chapters orissa

CHAPTER - IGENERAL 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 state’s 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. Table 1.1 : Geographical Area and Forest Cover of the General Category States

S.No

.States

Total Geographica

l Area(Sq. Km.)

% of Total Geographical Area of India

Rank

Forest Cover

(Sq. Km) 2005

% of Forest Cover Area

Rank

1 Andhra Pradesh 275,069 8.37 4 44,372 16.13 92 Bihar 94,163 2.86 11 5,579 5.92 133 Chhattisgarh 135,191 4.11 9 55,863 41.32 24 Goa 3,702 0.11 17 2,164 58.45 15 Gujarat 196,022 5.96 6 14,715 7.51 126 Haryana 44,212 1.34 15 1,587 3.59 167 Jharkhand 79,714 2.42 13 22,591 28.34 58 Karnataka 191,791 5.83 7 35,251 18.38 79 Kerala 38,863 1.18 16 15,595 40.13 3

10 Madhya Pradesh 308,245 9.38 2 76,013 24.66 611 Maharashtra 307,713 9.36 3 47,476 15.43 1012 Orissa 155,707 4.74 8 48,374 31.07 413 Punjab 50,362 1.53 14 1,558 3.09 1714 Rajasthan 342,239 10.41 1 15,850 4.63 1515 Tamil Nadu 130,058 3.96 10 23,044 17.72 816 Uttar Pradesh 240,928 7.33 5 14,127 5.86 1417 West Bengal 88,752 2.70 12 12,413 13.99 11

All India 3287263 100.00 - 677088 20.60Source: State Forest Report, 2005, Forest Survey of India

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

1

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

YearDense Forest

Open ForestVery Dense Mod. Dense

1999 55.44 44.11

2001 57.28 42.72

2003 1.01 57.31 41.68

2005 1.11 57.17 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: 181.44 lakhs (49.30 percent)

Rural population: 312.87 lakhs (85.01 percent)

Urban population: 55.17 lakhs (14.99 percent)

SC population: 16.5 percent

ST population: 22.1 Percent

1 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%.

2

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

.States

Population 2001 Percent Population Share 2001Projected

Population March 1, 2008

Total(in lakhs)

Rank Male Female SC STTotal

(in lakhs)Percent Female

1 Andhra Pradesh 762.10 5 50.6 49.4 16.2 6.6 823.75 49.7

2 Bihar 829.99 3 52.1 47.9 15.7 0.9 936.33 48.1

3 Chhattisgarh 208.34 16 50.3 49.7 11.6 31.8 232.69 49.8

4 Goa 13.48 17 51.0 49.0 1.8 0.0 15.96 47.8

5 Gujarat 506.71 10 52.1 47.9 7.1 14.8 566.26 47.6

6 Haryana 211.45 15 53.7 46.3 19.3 0.0 241.71 46.0

7 Jharkhand 269.46 13 51.5 48.5 11.8 26.3 301.81 48.5

8 Karnataka 528.51 9 50.9 49.1 16.2 6.6 575.50 49.2

9 Kerala 318.41 12 48.6 51.4 9.8 1.1 338.02 51.3

10 Madhya Pradesh 603.48 7 52.1 47.9 15.2 20.3 687.37 47.8

11 Maharashtra 968.79 2 52.0 48.0 10.2 8.9 1079.72 47.8

12 Orissa 368.05 11 50.7 49.3 16.5 22.1 396.54 49.4

13 Punjab 243.59 14 53.3 46.7 28.9 0.0 267.21 46.4

14 Rajasthan 565.07 8 52.1 47.9 17.2 12.6 645.33 47.8

15 Tamil Nadu 624.06 6 50.3 49.7 19.0 1.0 661.06 49.8

16 Uttar Pradesh 1,661.98 1 52.7 47.3 21.1 0.1 1902.53 47.3

17 West Bengal 801.76 4 51.7 48.3 23.0 5.5 869.94 48.5

All India 10286.11 51.7 48.3 16.2 8.2 11447.34 48.2

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

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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

Sex Ratio (2001) Population Density Popl. Growth Rate (%)Per 1000

MalesRank Per Sq.

Km.Rank 1991-2001 Rank

1 Andhra Pradesh 978 4 277 11 14.59 15

2 Bihar 919 13 881 2 28.62 1

3 Chhattisgarh 989 2 154 17 18.27 10

4 Goa 961 7 364 8 15.21 14

5 Gujarat 920 12 258 13 22.66 8

6 Haryana 861 17 478 7 28.43 2

7 Jharkhand 941 8 338 9 23.36 6

8 Karnataka 965 6 276 12 17.51 12

9 Kerala 1058 1 819 3 9.43 17

10 Madhya Pradesh 919 14 196 15 24.26 5

11 Maharashtra 922 10 315 10 22.73 7

12 Orissa 972 5 236 14 16.25 13

13 Punjab 876 16 484 5 20.10 9

14 Rajasthan 921 11 165 16 28.41 3

15 Tamil Nadu 987 3 480 6 11.72 16

16 Uttar Pradesh 898 15 690 4 25.85 4

17 West Bengal 934 9 903 1 17.77 11

All India 933 325 21.54

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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

SN States

Infant Mortality Rate (Per thousand) Literacy Rate (2001 census)

2004 @1994-98

$2005-06

#

Rank (2005-

06)(%) Rank

1 Andhra Pradesh 59 66 53 10 60.5 13

2 Bihar 61 73 62 11 47.0 17

3 Chhattisgarh 60 81 71 16 64.7 10

4 Goa 17 37 15 1 82 2

5 Gujarat 53 63 50 9 69.1 6

6 Haryana 61 57 42 5 67.9 8

7 Jharkhand 49 54 69 14 53.6 16

8 Karnataka 49 52 43 8 66.6 9

9 Kerala 12 16 15 1 90.9 1

10 Madhya Pradesh 79 86 70 15 63.7 11

11 Maharashtra 36 44 38 4 76.9 3

12 Orissa 77 81 65 12 63.1 12

13 Punjab 45 57 42 5 69.7 5

14 Rajasthan 67 80 65 12 60.4 14

15 Tamil Nadu 41 48 31 3 73.5 4

16 Uttar Pradesh 76 87 73 17 56.3 15

17 West Bengal 46 49 42 5 68.6 7

All India 58 57 65Source: * 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 2000-2002$ National Family Health Survey (Round-2)# National Family Health Survey (Round-3), National Reports

