts, indicating reduced dependence on Central transfers.
Table 2.1: Budget Highlights, 2025-26
| Budget Highlights, 2025-26 | |
|---|---|
| Total Budget: | ₹ 2.9 lakh crore 27.7% growth over 2024-25 |
| Revenue Growth: | 26.1% with Strong fiscal momentum |
| Own tax revenue: | ₹ 66,000 crore 16.8% growth over 2024-25 |
| Capital Outlay: | ₹ 65,012 crore, a 42.9% increase |
| Revenue Surplus: | ₹ 31,800 crore, 3.2% of GSDP healthy fiscal position |
| Fiscal Deficit: | 3.5% of GSDP within FRBM limits |
| Debt-to-GSDP: | 13.6% well below 25% ceiling |
| Budget-to-GSDP: | 29.3% significant government role in demand creation |
| Central Transfers: | ₹ 1.06 lakh crore 39.1% growth in central government support |
| Tax Revenue Portfolio: | ₹ 1.30 lakh crore Balanced own-source and central transfers |
Source: Annual Budget documents, 2025-26 Government of Odisha
2.2.2 Odisha’s budget for 2025-26 demonstrates a strategic commitment to accelerated development with total expenditure of ₹ 2.90 lakh crore, marking a robust 27.7 per cent increase over 2024-25. This expenditure growth is strategically oriented towards infrastructure and productive investments, with capital outlay surging by 42.9 per cent, significantly outpacing the 24.1 per cent growth in revenue expenditure (Table 2.1). The substantial budgetary allocation (Total expenditure), constituting 29.3 per cent of the state’s GSDP, underscores the government’s proactive role as a catalyst for economic transformation. This expenditure pattern reflects a well-calibrated fiscal strategy that prioritizes long-term productive capacity enhancement while maintaining operational efficiency, thereby creating a multiplier effect that stimulates economic growth, generates employment opportunities, and delivers tangible improvements in citizen welfare across all segments of society.
2.2.3 Odisha’s fiscal architecture demonstrates a balanced and resilient revenue framework that effectively combines own resource mobilization with strategic utilization of central transfers. The state’s revenue receipts for 2025-26 BE are projected at ₹ 2.32 lakh crore, representing a healthy growth of 26.1 per cent and constituting 80 per cent of total receipts worth ₹ 2.90 lakh crore. This growth trajectory is underpinned by robust own tax revenue expansion of 16.8 per cent, complemented by increases of more than 10.5 per cent in central tax devolution, signaling enhanced fiscal capacity and optimal leveraging of intergovernmental fiscal transfers.
2.2.4 The state’s comprehensive tax revenue portfolio for 2025-26 BE totals ₹ 1.30 lakh crore, comprising ₹ 66,000 crore from state’s own tax sources and ₹ 64,408 crore from central tax devolution under Article 280(3a) of the Constitution. This balanced composition reflects both improved domestic tax administration and the state’s share in central tax resources. Non-tax revenues are estimated at ₹ 1.02 lakh crore, with ₹ 60,000 crore generated from state’s
own sources and ₹ 41,592 crore received as grants-in-aid from the central government, demonstrating diversified revenue streams that enhance fiscal sustainability and reduce dependence on any single revenue source. (Table 2.1)
2.3 REVENUE ANALYSIS
2.3.1 Revenue receipts have shown a consistent upward trend during recent years, indicating sustained revenue growth (Figure 2.1). In 2025-26 BE, the revenue receipts of Odisha stood at ₹ 232 thousand crore, which grew by 26.1 per cent over 2024-25.
Figure 2.1: Trend in Revenue Receipts, Odisha, 2016-17 to 2025-26 BE, ₹ Thousand Crore
| Fiscal Year | Revenue Receipts (₹ Thousand Crore) |
|---|---|
| 2016-17 | 74 |
| 2017-18 | 85 |
| 2018-19 | 100 |
| 2019-20 | 102 |
| 2020-21 | 104 |
| 2021-22 | 153 |
| 2022-23 | 150 |
| 2023-24 | 180 |
| 2024-25 | 184 |
| 2025-26 BE | 232 |
Note: BE: Budget Estimates. Source: Annual Budget Documents (various years), Finance Department, Government of Odisha, and Finance Accounts 2024-25, Principal Accountant General (A&E), Odisha
A. Revenue Performance Analysis: Odisha’s Fiscal Trajectory (2016-17 to 2025-26):
2.3.10 Revenue receipts as a percentage of GSDP increased from 18.9 per cent in 2016-17 to a projected 23.6 per cent in 2025-26 BE, representing a 4.7 percentage point increase over the period (Figure 2.2). Tax revenue performance shows cyclical patterns within the range of 12 per cent to 13 per cent of GSDP. During 2016-17, tax revenue ratio remained at 13 per cent of GSDP, followed by a decline to 11.3 per cent during 2021-22. Recovery is evident from 2023-24 with tax revenue reaching 12.9 per cent and projected at 13.2 per cent for 2025-26 BE. This pattern suggests correlation with economic cycles and policy interventions affecting tax collection efficiency.
2.3.11 Non-tax revenue demonstrates stability across the observation period, ranging from 5.9 per cent in 2016-17 to 10.3 per cent in 2025-26 BE, with a peak of 10.7 per cent in 2021-22. The consistent performance within this range indicates systematic revenue generation mechanisms.
2.3.12 The revenue composition analysis reveals tax revenue constituting approximately 55-60 per cent of total revenue receipts, while non-tax revenue accounts for 40-45 per cent. This distribution has remained relatively stable throughout the period, suggesting balanced revenue portfolio management. The fiscal performance demonstrates revenue mobilization improvements, evidenced by the sustained revenue-to-GSDP ratio above historical averages in recent years (Figure 2.2).
Revenue receipts grew by 26.1% to ₹2.32 lakh crore, supported by robust own-tax growth and higher central transfers
Figure 2.2: Revenue to GSDP Ratio, Odisha, 2016-17 to 2025-26 BE, In per cent
| Year | Tax Revenue (%) | Non-Tax Revenue (%) | Revenue Receipts (%) |
|---|---|---|---|
| 2016-17 | 13.0 | 5.9 | 18.9 |
| 2021-22 | 11.3 | 10.7 | 22.0 |
| 2023-24 | 12.9 | 9.0 | 21.9 |
| 2024-25 | 12.7 | 7.7 | 20.4 |
| 2025-26 BE | 13.2 | 10.3 | 23.5 |
Note: BE: Budget Estimates. Source: Annual Budget Documents (various years), Finance Department, Government of Odisha, and Finance Accounts 2024-25, Principal Accountant General (A&E), Odisha
B. Composition of Revenue Receipts
2.3.13 Revenue receipts can be broadly divided into tax and non-tax categories. Tax revenues comprise of own tax revenues and share in central taxes. The non-tax revenues consist of own non-tax revenues and grants from the centre. For 2025-26 BE, tax revenues are projected at ₹ 1.30 lakh crore, representing 56.2 per cent of total revenue receipts and 13.2 per cent of GSDP. Non-tax revenues, including both the State’s own non-tax revenue and grants from the centre, are projected to reach ₹ 1.01 lakh crore in 2025-26 BE, accounting for nearly 43.8 per cent of the State’s total revenue receipts. (Figure 2.3).
