Covid-19: Odisha govt restricts capital expenditure in non-priority sectors

BHUBANESWAR: The state government will relook budget allocations of various departments for the 2020-21 fiscal year while giving priority to healthcare expenditure, social security measures, rural employment generation and agriculture and allied sectors.
The decision has been taken at the council of ministers meeting headed by chief minister Naveen Patnaik, which has also decided to restrict capital expenditure in all non-priority sectors in view of the huge financial requirement to fight the Covid-19 pandemic in the state. It was also decided that no new schemes will be taken up during the financial year.
Sharp fall in revenue collection due to lockdown to contain spread of virus and fall in central fund flow has forced the state government to take such steps, said official sources.
Recently, the state finance department had announced austerity measures like ban on launching new schemes/projects, restrictions on government recruitment, cutting expenditure on travel and vehicle and rationalizing establishment expenditure.
“Since Covid-19 pandemic is an evolving situation, we need huge expenditure to tackle the public health emergency. Life above everything else will be our guiding principle while fighting the pandemic. The allocation will be relooked during the supplementary budget,” said chief secretary Asit Tripathy after the council of ministers meeting.
The state government had presented budget of Rs 1.5 lakh crore for the 2020-21 financial year with massive allocations on infrastructure development in various areas. Sources said departments which are not directly associated with Covid management are likely to witness massive budget cut in the supplementary budget.
While there has been over 23 per cent fall in revenue collection in first quarter of the current fiscal compared to the corresponding period of the previous year, the chief secretary said the state government is also expecting reduction in central fund flow to the state under the centrally sponsored scheme and devolution of central grant.
“The state government will go for prudent borrowing to meet the financial requirements. Instead of going for more open market borrowing (from banks and other financial institutions), we have decided to borrow from the Compensatory Afforestation Fund Management and Planning Authority (CAMPA) and Odisha Mineral Bearing Area Development Corporation, where interest rate is very low. We have also received statutory approvals for the borrowing,” said Tripathy.
The state government has already borrowed around Rs 5,000 crore in the first quarter of the current fiscal, while the overall debt stock of the state would be around Rs 95,000 crore.
Besides borrowing, the state government has also been working on revenue augmentation strategy to meet financial requirements. “Funds under various projects lying idle in banks will be withdrawn after scrutiny of the finance department. We have also decided to go for one time settlements to recover around Rs 17,000 crore, pending due to litigation. These litigation amounts include electricity bills, water tax and commercial tax,” said Tripathy.
The chief secretary said the state government is confident that it will manage the situation very well than other states.
The council of ministers was also informed about the expenditure of around Rs 1900 crore made under various heads in managing the Covid-19 pandemic in the state. These include Rs 340 crore from chief minister’s relief fund, Rs 624 crore from the state disaster response fund, Rs 875 crore by the panchayati raj institutions in putting up temporary medical camps and Rs 73 crore from the MLA local area development funds. Several departments have also spent from their budget allocations, said the chief secretary.
While informing the steps taken by the state government so far, officials informed the council of ministers that Odisha has already started plasma therapy to treat critically-ill Covid patients in Cuttack, Bhubaneswar and Berhampur while the same will be started soon in Rourkela.
Inspired By