5

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

SN States

Percentage People below Poverty Line

1993-94 1999-00 (MRP)

2004-05 (Based on URP) 2004-05(Based on MRP)

Rural Urban

Total Rural Urban

Total

1 Andhra Pradesh 22.19 15.77 11.2 28.0 15.8 7.5 20.7 11.1

2 Bihar 54.96 42.6 42.1 34.6 41.4 32.9 28.9 32.5

3 Chhattisgarh 40.8 41.2 40.9 31.2 34.7 32.0

4 Goa 14.92 4.4 5.4 21.3 13.8 1.9 20.9 12.0

5 Gujarat 24.21 14.07 19.1 13.0 16.8 13.9 10.1 12.5

6 Haryana 25.05 8.74 13.6 15.1 14.0 9.2 11.3 9.9

7 Jharkhand 46.3 20.2 40.3 40.2 16.3 34.8

8 Karnataka 33.16 20.04 20.8 32.6 25.0 12.0 27.2 17.4

9 Kerala 25.43 12.72 13.2 20.2 15.0 9.6 16.4 11.4

10 Madhya Pradesh 42.52 37.43 36.9 42.1 38.3 29.8 39.3 32.4

11 Maharashtra 36.86 25.02 29.6 32.2 30.7 22.2 29.0 25.2

12 Orissa 48.56 47.15 46.8 44.3 46.4 39.8 40.3 39.9

13 Punjab 11.77 6.16 9.1 7.1 8.4 5.9 3.8 5.2

14 Rajasthan 27.41 15.28 18.7 32.9 22.1 14.3 28.1 17.5

15 Tamil Nadu 35.03 21.12 22.8 22.2 22.5 16.9 18.8 17.8

16 Uttar Pradesh 40.85 31.15 33.4 30.6 32.8 25.3 26.3 25.5

17 West Bengal 35.66 27.02 28.6 14.8 24.7 24.2 11.2 20.6All India 35.97 26.1 28.3 25.7 27.5 21.8 21.7 21.8

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

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

GSDP/GDP (2006-07) (Rs cr) Per capita GSDP (2006-07) (Rs.)

(current prices) (1999-00 prices) (current prices) (1999-00 prices)

Orissa 91,151 67,676 23,227 17,245

India (Q.E.) 37,90,063 28,64,309 33,780 25,529Source: CSOSee Annex-I for details

6

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 India’s GDP.

Orissa’s 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 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06Per capita GSDP of State as % of per capita GDP of India

70.57 67.63 68.16 66.61 73.20 77.02 77.43

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

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07-5

0

5

10

15

20

25

-1.14

6.25

-0.06

14.7112.61

6.359.35

1.36

7.94 6.98

22.30

16.29

9.95

16.06

Orissa - Annual growth rate of GSDP (%)Constant Prices Current Prices

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-070

2

4

6

8

10

12

14

16

18

4.355.81

3.84

8.527.45

9.40 9.627.758.97

7.80

12.2413.38 13.83

15.70

India - Annual Growth Rate of GDP (%) Constant Current

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 vis—vis 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

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-0715

20

25

30

35

40

45

50

Sectorwise Composition of GSDP at current prices (%)

Primary Secondary Tertiary

Source: CSO

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 STATE’S FISCAL PERFORMANCE

General Comments

A. Revenue Receipts

Total Revenue Receipts (TRR)

As a percent of GSDP: 13.71 in 1999-200016.80 in 2002-03, 21.26 in 2007-08

TRR 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-0808-09 (BE)

TRR (Rs. In Crores) 5885 6902 7048 8439 9440 11850 14085 18033 21967 23270

Annual Growth Rate 29.21 17.29 2.11 19.73 11.87 25.53 18.86 28.03 21.82 5.93

As a % to GSDP 13.71 15.87 15.01 16.80 15.37 16.59 17.93 19.78 21.26 19.93

Annual Buoyancy 12.72 0.27 2.83 0.53 1.57 1.89 1.75 1.64 0.46

Rs. In Crore

Items 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-0808-09 (BE)

Total Revenue Receipts 5885 6902 7048 8439 9440 11850 14085 18033 21967 23270

Own Tax Revenue 1704 2184 2467 2872 3302 4177 5002 6065 6856 7272

Own Non-Tax Revenue 716 685 692 961 1095 1346 1532 2588 2654 2135

Transfer from Centre 3464 4033 3889 4606 5044 6328 7551 9379 12458 13863

% of Transfer from Centre to TRR

58.87 58.43 55.18 54.58 53.43 53.40 53.61 52.01 56.71 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 State’s 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

99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-090

5

10

15

20

25

13.715.9 15.0

16.815.4

16.617.9

19.821.3

19.9

Revenue Receipts as % age of GSDP

SOTR SONTR Central Transfer TRR/GSDP

Composition of Total Revenue Receipts

99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-090

5000

10000

15000

20000

25000

Compositionof Revenue Receipts(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 07-0808-09 (BE)