Figure 2.3: Composition of Revenue Receipts, Odisha, 2025-26 BE
graph LR
RR["REVENUE RECEIPT
(2025-26 BE)
INR 232000 Crore"] --> TR["TAX REVENUE
INR 130408 Crore (56.2%)"]
RR --> NTR["NON TAX REVENUE
INR 101592 Crore (43.8%)"]
TR --> OTR["OWN TAX REVENUE
INR 66000 Crore (50.6%)"]
TR --> SCT["SHARE IN CENTRAL TAX INR
64408 Crore (49.4%)"]
NTR --> ONTR["OWN NON TAX REVENUE
INR 60000 Crore (59.1%)"]
NTR --> GIA["GRANTS-IN-AID
INR 41592 Crore (40.9%)"]
Source: Annual Budget Documents 2025-26, Finance Department, Government of Odisha
1. State’s Own Tax Revenues
2.3.14 The state’s own tax revenue comprises of State GST, Sales Tax, State Excise, Motor Vehicle Tax, Taxes on Goods and Passengers, Electricity Duty, Land Revenue, and others. In 2025-26 BE, the state budgeted ₹ 66,000 crore as own tax revenue, representing 50.6 per cent of the state’s total tax revenue and 28.4 per cent of overall revenue receipts. (Figure 2.4). State GST, Sales Tax, and State Excise are the top three contributors. Together, these three sources account for over 81.7 per cent of the state’s own tax revenue.
State’s own tax
revenue grows robust
16.8% in 2025-26
2.3.15 The state has also experienced buoyant own-tax revenues in recent years, particularly from Sales Tax (VAT), State Excise, Stamp Duty and Registration Fees, Motor Vehicle Tax, and Taxes on Goods and Passengers. State GST, Sales Tax, State Excise, Motor Vehicle Tax, Taxes on Goods and Passengers, and Land Revenue are all expected to grow by more than 10 per cent in 2025-26 BE compared to the previous year’s 2024-25.
Figure 2.4: Composition of State’s own tax revenues, Odisha, 2025-26 BE, In Per cent
| Tax Type | Percentage (%) |
|---|---|
| SGST | 42.7 |
| Sales Taxes (VAT) | 24.2 |
| State Excise | 14.8 |
| Electricity duty | 7.0 |
| Stamps & Registration… | 7.0 |
| Motor Vehicle Tax | 4.6 |
| Other Taxes and Duties | 2.8 |
Note: BE: Budget Estimates. Source: Annual Budget documents, 2025-26, Finance Department, Government of Odisha
2. State’s Own Non-Tax Revenues
2.3.16 In 2025-26 BE, the State budgeted ₹ 60,000 crores of own non-tax revenues. This is nearly 59.1 per cent of the state’s total non-tax revenue and 25.9 per cent of revenue receipts. Mining royalties constituted nearly 79.1 per cent of total own non-tax revenues in 2025-26 BE (Figure 2.5).
Budget Stabilization Fund provides buffer against mining revenue fluctuations
Figure 2.5: Composition of State’s own non-tax revenues, Odisha, 2025-26 BE, In per cent
| Revenue Source | Percentage (%) |
|---|---|
| Mining Royalty (Non-Ferrous mining and metallurgical industries) | 79.1 |
| Other Receipts | 10.4 |
| Dividends and Profits | 5.5 |
| Interest Receipt | 2.8 |
| Major and Medium Irrigation | 2.2 |
Own non-tax revenue 2025-26 BE: ₹ 60,000 Crore
Note: BE: Budget Estimates. Source: Annual Budget documents, 2025-26, Finance Department, Government of Odisha
2.3.17 Mineral revenue remains highly sensitive to global price fluctuations and demand for metals both domestically and internationally. To manage the fiscal risks associated with these fluctuations, the state has established a ‘Budget Stabilization Fund’ in 2022-23. This strategic reserve in the fund provides a safeguard to mitigate potential shortfalls in mining revenue, thus supporting financial resilience for the state’s budget.
3. State’s Share in Central Taxes
2.3.18 Central transfers to the state include both the share in central taxes and grants from the centre. In 2025-26 BE, the state budgeted central transfers amounting to ₹ 106,000 crore. These transfers account for 27.8 per cent as the share in the divisible pool of taxes and 17.9 per cent as grants provided by the centre. The state budgeted for ₹ 64,408 crore as share in central taxes for 2025-26 BE (Figure 2.6). Personal income tax, Central GST, and corporation tax are the leading contributor to transfers of tax collections from the Govt. of India.
Central transfers constitute 45.7% of total revenue receipts in 2025-26
Figure 2.6: Distribution of shared taxes, Odisha, 2025-26 BE, In per cent
| Category | Percentage (%) |
|---|---|
| Mining Royalty (Non-Ferrous mining and metallurgical industries) | 79.1 |
| Other Receipts | 10.4 |
| Dividends and Profits | 5.5 |
| Interest Receipt | 2.8 |
| Major and Medium Irrigation | 2.2 |
Note: BE: Budget Estimates. Source: Annual Budget documents, 2025-26, Finance Department, Government of Odisha
2.3.19 Odisha’s fiscal development also benefited from increased central transfers from the centre. This is due to the 15th Finance Commission’s recommendations. As a result, central transfers as a percentage of GSDP increased by 2.3 percentage points, from 8.4 per cent in 2024-25 to over 10.7 per cent in 2025-26 BE. This accounts for nearly the fiscal deficit expansion and more than the increase in the amount of capital outlay. As a percentage of revenue receipts, central transfers have increased from 41.4 per cent in 2024-25 to 45.7 per cent in 2025-26 BE, reflecting enhanced devolution during the award period of 15th Finance Commission. (Figure 2.7).
Figure 2.7: Trend in Central transfers, Odisha, 2021-22 to 2025-26 BE, As % of Revenue Receipts
| Year | Percentage (%) |
|---|---|
| 2022-23 | 40.7 |
| 2023-24 | 40.2 |
| 2024-25 | 41.4 |
| 2025-26 BE | 45.7 |
Note: BE: Budget Estimates. Source: Annual Budget Documents (various years), Finance Department, Government of Odisha, and Finance Accounts 2024-25, Principal Accountant General (A&E), Odisha
4. Grants-in-Aid from Centre
2.3.20 In the 2025-26 BE, the State government has budgeted nearly ₹ 41,592 crore as grants from the centre. Key schemes under which the State receives grants include (i) Pradhan Mantri Awas Yojana-Rural, (ii) Samagra Shiksha Abhiyan, (iii) National Rural Health Mission, (iv) Pradhan Mantri Gram Sadak Yojana, and (v) GST compensation, among others. (Table 2.2).
