Odisha economy may shrink by about 2% this financial year
BHUBANESWAR: The state economy is projected to contract by about 1 to 2% in 2020-21 because of Covid-19 while it is expected to register a growth of about 7% in the next financial year (2021-22), state finance secretary A K Meena stated in a letter to the secretaries ahead of the preparation of the budget for the 2021-22 financial year, likely to be tabled in the assembly in the third week of February.
The Odisha Economic Survey 2019-20 had projected Odisha’s economy growth at 6.16% in 2019-20 as compared to 7.90% in 2018-19.
It must be mentioned here that the International Monetary Fund has recently projected the Indian economy to shrink by 10.3%.
Meena said the economic contraction at national and state level will adversely impact the collection of direct and indirect taxes, during 2020-21 and 2021-22 which could affect inflow of shared tax and grant-in-aid from the Centre.
Even as the state government has taken some timely steps – like raising one-time revenue through renewal of mining leases and mopping up of unused money parked in bank accounts, the finance secretary said these efforts have substantially reduced the resource gaps till August.
“If the effect of one-time collection is taken out, most of the revenue items are underperforming. Considering the likely level of central assistance and expected receipts from own revenue, the estimated shortfall in revenue during the current financial year would be around 20 to 25%,” said the finance secretary indicating the state may have to depend on greater borrowing during the current year to finance spending on pandemic management.
The state’s own revenue generation is expected see moderate growth in the next financial year while GST compensation from the Centre will depend on the performance of the economy.
While highlighting the state government’s strategic priorities for the next five years, the finance secretary said in the short-run, effective Covid-19 management, saving lives and providing livelihood to people will remain the government’s priority areas.