Central Transfers (Rs. Crore) 3464 4033 3889 4606 5044 6328 7551 9379

12458 13863

Annual Growth Rate 38.02 16.41 -3.55 18.42 9.51 25.46 19.32 24.22 32.82 11.28

As a % of TRR 58.87 58.43 55.18 54.58 53.43 53.40 53.61 52.01 56.71 59.57

of which

Plan Grants 834 961 927 1405 1451 1952 1607 2073 3459 4413

Non Plan Grants 876 468 313 395 266 399 1067 1086 1152 1205

Share in Central Taxes 1754 2604 2649 2806 3328 3978 4877 6220 7847 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 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09(BE)

Non-Plan 876 468 313 395 266 399 1067 1086 1152 1205

State-Plan Schemes 555 601 650 1021 1049 1392 1079 1284 2232 2677

Central-Plan Schemes 65 36 63 32 62 38 46 62 116 539

Centrally Sponsored Plan Schemes

214 324 214 352 340 521 483 726 1111 1197

Total 1710 1429 1240 1800 1717 2350 2675 3158 4611 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 X FC XI FC XII FC

Share in Taxes & Duties 8783 19027 31669

As percent of total Taxes & Duties to all States 4.3 5.1 5.2

Aggregate grants 923 1728 5273

As percent of total FC grants to all States 4.5 2.9 3.7

Total FC transfers 9707 20755 36943

As percent of Total FC transfers to all States 4.3 4.8 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:

OrissaFinance Commissions

1st 2nd 3rd 4th 5th 6th 7th 8th 9th (1) 9th (2) 10th 11th 12thNPRD Grant (Rs. Crore)

3.75 16.75 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 1999-20007.63 in 2002-039.21 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 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-0808-09 (BE)

Rs. In Crore 2421 2869 3159 3833 4396 5522 6534 8653 9510 9407

Annual Growth Rate 18.39 18.55 10.08 21.35 14.69 25.61 18.33 32.43 9.90 -1.08

As a % to GSDP 5.64 6.60 6.73 7.63 7.16 7.73 8.32 9.49 9.21 8.06

Annual Buoyancy 13.65 1.27 3.06 0.66 1.57 1.84 2.02 0.74 -0.08

12

Composition of Own Revenue Receipts

99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-090

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Composition of Own Revenue Receipts (Rs. in Crore)

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 1999-20005.72 in 2002-036.64 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 07-0808-09 (BE)

OTR (Rs. Crore) 1704 2184 2467 2872 3302 4177 5002 6065 6856 7272


As a % to GSDP 3.97 5.02 5.25 5.72 5.38 5.85 6.37 6.65 6.64 6.23

Annual Buoyancy 20.72 1.63 2.35 0.67 1.63 1.99 1.32 0.98 0.47

As a % of TRR 28.93 31.64 35.00 34.03 34.98 35.24 35.52 33.63 31.21 31.25

As a % of ORR 70.40 76.11 78.10 74.92 75.10 75.63 76.56 70.09 72.10 77.30

13

Own tax revenue increased from Rs. 1704 crore in 1999-2000 to Rs.6856 crore in 2007-08 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 State’s Own Tax Revenue

Items 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09

Sales TaxRs. Cr. 1108 1342 1402 1605 1864 2471 3012 3765 4118 4400

AGR 21.2 4.5 14.5 16.1 32.6 21.9 25.0 9.4 6.8% 65.0 61.5 56.8 55.9 56.5 59.2 60.2 62.1 60.1 60.5

State ExciseRs. Cr. 115 135 197 246 256 307 389 430 525 601

AGR 17.8 45.9 24.6 4.2 19.6 27.0 10.5 22.1 14.4% 6.7 6.2 8.0 8.6 7.8 7.3 7.8 7.1 7.7 8.3

Taxes on Vehicles, Goods & Passengers

Rs. Cr. 190 372 468 570 657 723 869 1001 1086 1172AGR 96.2 25.8 21.8 15.2 10.0 20.2 15.1 8.6 7.9

% 11.1 17.0 19.0 19.9 19.9 17.3 17.4 16.5 15.8 16.1

Stamps & Registration Fees

Rs. Cr. 102 109 110 136 153 198 236 260 405 351AGR 6.4 1.1 23.8 12.7 29.3 19.3 10.3 55.4 -13.4

% 6.0 5.0 4.4 4.7 4.6 4.7 4.7 4.3 5.9 4.8

Taxes & Duties on Electricity

Rs. Cr. 127 147 137 172 200 262 353 283 327 380AGR 15.3 -6.6 25.7 16.4 30.7 34.8 -20.0 15.9 16.0

% 7.5 6.7 5.6 6.0 6.1 6.3 7.1 4.7 4.8 5.2

Other TaxesRs. Cr. 63 79 152 142 171 216 143 327 394 369

AGR 26.1 92.0 -6.5 20.1 26.4 -33.8 128.6 20.7 -6.4% 3.7 3.6 6.2 4.9 5.2 5.2 2.9 5.4 5.7 5.1

SOTRRs. Cr. 1704 2184 2467 2872 3302 4177 5002 6065 6856 7272

AGR 28.2 13.0 16.4 15.0 26.5 19.8 21.2 13.0 6.1% 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Tax on Sales/Trade is the major source of State’s 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 of Farmer’s

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

YearSales Tax/VAT

(excluding CST)Increase in Collection %age of increase

2004-05 20612005-06 2524 463 22.462006-07 3042 518 20.532007-08 3608 566 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 2004-05 2005-06 2006-07

Sales Tax on Petroleum Products669 839 1016

(25.4%) (21.1%)

VAT other than Petroleum Products982 1198 1304

(21.9%) (8.9%)

Central Sales Tax410 488 722

(18.9%) (48.2%)

(MH 0040)Taxes on Sales, Trades etc.