Table 2.2: : Major grants from central government, Odisha, 2025-26 BE
| S. No. | Item | Amount (₹ Crore) | % Share |
|---|---|---|---|
| 1 | Pradhan Mantri Awas Yojana-Rural | 4498 | 10.8 |
| 2 | Samagra Sikshya Abhiyan | 4401 | 10.6 |
| 3 | National Rural Health Mission | 3614 | 8.7 |
| 4 | Pradhan Mantri Gram Sarak Yojana | 3226 | 7.8 |
| 5 | Compensation of Revenue Loss on implementation of GST | 3000 | 7.2 |
| 6 | National Rural Employment Guarantee Act | 2412 | 5.8 |
| 7 | 15th FC Grants for Rural Local Bodies | 2267 | 5.4 |
| 8 | Integrated Child Development Scheme | 1965 | 4.7 |
| 9 | Grants towards State Disaster Response Fund | 1950 | 4.7 |
| 10 | National Social Assistance Programme | 1704 | 4.1 |
| 11 | National Rural Livelihood Mission | 1663 | 4.0 |
| S. No. | Item | Amount (₹ Crore) | % Share |
|---|---|---|---|
| 12 | National Programme to Nutritional Support to Primary Education | 1411 | 3.4 |
| 13 | Grants towards National Disaster Response Fund (NDRF) | 1400 | 3.4 |
| 14 | 15th FC sector specific grants | 1350 | 3.2 |
| 15 | 15th FC Grants for Urban Local Bodies | 1045 | 2.5 |
| 16 | Other grants | 5687 | 13.7 |
| Grants from central government | 41592 | 100 |
Note: BE: Budget Estimates. Source: Annual Budget documents, 2025-26, Finance Department, Government of Odisha
2.4 EXPENDITURE ANALYSIS
2.4.1 The total budgetary expenditure of the state government can be broadly classified into revenue expenditure and capital expenditure. (Table 2.3). Revenue expenditure is the recurring spending on daily operations and maintenance, essential for running government services without creating physical assets. Capital outlay, on the other hand, is directed towards infrastructure development.
Total expenditure in 2025-26 BE increased by 27.7%, driven by a strong thrust on capital outlay and developmental spending
2.4.2 The total budgeted expenditure for 2025-26 BE stood at ₹ 2.90 lakh crore, representing 29.3 per cent of the GSDP (27 per cent excluding debt repayments). About 69 per cent of the total expenditure is allocated to revenue expenditure, while the remaining 31 per cent is designated for capital expenditure, of which 22.4 per cent constitutes capital outlay.
Table 2.3: State Government’s Expenditure during 2023-24 to 2025-26, Odisha
| 2023-24 | 2024-25 | 2025-26 BE | 2023-24 | 2024-25 | 2025-26 BE | |
|---|---|---|---|---|---|---|
| ₹ Crore | Per cent of GSDP | |||||
| Total Expenditure | 204,130 | 227,021 | 290,000 | 24.9 | 25.2 | 29.3 |
| Revenue Expenditure | 148,832 | 161,312 | 200,200 | 18.1 | 17.9 | 20.3 |
| Capital Expenditure | 55,299 | 65,709 | 89,800 | 6.7 | 7.3 | 9.1 |
Note: BE: Budget Estimates. Source: Annual Budget Documents (various years), Finance Department, Government of Odisha, and Finance Accounts 2024-25, Principal Accountant General (A&E), Odisha
2.4.3 The actual growth rates of the state’s capital expenditure have diverged significantly from those of previous years. Capex increased by 18.8 per cent in 2024-25, compared to 11.9 per cent in 2023-24, highlighting a strong emphasis on infrastructure development. The sharp acceleration in capital expenditure suggests a strategic shift towards long-term development objectives.
Actual capex recorded the highest growth among all expenditure components in 2024-25. Increased capital spending is expected to support economic growth through improved infrastructure and productive capacity
2.4.4 Odisha has consistently allocated a substantial portion of its budget to developmental expenditure, especially in sectors that foster social welfare and inclusive growth. The development expenditure as a percentage of GSDP increased notably from 17.9 per cent in 2023-24 to 18.1 per cent and 21.3 per cent in 2024-25 and 2025-26 BE respectively. This reflects the state’s strategic emphasis on developmental spending as a key aspect of fiscal management (Figure 2.8).
Figure 2.8: Developmental and Non-Developmental Expenditure to GSDP, Odisha, In per cent
| Year | Devt. Expenditure (%) | Non-Devt. Expenditure (%) |
|---|---|---|
| 2023-24 | 17.9 | 5.3 |
| 2024-25 | 18.2 | 4.7 |
| 2025-26 BE | 21.3 | 5.4 |
Note: BE: Budget Estimates. Source: Annual Budget Documents (various years), Finance Department, Government of Odisha, and Finance Accounts 2024-25, Principal Accountant General (A&E), Odisha
2.4.5 A significant share of development expenditure was dedicated to education, which accounted for nearly 17.7 per cent of the total development expenditure. This was followed by allocations to social welfare and nutrition (12.1 per cent), agriculture (11.8 per cent), health (10.4 per cent), roads & bridges (9.6 per cent), rural development (9.2 per cent), irrigation (7.7 per cent), and water & sanitation (5.4 per cent). (Figure 2.9). Together, these key sectors represent 84.1 per cent of the total developmental expenditure in 2025-26 BE. These allocations are divided between social services and economic services. Social services make up about 56.4 per cent of the total developmental expenditure. Economic services account for the remaining 43.6 per cent.
Developmental expenditure constitutes 19.9% of GSDP, placing Odisha second highest among major states
Figure 2.9: Share of sectors in developmental expenditure, Odisha, 2025-26 BE, In per cent
| Sector | Odisha (%) | All States/UTs (%) |
|---|---|---|
| Education | 17.7 | 21.3 |
| Social welfare and Nutrition | 12.1 | 10.8 |
| Agriculture and Allied Services | 11.8 | 8.4 |
| Medical and Public Health | 10.4 | 8.0 |
| Roads and Bridges | 9.6 | 6.3 |
| Rural Development | 9.2 | 7.1 |
| Irrigation and Flood Control | 7.7 | 5.0 |
| Water Supply and Sanitation | 5.4 | 4.1 |
Note: BE: Budget Estimates. Source: Annual Budget Documents, 2025-26, Finance Department, Government of Odisha
2.4.6 Compared to the All states/UTs average, Odisha has maintained a strong commitment to developmental spending across all key sectors. (Figure 2.9). In 2025-26 BE, Odisha is the second highest (19.9 per cent) among major states and above the average of All-States & UTs (12.2 per cent) in terms of developmental spending as percentage of GSDP. (Figure 2.10).