2471 3012 3765

(21.9%) (25.0%)

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 2007-08, 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:

* This

TThis 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)

Year Anticipated Collection @4% CST rate and 35.22% growth rate

% of CST in the proposed scheme of CST phase-out

Actual/ anticipated collection in the proposed scheme of CST phase-out

Estimated Loss in the proposed scheme of CST phase-out

2007-08 1061.46 3% 648.99 412.472008-09 1435.31 2% 384.95** 1050.362009-10 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)

(a) Own Non Tax Revenue (ONTR):

As a percent of GSDP: 1.67 in 1999-20001.91 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

Year Rate of CST Collection(Rs. in crore)

Growth rate Compounded Annual Growth Rate (CAGR)

2003-04 4% 317.50

35.22%2004-05 4% 410.16 29.18%2005-06 4% 487.55 18.87%2006-07 4% 784.99* 61.01%

ONTR 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-0808-09 (BE)

ONTR (Rs. Crore) 716 685 692 961 1095 1346 1532 2588 2654 2135

Annual Growth Rate 28.52 -4.33 0.92 38.95 13.88 22.93 13.85 68.95 2.53 -19.53

As a % to GSDP 1.67 1.58 1.47 1.91 1.78 1.88 1.95 2.84 2.57 1.83

Annual Buoyancy -3.18 0.12 5.58 0.62 1.41 1.39 4.29 0.19 -1.50

As a % of TRR 12.18 9.93 9.81 11.39 11.59 11.35 10.88 14.35 12.08 9.18

As a % of ORR 29.60 23.89 21.90 25.08 24.90 24.37 23.44 29.91 27.90 22.70

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 2008-09 (BE)

A. TIMBER 9.63 3.29 8.22 6.65 9.94 7.00 14.34

B. NON-TIMBER 76.50 34.06 27.26 47.40 116.63 49.45 101.89

Total Revenue from Forest Produce

86.13 37.35 35.48 54.05 126.58 56.46 116.23

%age to ONTR 8.96 3.41 2.64 3.53 4.89 2.95 5.44

Revenue from Royalty on Major Minerals:

Major Minerals 2002-03 2003-04 2004-05 2005-06 2006-07 2007-082008-09

(BE)Coal 310.7 386.0 441.9 460.1 516.1 NA NAChromites 18.2 27.2 44.0 83.8 111.3 NA NAIron ore 42.3 59.3 72.9 101.3 127.8 NA NABauxite 27.7 25.4 29.0 37.6 50.1 NA NAOthers 18.4 21.6 31.2 34.0 31.4 NA NATotal 417.4 519.6 619.1 716.7 836.8 NA NA%age to ONTR 43.42 47.47 46.01 46.79 32.33 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 5 th

September, 1991. The Hon’ble 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. 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-0808-09 (BE)

Total Expr. (Rs. Crore) 9734 10304 11148 11432 13286 13633 14709 17495 20971 26054


As a % to GSDP 22.68 23.69 23.75 22.76 21.63 19.09 18.73 19.19 20.30 22.32

Annual Buoyancy 4.31 1.03 0.37 0.73 0.16 0.79 1.18 1.49 1.86

Of which

Revenue Expenditure 8459 8834 9882 10015 10861 12372 13604 15772 17723 22707

Capital Expenditure 1275 1470 1266 1417 2425 1261 1105 1723 3248 3348

II. Total Revenue Expenditure (TRE)


Trend Growth Rate (TGR) of total revenue expenditure: 9.69 for the period 1999-08 with buoyancy of 0.77.

TRE 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-0808-09 (BE)

TRE (Rs. Crore) 8459 8834 9882 10015 10861 12372 13604 15772 17723 22707


As a % to GSDP 19.71 20.31 21.05 19.94 17.68 17.32 17.32 17.30 17.16 19.45

Annual Buoyancy 3.26 1.49 0.19 0.38 0.85 1.00 0.99 0.93 2.16

As % of TE 86.90 85.73 88.64 87.60 81.75 90.75 92.49 90.15 84.51 87.15

Of which

Plan 1828 1824 1816 1571 1644 1956 2113 2727 4089 5368

Non-Plan 6631 7010 8066 8444 9218 10416 11491 13045 13634 17339

18

Total Revenue Expenditure exceeded total Revenue Receipts during 1999-2000 to 2004-05. 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 2007-08. Of this Non-plan expenditure was about 77%, while the plan expenditure was only 23%.

99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-090

5000

10000

15000

20000

25000

Revenue & Expenditure Trends (Rs. Crore)TRE TRR

AGR of Revenue Expenditure

99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09-20

-10

0

10

20

30

40

50

60

Annual Growth Rate of Revenue Expenditure

PRE NPRE

19

ii)

(PRE)


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

PRE 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-0808-09 (BE)

PRE (Rs. Crore) 1828 1824 1816 1571 1644 1956 2113 2727 4089 5368

Annual Growth Rate 11.00 -0.18 -0.45 -13.51 4.64 19.01 8.01 29.05 49.97 31.27

As a % to GSDP 4.26 4.19 3.87 3.13 2.68 2.74 2.69 2.99 3.96 4.60

Annual Buoyancy -0.13 -0.06 -1.94 0.21 1.17 0.81 1.81 3.75 2.41

As % of TRE 21.61 20.65 18.38 15.68 15.13 15.81 15.53 17.29 23.07 23.64

As % of TE 18.78 17.70 16.29 13.74 12.37 14.35 14.36 15.58 19.50 20.60

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)


Trend Growth Rate (TGR) of non-plan revenue expenditure: 9.90 for the period 1999-08 with buoyancy of 0.79.

NPRE 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 (BE)

NPRE (Rs. Crore) 6631 7010 8066 8444 9218 10416 11491 13045 13634 17339

AGR 28.25 5.71 15.07 4.69 9.16 13.01 10.31 13.53 4.51 27.17

As a % to GSDP 15.45 16.12 17.18 16.81 15.01 14.58 14.63 14.31 13.20 14.85

Annual Buoyancy 4.20 1.90 0.67 0.41 0.80 1.04 0.84 0.34 2.09

As % of TRE 78.39 79.35 81.62 84.32 84.87 84.19 84.47 82.71 76.93 76.36

As % of TE 68.13 68.03 72.35 73.86 69.38 76.41 78.12 74.57 65.01 66.55

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

01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-0905

101520253035404550

Interest Payments, Pensions & Salary as % of NPRE

Interest Payments Pension Salary

AGR of Interest Payments, Pensions and Salary

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

Interest PaymentsRs. Crore 2886 2860 3332 3697 3188 3169AGR 1.8 -0.9 16.5 11.0 -13.8 -0.6% (NPRE) 34.2 31.0 32.0 32.1 24.4 23.2

PensionRs. Crore 1030 1158 1260 1339 1485 1801AGR 2.6 12.5 8.8 6.3 10.9 21.3% (NPRE) 12.2 12.6 12.1 11.6 11.4 13.2

Salary(AG Figures)

Rs. Crore 3929 3726 3778 4002 4028 4582AGR 5.2 -5.2 1.4 5.9 0.6 13.8% (NPRE) 46.5 40.4 36.3 34.8 30.9 33.6

Subsidy(AG Figures)

Rs. Crore 230 94 83 170 148AGR -59.1 -11.7 104.8 -12.9% (NPRE) 0.0 2.5 0.9 0.7 1.3 1.1

Total Committed Expr. 7844 7975 8464 9121 8871 9701%age to NPRE 93 87 81 79 68 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 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.

21

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.

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-087.00

8.00

9.00

10.00

11.00

12.00

13.00

14.00

12.82

11.32

10.0810.48

10.83

8.74 8.50

Average Rate of Interest (%)

(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 (%)(in percent)

TRE 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09(BE)

General Services 33.13 44.77 47.48 48.23 46.84 51.85 49.46 46.52 39.66 43.51

Social Services 48.32 36.13 35.43 34.30 34.81 32.70 35.10 34.15 37.32 34.72

Economic Services 18.30 17.41 15.58 16.00 16.31 14.17 14.36 17.60 21.04 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 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 (BE)

General Services 2803 3955 4692 4830 5087 6415 6728 7337 7029 9879AGR 4.8 41.1 18.6 2.9 5.3 26.1 4.9 9.1 -4.2 40.5Social Services 4087 3192 3501 3435 3781 4046 4775 5386 6615 7883AGR 45.9 -21.9 9.7 -1.9 10.1 7.0 18.0 12.8 22.8 19.2Economic Services 1548 1538 1539 1603 1771 1753 1953 2776 3729 4567AGR 17.6 -0.7 0.1 4.1 10.5 -1.0 11.4 42.1 34.3 22.5Compensation & Local Assignments 16 120 127 146 153 144 161 272 351 377

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.

99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09-40

-30

-20

-10

0

10

20

30

40Annual Growth Rate of Services (TRE)

General Social Economic

Capital Expenditure

TGR of capital expenditure for the period 1999-08 is 6.59 with buoyancy 0.52.

Capital Expd 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 (BE)

Capital Expenditure 1275 1470 1266 1417 2425 1261 1105 1723 3248 3348

Annual Growth Rate 1.05 15.28 -13.88 11.96 71.10 -48.01 -12.33 55.91 88.48 3.07

As a % to GSDP 2.97 3.38 2.70 2.82 3.95 1.76 1.41 1.89 3.14 2.87

Annual Buoyancy 11.24 -1.75 1.71 3.19 -2.95 -1.24 3.48 6.64 0.24

As % of TE 13.10 14.27 11.36 12.40 18.25 9.25 7.51 9.85 15.49 12.85

Break-up of Capital Expenditure

Capital Outlay 799 834 887 1074 853 1056 1038 1451 2815 3020

Loan & Advances 476 636 379 343 1572 205 67 272 433 328

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.

99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-090

500

1000

1500

2000

2500

3000

3500

4000Capital Expenditure (Rs. Crore)

Capital Outlay on Major Sectors:

Rs.in Crore (Figures in brackets are %)

Capital Outlay 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 (BE)

Police 0 14 58 10 9 6 21 13 0 25(1.7) (6.5) (0.9) (1) (0.6) (2.1) (0.9) (0) (0.8)

Public Work15 15 17 11 30 23 31 51 132 109

(1.8) (1.9) (1) (3.5) (2.2) (3) (3.5) (4.7) (3.6)Education 9 19 22 20 18 2 2 4 6 3

(2.3) (2.5) (1.8) (2.1) (0.2) (0.2) (0.3) (0.2) (0.1)Health 6 26 28 38 41 3 16 33 20 23

(3.1) (3.2) (3.5) (4.8) (0.3) (1.6) (2.3) (0.7) (0.8)Water Supply

22 55 74 45 47 47 70 127 441 529(6.6) (8.4) (4.2) (5.5) (4.4) (6.8) (8.8) (15.7) (17.5)

Housing 8 16 16 49 17 21 17 17 72 87(1.9) (1.8) (4.6) (2) (2) (1.7) (1.2) (2.6) (2.9)

Forest 43 37 26 33 47 45 40 46 42 18(4.4) (2.9) (3) (5.5) (4.2) (3.9) (3.2) (1.5) (0.6)

Irrigation 522 464 448 507 399 481 473 681 1353 1240(55.7) (50.5) (47.2) (46.7) (45.6) (45.6) (46.9) (48.1) (41.1)

Cooperation 8 17 5 19 11 11 14 13 6 12(2.1) (0.6) (1.7) (1.3) (1.1) (1.4) (0.9) (0.2) (0.4)

Road & Bridges

118 149 115 302 196 358 318 392 522 692(17.9) (12.9) (28.2) (23) (33.9) (30.6) (27) (18.6) (22.9)

Others 49 21 78 40 39 58 34 74 220 280(6.1) (2.5) (8.8) (3.7) (4.6) (5.5) (3.2) (5.1) (7.8) (9.3)

Total 799 834 887 1074 853 1056 1038 1451 2815 3020

24

Capital Outlay was Rs.2815 crores of the total expenditure of Rs.20971 crores in 2007-08. 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 DebtOutstanding Debt & Guarantees

99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-080

10

20

30

40

50

60

70

47.3

55.059.3 61.2

55.450.5 49.0

43.337.3

8.614.23

11.18 10.42 8.295.35 4.45 2.90 2.10

Outstanding Debt & Guarantees as % of GSDP

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) Amount Rs. Cr.