Figure 2.10: Developmental expenditure to GSDP, Odisha, 2025-26 BE, In per cent
| State/UT | Developmental expenditure to GSDP (%) |
|---|---|
| Chhattisgarh | 20.2 |
| Odisha | 19.9 |
| Jharkhand | 19.3 |
| Bihar | 18.4 |
| Madhya Pradesh | 16.1 |
| Uttar Pradesh | 15.5 |
| Rajasthan | 14.2 |
| Telangana | 13.0 |
| All States & UTs | 12.2 |
| Andhra Pradesh | 12.1 |
| West Bengal | 12.0 |
| Maharashtra | 9.2 |
| Punjab | 8.6 |
| Karnataka | 8.5 |
| Haryana | 8.3 |
| Gujarat | 8.2 |
| Tamil Nadu | 7.5 |
| Kerala | 6.7 |
Note: BE: Budget Estimates. Source: State Finances: A Study of Budgets of 2025-26, Reserve Bank of India
A. Revenue Expenditure
2.4.7 Revenue expenditure constitutes the largest portion of the state’s total expenditure, amounting to ₹ 200.2 thousand crores in the 2025-26 BE. Its share in total expenditure stood at 69 per cent. This expenditure is divided into three main categories: developmental (covering social and economic services), non-developmental, and grants to local bodies. To support the state’s economic growth, the majority of revenue expenditure is directed towards developmental activities. It represents 74.7 per cent of the total revenue expenditure, equating to ₹ 149.6 thousand crores in 2025-26 BE.
Figure 2.11: Composition of Revenue Expenditure, Odisha, 2025-26 BE, In per cent to Total
| Category | Percentage |
|---|---|
| Developmental | 74.7% |
| Non-Development (General Services) | 24.4% |
| Grants to ULBs and PRIs | 0.9% |
| Social Services (of Developmental) | 47.2% |
| Economic Services (of Developmental) | 27.5% |
Note: BE: Budget Estimates. Source: Annual Budget Documents, 2025-26, Finance Department, Government of Odisha
2.4.8 Social services and economic services together make up about 74.7 percent of the total revenue expenditure. Social services, like health, education, and welfare, take a large part, with 47.2 per cent of the development expenditure. This shows Odisha’s focus on social development. Economic services, such as infrastructure, agriculture, and industry, account for 27.5 per cent of the development expenditure. (Figure 2.11). Non-developmental expenditure stood at ₹ 48.8 thousand crores in the 2025-26 BE. It primarily comprises interest payments and pensions, accounting for 24.4 per cent of the total revenue expenditure. Grants to local bodies make up the remaining 0.9 per cent (₹ 1.8 thousand crores). (Figure 2.11).
Box Item 2.1: Nutrition Budget: Breaking Intergenerational Malnutrition
#Nutrition Budget for Improved Human Development Outcomes: Recognizing its far-reaching impact, the United Nations made nutrition a core priority in SDG Goal 2 (Zero Hunger), which aims to eradicate hunger, improve food security, and promote sustainable agriculture. But achieving these goals requires an integrated approach – one that tackles malnutrition, invests in food systems, and prioritizes health and equality.
Odisha became the first state in India to introduce the concept of Nutrition Budgeting in FY 2020–21, marking a significant step toward prioritizing nutrition in fiscal planning.
Odisha’s Nutrition Budget adopts a life-cycle and multi-sectoral approach to address malnutrition, recognising its intergenerational nature. Budgetary allocations encompass nutrition-specific and nutrition-sensitive interventions across health, women and child development, water and sanitation, and social protection sectors. By focusing on pregnant women, lactating mothers, infants, children and adolescents, the Nutrition Budget aims to improve nutritional outcomes and enhance overall human development. Strengthened convergence among departments ensures that nutrition outcomes are supported not only by food-based interventions but also by health services, sanitation and behavioural change initiatives.
The Mukhyamantri Sampoorna Pusti Yojana (MSPY) remains a key State initiative to improve the nutritional status of women, adolescent girls and children, with an allocation of INR 526 crore. Reinforcing this commitment, the Government has launched the Odisha Pusti Mission with a budget provision of INR 100 crore in 2025–26 to strengthen convergence and delivery of nutrition services. Additionally, POSHAN Abhiyaan continues to play a critical role in addressing malnutrition, supported by a State allocation of INR 284 crore, reflecting sustained focus on nutrition security and public health outcomes
In 2025–26 BE, the Government of Odisha has allocated a sum of INR 72499.33 Crore under the Nutrition Budget for the nutritional development and well-being. This marks a 10.03% increase over the INR 65,888.65 Crore allocated in the previous BE in 2024–25.
Integrated Analytical Framework
graph LR;
Food[Food] --> Health[Health];
Health --> WASH[WASH];
WASH --> BehaviourChange[Behaviour Change];
BehaviourChange --> NutritionOutcomes[Nutrition Outcomes];
B. Capital outlay
2.4.9 Capital outlay strengthens economy’s productive capacity that drives future growth. The state Government’s thrust on capital outlay has remained strong. The revenue account remained in surplus which supported the State’s capital outlay to increase sharply, supplemented with borrowings.
Figure 2.12: Trends of Capital Outlay, Odisha, 2021-22 to 2025-26 BE
| Year | Capital Outlay (₹ Crore) | Capital Outlay (Per cent of GSDP) |
|---|---|---|
| 2021-22 | 22,725 | 3.3 |
| 2022-23 | 33,349 | 4.6 |
| 2023-24 | 43,273 | 5.3 |
| 2024-25 | 45,481 | 5.0 |
| 2025-26 BE | 65,012 | 6.6 |
CAGR (2021-22 to 2025-26): 30.1%
Note: BE: Budget Estimates.
Source: Annual Budget Documents (various years), Finance Department, Government of Odisha, and Finance Accounts 2024-25, Principal Accountant General (A&E), Odisha
2.4.10 In 2025-26 BE, capital outlay reached ₹ 65 thousand crores, which is 22.4 per cent of total expenditure. Capital outlay as a percentage of GSDP stood at 6.6 per cent in 2025-26 BE, increased from 5.0 per cent in 2024-25. (Figure 2.12). This highlights an improvement in the quality of government expenditure over the years. The state has made substantial investments in transportation infrastructure, including road and bridge networks, to enhance connectivity and promote trade. In addition, considerable resources have been dedicated to social sector development, emphasizing education, health, and through a range of social welfare programs. In the 2025-26 BE, the increased Capex outlays by the state are in sectors such as roads & bridges, irrigation & flood control, and water & sanitation. (Figure 2.13).
Capital outlay reached 6.6% of GSDP in 2025-26 BE, the highest among major States, enhancing future productive capacity
Figure 2.13: Composition of Capital Outlay, Odisha, 2025-26
BE, In ₹ Crore and Per cent of Total
| Sector | BE (₹ Crore) | Per cent of Total |
|---|---|---|
| Roads and Bridges | 16,030 | 24.7 |
| Irrigation and Flood Control | 12,335 | 19.0 |
| Others | 9,454 | 14.5 |
| Water Supply & Sanitation | 8,562 | 13.2 |
| Education Sports Art & Culture | 5,199 | 8.0 |
| Medical & Public Health | 4,538 | 7.0 |
| General Services | 4,304 | 6.6 |
| Energy | 2,063 | 3.2 |
| Rural Development | 2,000 | 3.1 |
| Total | 64,785 | 100.0 |
Note: BE: Budget Estimates. Source: Annual Budget Documents, 2025-26, Finance Department, Government of Odisha
2.4.11 Odisha has the highest capital outlay to GSDP ratio among all major states in India (Figure 2.14). Furthermore, the state’s capital outlay ratio has steadily increased from a long-term average of 4.3 per cent of GSDP (2014-15 to 2023-24) to 6.6 per cent of GSDP in 2025-26 BE. This is much higher than All States & UTs average of 3.0 per cent of GSDP for 2025-26 BE.