Percent

Total Outstanding Debt 38525 100

Internal Debt (of which) 17185 44.6

a) Market Loans 8024 20.8

b) NSSF Securities 6756 17.5

Loans & advances from Central Government 8402 21.8

Small Savings & Provident Funds 10727 27.8

Other Obligations 2212 5.7

25

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 Sustainability–Interest Rate and GSDP Growth (in per cent)

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07Average Interest Rate 10.95 9.85 8.83 9.51 9.92 8.18GSDP Growth 7.48 6.09 21.78 13.04 9.66 9.66Interest Spread (-)3.47 (-)3.76 12.94 3.54 (-)0.28 1.47Quantum Spread(Rs. In crore)

(-)830 (-)1047 3477 1204 (-)101 565

Primary Deficit(Rs. In crore)

(-)1133 70 (-)713 1966 3421 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 table- indicates the resource gap as defined for the period 2002-07.

Incremental revenue receipts and Revenue Expenditure

(Rs. In crore)Period Incremental Resource

GapNon-Debt Receipts

Primary Exp.

Interest Payments

Total Exp.

2002-03 1436 233 51 284 11522003-04 1097 1880 -26 1854 -7572004-05 2554 -125 472 347 22072005-06 2166 711 365 1076 10902006-07 3886 3296 -509 2787 1099

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 1687 2296 4338 2689 2105 1305

Repayment(Principal +Interest) 987 1298 1834 2344 2043 2768

Net Fund Available 700 998 2504 345 62 -1463

Net Fund Available (%) 41.49 43.47 57.72 12.83 2.95 -112.11

Loans & Advances from GOI

Receipt 973 1769 1141 1423 -10 741


Net Fund Available -659 -293 -1368 -1003 -1290 -739

Net Fund Available (%) -67.73 -16.56 -119.89 -70.48 -12900 -99.73

Other obligations

Receipt 1994 2020 1675 1938 2742 2077


Net Fund Available 156 177 -188 -154 -11 -193

Net Fund Available (%) 7.82 8.76 -7.04 -7.95 -0.40 -9.29

Total liabilities

Receipt 4654 6085 7154 6050 4837 4123


Net Fund Available 197 882 1018 -812 -1239 -2395

Net Fund Available (%) 4.23 14.49 14.22 -13.42 -25.61 -58.08

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 State’s 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.

Year Annual repayment schedule prior to

consolidation

Interest payment due prior to

consolidation

New amortization

schedule after consideration

Schedule of interest payment after reset of interest at 7.5%

per annum

2005-06 613.36 886.41 381.90 572.85

2006-07 643.87 815.95 381.90 544.20

2007-08 674.80 741.62 381.90 515.56

2008-09 478.59 663.54 381.90 486.92

2009-10 515.09 607.98 381.90 458.28

Details of debt write-off availed (Rs. in crore)

YearWhether Actual / RE / BE

Revenue Deficit (+)/ Surplus (-)

Minimum Reduction in RD required from the base year (Rs -

2457 crore)/ previous year for full debt

waiver

Fiscal Deficit (+)/ Surplus (-)

Fiscal Deficit/ Surplus as % of GSDP

Amount of debt waiver

received

2005-06 Actual -481.20 2938.20 276.46 0.35 381.90

2006-07 Actual -2260.60 4717.60 -823.18 -0.90 381.90

2007-08 Actual -4243.92 6700.92 -1351.25 -1.31 381.90

2008-09 BE -563.87 3020.87 2537.0 2.17

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 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-0808-09 (BE)

NPRD 3.68 2.46 4.14 2.81 2.00 0.73 -1.26 -3.20 -4.72 -1.30

SORD 14.07 13.71 14.32 12.31 10.53 9.59 9.00 7.81 7.95 11.39

RD 6.00 4.44 6.04 3.14 2.31 0.73 -0.61 -2.48 -4.11 -0.48

GFD 8.73 7.65 8.45 5.61 5.82 1.91 0.35 -0.90 -1.31 2.17

PD 5.85 2.39 2.41 -0.14 1.16 -2.75 -4.36 -4.40 -4.38 -1.52

RD/GFD 0.69 0.58 0.71 0.56 0.40 0.38 -1.74 2.75 3.14 -0.22Non-Plan Revenue Deficit= NPRE – (TRR-Plan Grants); State’s 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.

99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09-6.00

-4.00

-2.00

0.00

2.00

4.00

6.00

8.00

10.00

Deficit Indicator as % of GSDPRevenue Deficit Gross Fiscal Deficit Primary Deficit

F. Guarantees

30

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 State’s revenue receipts would include, State’s Own tax Revenue, State’s 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)

YearMaximum

amount guaranteed

Outstanding amount of

guarantees as on 1st April

State’s revenue receipts of

second preceding year

(TRR)*

% age of outstanding guarantees to State’s revenue receipts of

second preceding year

2002-03 8487 5231 5473 95.572003-04 9343 5094 5807 87.712004-05 9297 3823 6639 57.592005-06 9252 3496 7724 45.262006-07 8589 2648 9500 27.872007-08 8587 2168 11411 19.00

*(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 (Rs. Crore)

Items2005-06

(Act)2006-07

(Act)2007-08

(Act)2008-09

(BE)2009-10

(Est)2005-10

(Tot)