Figure 2.14: Capital Outlay by Major States: 2025-26 BE
| State / Category | Per cent of GSDP |
|---|---|
| Odisha | 6.6 |
| Uttar Pradesh | 5.4 |
| Madhya Pradesh | 4.9 |
| Chhattisgarh | 4.1 |
| Jharkhand | 4.1 |
| Bihar | 3.7 |
| Gujarat | 3.2 |
| Rajasthan | 2.7 |
| Andhra Pradesh | 2.2 |
| Karnataka | 2.2 |
| Telangana | 2.0 |
| West Bengal | 1.9 |
| Maharashtra | 1.7 |
| Tamil Nadu | 1.6 |
| Haryana | 1.2 |
| Kerala | 1.2 |
| Punjab | 1.2 |
| All States & UTs | 3.0 |
Note: BE: Budget Estimates. Source: Annual Budget Documents, 2025-26, Finance Department, Government of Odisha and State Finances: A Study of Budgets of 2025-26, Reserve Bank of India
Box Item 2.2: Gender Budget: Advancing Women-Led Development
Gender-responsive public finance: The Government of Odisha launched its first Gender Budget Statement (GBS) in 2019-20. Gender Budgeting in Odisha integrates gender considerations into public expenditure planning to address structural inequalities and enhance women’s socio-economic empowerment. Over time, the State has transitioned from welfare-dominated interventions towards empowerment-focused investments in skill development, entrepreneurship, financial inclusion and support to women Self-Help Groups. Outcome-linked gender budgeting strengthens women’s economic participation, improves household welfare outcomes and contributes to more inclusive and sustainable growth.
The Subhadra Yojana, launched by the Government of Odisha on September 17, 2024, is a flagship welfare scheme designed to empower women aged 21 to 60 from economically weaker sections. The scheme is committed to fostering holistic development by empowering women with knowledge of their rights, improving health and educational outcomes, encouraging financial independence and entrepreneurship, advancing digital financial literacy, and supporting their personal and professional growth. So far, more than 98 Lakh women have received the 1st instalment of Subhadra and more than INR 4900 crore has been transferred to them. The Odisha government has announced the expansion of the Subhadra Yojana into Subhadra Plus, introducing a range of new initiatives to further enhance the welfare of women across the state.
The total allocation under Gender Budget in 2025-26 BE has been increased by 18.85% from 2024-25 RE. It stood at INR 89861.77 Crore.
Integrated Analytical Framework
| Year | Allocation (INR Crore) |
|---|---|
| 2024-25 RE | 75612 |
| 2025-26 BE | 89862 |
C. Social Sector Expenditure
2.4.12 The government’s increased spending on social services like education and health demonstrates its commitment to improving citizens’ quality of life, particularly for marginalized and vulnerable population. Odisha’s social sector expenditure for 2025-26 BE stood at ₹ 121.7 thousand crores, marking an 8.1 per cent increase over 2024-25. Between 2016-17 and 2025-26, social sector expenditure grew at a CAGR of 15 per cent. Notable increases were seen in medical, public health, family welfare, water supply, and sanitation sectors. (Table 2.4).
Social sector expenditure increased to ₹121.7 thousand crore, registering an 8.1% growth in 2025-26
Table 2.4: Trend in Social Sector Expenditures, Odisha
| 2016-17 | 2022-23 | 2023-24 | 2024-25 | 2025-26 BE | |
|---|---|---|---|---|---|
| ₹ Thousand Crore | |||||
| Social Sector Expenditure | 39.6 | 72.6 | 78.6 | 114.1 | 121.7 |
| of which: | |||||
| Education | 12.2 | 25.1 | 27.3 | 27.9 | 37.3 |
| 2016-17 | 2022-23 | 2023-24 | 2024-25 | 2025-26 BE | |
|---|---|---|---|---|---|
| Medical and Public Health and Family Welfare | 4.7 | 12.3 | 15.9 | 19.7 | 22.9 |
| Water Supply and Sanitation | 3.2 | 5.8 | 5.5 | 11.7 | 11.3 |
| Others | 19.5 | 29.4 | 29.9 | 54.7 | 50.2 |
| As Per cent of GSDP | |||||
| Social Sector Expenditure | 10.1 | 10.1 | 9.6 | 12.6 | 12.4 |
| of which: | |||||
| Education | 3.1 | 3.5 | 3.3 | 3.1 | 3.8 |
| Medical and Public Health and Family Welfare | 1.2 | 1.7 | 1.9 | 2.2 | 2.3 |
| Water Supply and Sanitation | 0.8 | 0.8 | 0.7 | 1.3 | 1.1 |
| Others | 5.0 | 4.1 | 3.6 | 6.1 | 5.1 |
Note: BE: Budget Estimates. Annual Budget Documents (various years), Finance Department, Government of Odisha, and Finance Accounts 2024-25, Principal Accountant General (A&E), Odisha
D. QUALITY OF EXPENDITURE
2.4.13 Quality of expenditure is a critical indicator of how effectively government funds are utilized to promote development and improve social welfare. Overall, Odisha outperforms the average of all States & UTs on several indicators of expenditure quality. (Figure 2.15). These accomplishments underscore Odisha’s success in sustaining high expenditure quality alongside fiscal discipline.
Figure 2.15: Quality of Expenditure, Odisha vis-a-vis All States & UTs, 2025-26 BE, In per cent
| Indicator | Odisha (%) | All States & UTs (%) |
|---|---|---|
| Own Revenue/Revenue Expenditure | 62.9 | 57.3 |
| Development Expenditure/Aggregate Disbursement | 73.1 | 62.8 |
| Interest Payment/Revenue Expenditure | 3.2 | 12.0 |
| Interest Payment/Revenue Receipts | 2.8 | 12.2 |
| Committed Expenditure/Revenue Expenditure | 21.7 | 30.6 |
| Pension/Revenue Expenditure | 12.4 | 11.8 |
Note: BE: Budget Estimates. Annual Budget Documents, Finance Department, Government of Odisha, and State Finances: A Study of Budgets of 2025-26, Reserve Bank of India
E. Human Development Expenditure Ratios
2.4.14 State expenditure could be assessed through various ratios: Public Expenditure Ratio (PER), (ii) Social Allocation Ratio (SAR), (iii) Social Priority Ratio (SPR), and (iv) Human Expenditure Ratio (HER).
2.4.15 The PER indicates total budgetary expenditure as a percentage of GSDP. The SAR reflects the proportion of the budget allocated to social services, such as education, health, and rural development. The SPR measures the share of spending on human priority development sectors primarily education and health as a percentage of the social services budget. The HER is calculated as the product of these three ratios. According to UNDP guidelines, the ideal benchmark values are approximately 25 per cent for PER, 40 per cent for SAR, 50 per cent for SPR, and 5 per cent for HER (Figure 2.16).
State exceeds all UNDP benchmarks for human development expenditure ratios
Figure 2.16: Human Development Ratios, Odisha, 2025-26 BE, In per cent
| Ratio | 2025-26 BE | UNDP Norms |
|---|---|---|
| Public Expenditure Ratio (PER) | 29.5 | 25 |
| Social Allocation Ratio (SAR) | 40.9 | 40 |
| Social Priority Ratio (SPR) | 49.9 | 50 |
| Human Expenditure Ratio (HER) | 6.0 | 5 |
Note: BE: Budget Estimates. Source: Annual Budget Documents (various years), Finance Department, Government of Odisha and UNDP-HDR, 1991.
2.4.16 The state has made significant strides in achieving and even exceeding the UNDP benchmarks for these four ratios recommended by the UNDP in its 1991 Human Development Report. (Figure 2.16) This reflects Odisha’s dedication to advancing human development and public welfare. This positive trend underscores the state’s focused efforts to boost public and social spending, signaling a promising path toward enhancing overall well-being in Odisha.
Box Item 2.3: Child Budget: Investing in Future Human Capital
Child budget as strategic investment in future human capital: The Constitution of India guarantees fundamental rights to children, and the state is responsible for providing the necessary measures to protect these rights and promote children’s welfare. Further, the comprehensive development of children is crucial for the state’s sustainable growth and future prosperity. Recognizing children as central to human development, the state government takes responsibility for their overall well-being. To ensure this, the government aligns its efforts with the four key dimensions of the United Nations Convention on the Rights of the Child (UNCRC): Development, Education, Health and Protection (DHEP). Guided by this framework, the Government of Odisha strategically allocates funds through the Child Budget to support the welfare of children in the state.
Odisha began including the Child Budget Statement (CBS) in its State Budget starting from 2019-20. It consolidates public expenditure across sectors such as health, nutrition, education and social welfare to ensure focused investment in children. Emphasis on early childhood care and education reflects the recognition of early years as critical for long-term cognitive, physical and emotional development. By improving transparency and accountability of child-related spending, the Child Budget enhances the effectiveness of interventions aimed at building future human capital.
In 2025-26 BE, the Government of Odisha has allocated INR 42,119.64 Crore under the Child Budget for the development and welfare of children in the state. This represents a significant increase of 16.04 per cent compared to the INR 36,298.94 Crore in 2024-25 BE.
Integrated Analytical Framework
| Year | Child Budget Allocation (INR Crore) |
|---|---|
| 2024-25 RE | 37373 |
| 2025-26 BE | 42120 |
2.5 KEY FISCAL INDICATORS
2.5.1 Revenue deficit/surplus, fiscal deficit/surplus are the major yardsticks for judging the fiscal performance of the government. The gross fiscal deficit of State is estimated to remain within the FRBM threshold of 3.5 per cent of GSDP during 2024-25 and 2025-26 BE. The fiscal deficit of Odisha is marginally higher than the average of all States & UTs (3.3 per cent) but well below the permissible limit of 3.5 per cent under FRBM Act. The state’s revenue surplus stood at 3.2 per cent of GSDP against the all-states average revenue deficit of 0.2 per cent in 2025-26 RE. (Figure 2.17).
Figure 2.17: Key Fiscal Indicators, Odisha, 2016-17 to 2025-26 BE, In per cent of GSDP
| Fiscal Year | Fiscal Deficit (Per cent of GSDP) | Revenue Surplus (Per cent of GSDP) | All States Average Fiscal Deficit (Per cent of GSDP) |
|---|---|---|---|
| 2016-17 | 2.4 | 2.4 | 3.5 |
| 2017-18 | 2.1 | 3.0 | 2.5 |
| 2018-19 | 2.0 | 2.8 | 2.5 |
| 2019-20 | 3.5 | 0.5 | 2.5 |
| 2020-21 | 1.8 | 1.8 | 4.0 |
| 2021-22 | -3.0 | 6.2 | 2.8 |
| 2022-23 | 2.1 | 2.8 | 2.8 |
| 2023-24 | 1.8 | 3.8 | 3.2 |
| 2024-25 | 2.8 | 2.8 | 3.5 |
| 2025-26 BE | 3.2 | 3.2 | 3.2 |
Note: (i) Negative (-) sign indicates fiscal surplus, (ii) BE: Budget Estimates.
Source: Annual Budget Documents (various years), Finance Department, Government of Odisha and State Finances: A Study of Budgets of 2025-26, Reserve Bank of India
2.6 DEBT MANAGEMENT
A. State’s Debt stock
2.6.1 The 15th Finance Commission recommends annual net borrowing limits for States, which the Department of Expenditure, Ministry of Finance, Government of India finalizes based on projected GSDP. For the FY 2025-26, the Government of India has fixed the net borrowing ceiling at 3.5 per cent of the projected GSDP. For Odisha, this limit for 2025-26 is set at ₹ 37,137.97 crore. This ceiling covers all borrowing sources, such as market borrowings, institutional loans, National Small Saving Fund loans, Government of India loans, and liabilities from public accounts like small savings and provident funds.
2.6.2 For 2025-26 BE, Odisha’s total debt stock has increased from ₹ 110.7 thousand crores in 2024-25 RE to ₹ 134.9 thousand crores in 2025-26 BE. This amounts to 13.6 per cent of GSDP, well within the 25 per cent limit prescribed by the Odisha FRBM Act. (Figure 2.20).
2.6.3 The major share of the State Government’s public debt is denominated in the national currency i.e., Indian Rupees. Nearly 93 per cent of the total borrowing is in Indian Rupees, while
the remaining 7 per cent is sourced in foreign currency from external agencies. As a result, the State’s debt profile faces lower exposure to risks associated with exchange rate fluctuations and depreciation of the rupee against the US Dollar and other foreign currencies.
2.6.4 As per 2025-26 BE, Odisha’s public debt stood at ₹ 121,571 crore, consisting of internal debt amounting to ₹ 94,095 crore and loans and advances from the Central Government totaling ₹ 27,476 crore. (Figure 2.18).
Figure 2.18: Trend of Public Debt over last 3 years, in ₹ Crores
| Year | Internal Debt (₹ Crores) | Loans from Centre (₹ Crores) | Total Public Debt (₹ Crores) |
|---|---|---|---|
| 2023-24 | 50,984 | 18,983 | 69,966 |
| 2024-25 | 74,845 | 23,526 | 98,371 |
| 2025-26 BE | 94,095 | 27,476 | 1,21,571 |
Source: State Finances: A Study of Budgets of 2025-26, Reserve Bank of India
B. State’s Debt Composition
The state’s major sources of borrowing comprise 29 per cent from NABARD (National Bank for Agriculture and Rural Development) and other funds such as OMBADC (Odisha Mineral Bearing Areas Development Corporation) and the Compensatory Afforestation (CAMP) fund. This is followed by 28 per cent from Government of India loans, 22 per cent from the General Provident Fund (GPF), 16 per cent from the open market, and the remaining 4 per cent from the National Small Savings Fund (NSSF) (Figure 2.19). Loans from the Government of India and NABARD are typically linked to specific projects, meaning the funds must be used solely for their specified purposes. Loans from the Government of India are provided either as Block Loans or Back-to-Back Loans. Back-to-Back Loans refer to funds sourced from external donor agencies through Externally Aided Projects (EAP) and passed on to the State Governments under similar terms.