Share in Central TaxesA TFC Projections 4719 5403 6200 7130 8217 31669

Actuals* 4877 6220 7362 8245 26704

Total GrantsB=(B1+B2) TFC Projections 995 1044 1060 1078 1097 5273

Actuals 995 1041 1007

Gap GrantsB1 TFC Projections 488 488

Actuals 488 488

Other TFC GrantsB2 TFC Projections 507 1044 1060 1078 1097 4785

Actuals 507 1041 1007 2555

Total TransfersC TFC Projections 5715 6447 7260 8208 9314 36943

Actuals 5872 7262 8368 8245 29747

D Deviations 157 815 1108 2081Source: 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 (Rs. In Crore)

ItemsTFC Recommendation Actual Releases

2005-06 2006-07 2007-08 2005-06 2006-07 2007-08Roads & Bridges - 368.77 368.77 - 368.77 368.77

Public Buildings - 97.28 97.28 - 48.64 145.92

Forests 15.00 15.00 15.00 15.00 15.00 15.00

Heritage - 12.50 12.50 - 12.50 12.50

State Specific Needs - 42.50 42.50 - 40.50 39.50

Local Bodies 181.40 181.40 181.40 181.40 171.00 160.60

Calamity 226.16 232.68 239.53 226.16 291.34 180.87

Education 53.49 58.57 64.13 53.46 58.57 64.13

Health 31.22 34.81 38.81 31.22 34.81 19.41

Total 507.27 1043.51 1059.92 507.24 1041.13 1006.7Source: 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 ActThe 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 1 st

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 State’s 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 State’s 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 Progress/Action Taken

I Core Recommendations (non-negotiable)

A 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.

B Reducing fiscal deficit to 3% of GSDP or its equivalent as ratio of interest payment to revenue receipt

Fiscal Deficit was 0.37 in 2005-06 which improve to surplus of 0.90 and 1.31 in 2006-07 and 2007-08 respectively.

C Bringing out annual reduction targets of revenue and fiscal deficits

The State enacted FRBM Act in May, 2005.

33

Recommendations Progress/Action Taken

D Bringing out annual statement giving prospects for the State economy and related fiscal strategy

Economic Survey and Medium Term Fiscal Policy is being brought out regularly.

E Bringing out special statements along with the budget giving in detail number of employees in Government, Public Sector, aided institutions and related salaries

The salary figures of the State Govt. employees have been incorporated in Finance Accounts w.e.f. 2005-06.

II Other Recommendations

A 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%

B In the case of States, the level of interest payment relating to the revenue receipts would fall to 15% by 2009-10.

IP/TRR2005-06 26.25%2006-07 17.68%2007-08 14.43%2008-09(BE) 18.53%

C 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.

Pension/TRR2005-06 9.50%2006-07 8.23%2007-08 8.20%2008-09(BE) 12.01%

The new contributory pension scheme has been implemented w.e.f. 1st January, 2005

D 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.

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.

E 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.

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.

F Debt GSDP ratio to be brought down to 28%. 2005-06 48.98%2006-07 43.30%2007-08 37.29%

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

Stateshare

Funds required to be transferred to

the CRF

Funds actually transferred to CRF

(As per Finance Account)

CRF NCCF CRF

2002-03 206.7 216.6 90.5 21.7 30.2 142.4 142.4

2003-04 345.8 324.5 95.0 104.4 31.7 231.2 339.7

2004-05 303.6 275.9 99.8 53.4 33.3 186.5 186.5

2005-06 396.5 238.2 226.2 0.0 75.4 301.5 301.5

2006-07 457.7 458.1 291.3 25.0 97.1 413.5 425.3

2007-08 245.6 287.2 180.9 0.0 60.3 241.2 241.1

Total 1956.0 1800.6 983.8 204.6 327.9 1516.2 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:

YearOpening Balance

Transfer to CRF

Expr. met from CRF as per Finance Account

Closing Balance

2002-03 172.6 142.4 216.6 98.3

2003-04 98.3 339.7 324.5 113.5

2004-05 113.5 186.5 275.9 24.1

2005-06 24.1 301.5 238.2 87.4

2006-07 87.4 425.3 458.1 54.7

2007-08 54.7 241.1 287.2 8.6

The balance in the CRF should have been Rs.8.6 crore as on 31st 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, State’s Own projections and Actual /BE for Orissa.

2005-06 2006-07 2007-08 2008-09 BE 2009-10 Est.0

2000

4000

6000

8000

10000

12000

Comparison of Own Revenue Receipts (Rs. Cr.)

Projections by 12th FC Projections by State Actual

Table: Own Tax and Non-tax Revenue Receipts(Rs. in Crore)

2005-06 2006-07 2007-08 2008-09(BE)

2009-10(Est.)

Projections by 12th FC Own Tax Revenue 4358 4933 5585 6322 7156

Own Non Tax Revenue 1190 1357 1541 1747 1979Projections by State

Own Tax Revenue 3832 4234 4678 5169 5712 Own Non Tax Revenue* 995 1052 1107 1169 1268

Actual Own Tax Revenue 5002 6065 6856 7272 8200

Own Non Tax Revenue 1532 2588 2654 2135 2142* 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

2005-06 2006-07 2007-08 2008-09 2009-100

5000

10000

15000

20000

25000

30000

Comparision of NPRE (Rs. cr.)

Projections by 12th FC Projections by State Actual

Service-wise Non-Plan Revenue Expenditure (Rs.in Crore)2005-06 2006-07 2007-08 2008-09(BE) 2009-10(Est.)