93% of public debt in Indian Rupees, minimizing exchange rate risks
Figure 2.19: Percentage share of different sources of Public Debt, Odisha, 2025-26
| Source | Percentage |
|---|---|
| NABARD & Others | 29% |
| Govt. of India | 28% |
| GPF | 22% |
| Open Market | 16% |
| NSSF | 4% |
Source: Annual Budget Documents (various years), Finance Department, Government of Odisha
C. State’s Debt Sustainability
2.6.6 Debt sustainability reflects a government’s ability to pay its current and future debts. It should be able to do this using its own income or borrowed money without facing financial constraints. Debt sustainability analysis assesses both solvency and liquidity of the government. In other words, public debt is deemed sustainable when the government maintains both solvency and liquidity. Solvency is indicated by the ratio of debt stock to repayment capacity. Liquidity is measured using debt service ratios, such as the debt service-to-revenue ratio (interest payment to revenue receipt ratio: IPRR ratio). These solvency and liquidity metrics are collectively known as debt burden indicators. The total debt stock to GSDP ratio and debt-servicing ratio are two important fiscal parameters of debt sustainability. The former represents the debt burden and debt servicing ratio represents interest payment burden of the State. The debt limits are defined in the FRBM Act. It mandates that the debt-to-GSDP ratio should not exceed 25 per cent. Also, the interest payment-to-revenue receipt ratio (IPRR) should remain within 15 per cent.
Debt-to-GSDP ratio stood at 13.6%, significantly below the FRBM ceiling of 25%, reflecting prudent debt management
Figure 2.20: Debt to GSDP ratio and Interest Payment to Revenue Receipts ratio, Odisha, 2016-17 to 2025-26 BE, in Per cent
| Year | Debt Stock to GSDP (Per cent) | IPRR (Per cent) |
|---|---|---|
| 2016-17 | 15.8 | 5.4 |
| 2017-18 | 16.8 | 5.9 |
| 2018-19 | 16.4 | 5.8 |
| 2019-20 | 17.3 | 6.0 |
| 2020-21 | 19.3 | 6.4 |
| 2021-22 | 14.0 | 4.1 |
| 2022-23 | 11.7 | 3.7 |
| 2023-24 | 11.7 | 2.9 |
| 2024-25 | 12.3 | 2.5 |
| 2025-26 BE | 13.6 | 2.8 |
Source: Annual Budget Documents (various years), Finance Department, Government of Odisha
2.6.7 For 2024-25 RE and 2025-26 BE, the debt-to-GSDP ratio is estimated at 12.3 per cent and 13.6 per cent respectively. Compared to 2020-21, the debt-to-GSDP ratio declined steadily to 13.6 per cent in 2025-26 BE. This reduction in debt ratio is attributed to the repayment of public debt and also meeting borrowing needs through low-cost sources rather than relying more on open market borrowing. The IPRR has steadily declined over the years, reaching 2.5 per cent in 2024-25. This demonstrates an improvement in debt sustainability over time, with both indicators remaining well within the threshold limits. (Figure 2.20).
D. Debt Outlook of Odisha
2.6.8 According to the actual accounts for FY 2023-24, the IPRR stood at 3.7 per cent. It is estimated to decline further to 2.6 per cent in 2024-25 RE and 2.8 per cent in 2025-26 BE. The IPRR is projected to remain below 4 per cent in the medium term, well within the prescribed limit of 15 per cent (Figure 2.21).
Figure 2.21: Medium term Debt Outlook, Odisha
| Year | Debt (As % of GSDP) | IPRR |
|---|---|---|
| 2025-26 BE | 13.6 | 2.8 |
| 2026-27 | 13.5 | 3.0 |
| 2027-28 | 14.2 | 3.2 |
| 2028-29 | 15.0 | 3.2 |
| 2029-30 | 15.7 | 3.0 |
Source: Annual Budget Documents, 2025-26, Finance Department, Government of Odisha
2.6.9 Total public debt is projected to increase, from 13.6 per cent of GSDP in 2025-26 BE to nearly 15.7 per cent of GSDP by 2029-30 but remain within the permissible limit over the medium term. (Figure 2.21). This increase is likely to be driven by fiscal deficits resulting from higher capital expenditures across various government programs. Additionally, borrowing costs are anticipated to be relatively low during this period due to the availability of low-cost financial sources, which will also keep principal repayments comparatively manageable. Currently, the State’s future debt outlook appears stable, although it remains subject to the State Government’s policy priorities.
2.7 FISCAL DISCIPLINE AND INNOVATIONS
2.7.1 Fiscal discipline is a key element in maintaining the sustainability of an economy’s fiscal position. It enhances the government’s decision-making ability by enabling the prioritization of developmental needs and helps reduce operational expenses. State governments bear responsibility for a wide range of social and economic functions,
which requires them to carefully allocate limited fiscal resources across various development priorities. Without fiscal stability, achieving policy objectives and ensuring adequate resource availability becomes challenging.
2.7.2 The FRBM Act was implemented across Indian states between 2005 and 2006 to promote fiscal discipline and improve public fund management. The Act’s goals include reducing deficits, stabilizing debt levels, controlling expenditure growth, and enhancing tax revenue performance. The state’s fiscal policy has been anchored in the principle of fiscal sustainability, while also recognizing the necessity of increased capital expenditure to drive economic growth. Odisha is among the few states that have consistently met the targets prescribed by the Act each year. In fact, the Reserve Bank of India’s report, “State Finances: A Study of Budgets 2024-25” (page 48), highlights Odisha’s exceptional fiscal management. The report features Odisha’s various budgetary innovations as a case study, showcasing the state’s efforts to enhance its resilience through its fiscal management practices.
2.7.3 Odisha has emerged as the top-ranked state in the country with a fiscal health score of 67.8, according to the report of Fiscal Health Index (FHI) released by NITI Aayog. The state excelled with an impressive score of 99.0 in the Debt Index and 64.0 in Debt Sustainability. Odisha’s strong fiscal discipline is reflected in its ability to maintain low fiscal deficit, a revenue account surplus (adhering to the FRBM limit of zero revenue deficit), a low primary deficit, a healthy debt profile, low IPRR ratio (which is below FRBM limit of 15 per cent), highest capital outlay to GSDP ratio, higher-than-average developmental expenditure to GSDP ratio, a robust tax to GSDP ratio, and a negligible outstanding guarantee to revenue receipts ratio. The salient features of Odisha’s fiscal discipline may be seen in Table 2.5.
Just-In-Time Funding System and gender budgeting showcase fiscal innovation excellence
Figure 2.22: Salient features of the Odisha’s Fiscal Discipline
- FRBM Compliant 3.5% Fiscal Deficit/GSDP ratio: 3.5%
- FRBM Debt Limit of 25% Debt/GSDP ratio: 13.6%
- FRBM Limit of Zero Revenue Deficit Revenue Surplus/GSDP: 3.2%
- Highest Capital Outlay/GSDP ratio: 6.6%
- Second Highest Devt. Exp./GSDP ratio: 19.9%
- More than Average Tax/GSDP ratio: 13.2%
- Low Primary Deficit Primary Deficit/GSDP ratio: 2.8%
- Within 15% FRBM Target IPRR ratio: 2.8%
- Negligible Guarantee Loan Outstanding Guarantees/Revenue Receipts ratio: 2.5%
Source: Annual Budget Documents, 2025-26, Finance Department, Government of Odisha
A. Citizen-Centric Innovative Schemes – Making life better
2.7.4 Government of Odisha has launched a number of new citizen-friendly schemes that comprehensively address the needs of every segment of society in the last two years (2024-25 and 2025-26) (Figure 2.22). The SUBHADRA scheme and SUBHADRA PLUS initiatives target women’s empowerment and financial inclusion, while the Samrudha Krushak Yojana and enhanced CM-KISAN support farmers’ income enhancement.
Figure 2.23: New Schemes, 2024-25 and 2025-26
2024-25 Schemes:
- Subhadra Yojana
- Samrudha Krushak Yojana
- Corpus Fund for SJTA
- Corpus Fund for Odisha Aamita
- Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY)
- Corpus Fund for Medical College & Hospitals
- Madho Singh Haath Kharch
- Roof Top Solar Panels (PM Surya Ghar)
2025-26 Schemes:
- Antyodaya Gruha Yojana
- Subhadra Surakhya
- Southern Odisha Development Council
- Alal Bus Stand
- Shaheed Laxman Nayak Adarsh Vidyalaya
- Odisha Pusti Mission
- Northern Odisha Development Council
- Samrudha Sahara
Source: Annual Budget Documents, 2024-25 and 2025-26, Finance Department, Government of Odisha
2.7.5 For the economically vulnerable, the Antyodaya Gruha Yojana addresses housing needs, and increased pensions for senior citizens and disabled individuals ensure social security. The Shree Jagannath Darshan Yojana serves religious devotees, while the MukhyaMantri Kanya Bibaha Yojana supports marriage ceremonies for economically weaker families.
2.7.6 Educational advancement is supported through Saheed Laxman Nayak Adarsh Vidyalaya and Godabarisha Mishra Adarsha Prathamik Vidyalaya schemes, while healthcare is strengthened by integrating Ayushman Bharat with Gopabandhu Jana Arogya Yojana. Rural development is enhanced through Pradhan Mantri Awas Yojana for housing and improved irrigation schemes, while urban transformation is addressed via Samruddha Sahara Scheme and Mukhyamantri Sahari Bikas Yojana. These initiatives demonstrate a holistic approach to governance that ensures no citizen or community is left behind in the state’s development journey.
Box Item 2.4: Fiscal Innovations and Inclusive Budgeting: Advancing Equity, Stability, and Fiscal Excellence
#Fiscal Innovation in Odisha: Odisha’s commitment to fiscal innovation and inclusive budgeting is evident in its progressive approach to resource allocation and financial management, fostering sustainable development and social equity across the State. The adoption of strategic budgeting, introduction of gender budgeting, child budgeting, and nutrition budgeting to support gender equality and the development of children. Just-In-Time Funding System (JiTFS), budget stabilization fund, and communication of multi-year budget ceilings have also contributed to improving its finances.
In the early 2000s, Odisha was among the most fiscally stressed states. Its debt-to-GSDP ratio was 57.3 per cent in 2002-03, much higher than the average of 32.1 per cent for all states. The interest payments to revenue receipts ratio (IPRR) was also high at 34.2 per cent, putting a heavy burden on the state’s finances. Over the next twenty years, Odisha made significant improvements. By 2025-26, the debt-to-GSDP ratio had fallen to 13.6 per cent, the lowest among all Indian states. The journey of fiscal innovations can be segmented into several phases, each defined by distinct strategies and results focused on enhancing the state’s financial health and ensuring sustained fiscal resilience. (Figure 2.23).
Figure 2.24: Connecting Fiscal Innovations to Improved Fiscal Outcomes
Source: Annual Budget Documents, Government of Odisha
Through these integrated efforts, Odisha exemplifies how fiscal innovation and inclusive budgeting can drive improved fiscal outcomes. The cumulative impact is reflected in higher expenditure efficiency, and sustained fiscal discipline, positioning the State as a national leader in fiscal health and responsible public finance management.
2.8 CONCLUSION
2.8.1 In recent years, Odisha’s fiscal management exemplifies a commendable blend of resilience, adaptability, and strategic foresight. The state’s ability to maintain fiscal discipline, evidenced by fiscal deficit levels within the FRBM Act limits and a steadily declining debt-to-GSDP ratio, reflects prudent fiscal governance. Importantly, Odisha’s fiscal architecture has consistently balanced revenue generation with productive expenditure, focusing on enhancing human development and infrastructure while safeguarding fiscal sustainability.
2.8.2 A key feature underpinning Odisha’s fiscal robustness is its strategic emphasis on developmental expenditure. This includes important social areas like education, health, and welfare, as well as investments (capital outlays) that build economic capacity. The state’s capital outlay has increased steadily as a share of its GSDP and has also outpaced many major states while remaining fiscally prudent. This shows state’s strong focus on long-term asset creation and improving infrastructure. This aligns with Odisha’s broader vision of achieving a ‘Samruddha Odisha’ by 2036.
2.8.3 Odisha’s revenue has increased sizably due to strong own tax collections, stable non-tax incomes, and increased funds from the central government. The state’s balanced revenue system, with money from within the state and support from the center, helps maintain ongoing investment in public services. Further, the state also invests in targeted social programs. It makes child and gender budgeting regular practice, showing a forward-thinking approach to inclusive development. This helps protect vulnerable groups and includes human development goals in financial planning.
2.8.4 Debt management strategies have kept the state’s debt at safe levels. A low IPRR ratio has helped in reducing financial risks and enabled the state to borrow in times of exigencies. Projected medium-term debt outlook suggest continued sustainability even as Odisha pursues ambitious capital programs. The clear prioritization of debt sustainability safeguards economic stability while enabling growth-enhancing investments.
2.8.5 Overall, Odisha’s fiscal policy framework strikes a well-calibrated balance between maintaining financial discipline and fostering socio-economic development. The state’s adaptive fiscal management and fiscal innovation mechanisms sets a benchmark for other states that are aiming to harmonize growth objectives with fiscal responsibility. Maintaining this fine balance will be critical for Odisha to navigate evolving economic challenges. It will also support the state in achieving its long-term development goals and become a leader in fiscal innovation and inclusive budgeting.
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