Projections by 12th FCGeneral Services 6367 6817 7307 7839 8489

Interest Payment 3570 3802 4049 4312 4593Pension 1758 1934 2127 2340 2574

Social Services 3034 3308 3608 3936 4295Economic Services 1160 1218 1279 1344 1412GIA TO Local Bodies & Committed Liabilities 196 220 1049 1140 1240

Total 10756 11563 13244 14259 15436Projections by StateGeneral Services 6932 7491 7950 8469 9072

Interest Payment 3580 3858 4121 4331 4531

Pension 1708 1885 1984 2183 2393Social Services 4319 4736 5202 5724 6314

Economic Services 1991 2334 2751 3261 3887

GIA TO Local Bodies & Committed Liabilities 445 479 1685 1840 2025

Total 13687 15040 17588 19294 21298ActualGeneral Services 6721 7325 6999 9818 12067

Interest Payment 3697 3188 3169 4312 4593

Pension 1339 1485 1801 2796 4612

Social Services 3439 3873 4296 5055 10903

Economic Services 1183 1575 1988 2089 5529

GIA TO Local Bodies & Committed Liabilities 147 272 351 377 434

Total 11491 13045 13634 17339 28933 Non-Plan Revenue Expenditure has been higher than what was projected by the TFC but

lower than by the State’s own projections till 2008-09.

37

2005-06 2006-07 2007-08 2008-09 2009-100

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

Pre-Devolution NPRE Deficit/Surplus (Rs. Crore)Projections by 12th FC Projections by State Actual/RE/BE/Est.

Table 3.6: Pre-Devolution NPRE Deficit (+) / Surplus (-) (Rs. in Crore)

2005-06 2006-07 2007-08 2008-09(BE)

2009-10(Est.)

Total

Projections by 12th FC 5207 5273 6118 6190 6300 29089Projections by State 8858 9752 11801 12954 14316 57681Actual 4957 4392 4125 7932 18590 39995

The TFC and the State’s 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 Items

Current Prices2007-08 2008-09 2009-10 2010-11 2011-12 2007-12

1 2 3 4 5 6 7 8I State's Own Revenue Receipts

a Planning Commission (XI th Plan) 8012 9098 10366 11817 13480 52773b Submitted to Finance Commission by State 9510 9407 10342 11026 12027 52313

Variation (b-a) 1498 309 -24 -790 -1453 -461A State's Own Tax Revenue


Variation (b-a) 241 -336 -549 -1301 -1943 -3888B State's Non Tax Revenue


Variation (b-a) 1257 645 525 511 490 3427II Non-Plan Revenue Expenditure

a Planning Commission (XI th Plan) * 14907 16901 18682 20265 21900 92656b Submitted to Finance Commission by State 13634 17339 28933 29681 33540 123127

Variation (b-a) -1273 438 10250 9416 11640 30471III Pre-devolution NPR Deficit


Variation (b-a) -2771 129 10274 10206 13093 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 State’s 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

Sl.No. General Category StatesTRR/GSDP 2005-06

TGR of TRR (2001-07)

% Rank % Rank

1 Andhra Pradesh 14.77 9 14.84 142 Bihar 22.38 1 18.55 63 Chhattisgarh 17.02 4 20.32 24 Goa 13.38 11 17.85 105 Gujarat 11.57 15 13.50 176 Haryana 12.22 14 20.01 4

7 Jharkhand 13.45 10 17.98 88 Karnataka 16.81 5 19.82 59 Kerala 12.71 12 14.43 15

10 Madhya Pradesh 17.71 3 17.90 911 Maharashtra 11.02 16 15.59 1312 Orissa 17.93 2 20.27 313 Punjab 12.39 13 20.84 114 Rajasthan 16.78 6 15.72 1215 Tamil Nadu 15.19 8 17.12 1116 Uttar Pradesh 16.21 7 18.52 717 West Bengal 10.05 17 13.84 16

Total (1 to 17) 14.06 16.95

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 State’s Own Revenue Receipts (ORR) (2001-2006) Orissa 19.95 percent General Category States 14.25 percent Rank among General Category States 1

Sl.No.General Category

States

TGR of CT2001-07

*CT/TRR 2006-07

TGR of ORR (2001-06)

% Rank % Rank % Rank Buoyancy1 Andhra Pradesh 13.62 17 31.26 9 12.96 14 1.182 Bihar 20.78 5 80.31 1 11.83 15 1.483 Chhattisgarh 22.89 3 43.27 7 17.81 3 1.174 Goa 18.86 11 19.22 16 17.52 5 1.035 Gujarat 17.94 13 24.48 12 9.77 17 0.656 Haryana 19.66 7 14.10 17 16.53 6 1.277 Jharkhand 22.89 4 55.65 2 13.97 11 0.828 Karnataka 18.93 10 27.92 11 19.22 2 1.579 Kerala 16.90 14 29.50 10 12.97 13 1.14

10 Madhya Pradesh 20.12 6 48.89 6 17.69 4 2.1311 Maharashtra 29.22 2 23.75 14 10.97 16 0.8912 Orissa 19.08 9 52.01 3 19.95 1 1.3513 Punjab 29.25 1 20.82 15 16.13 7 1.9214 Rajasthan 16.19 15 42.38 8 15.35 9 1.6915 Tamil Nadu 18.63 12 23.76 13 15.48 8 1.4016 Uttar Pradesh 19.12 8 51.27 4 15.03 10 1.5217 West Bengal 14.83 16 49.93 5 13.60 12 1.25

Total (1 to 17) 19.15 36.95 14.25 1.24 * CT-Central Transfers

41

States’ Own Revenue Receipts to GSDP (2005-06)


Share of States’ Own Revenue Receipts (ORR) in the Total Revenue Receipts (2006-07)


Sl.No

.

Special Category States

ORR/GSDP (2005-06)

ORR/TRR(2006-07)

TGR of ORR (2001-06)

% Rank % Rank % Rank1 Andhra Pradesh 10.13 6 68.74 9 12.96 14 1.182 Bihar 5.12 16 19.69 17 11.83 15 1.483 Chhattisgarh 10.17 4 56.73 11 17.81 3 1.174 Goa 11.00 3 80.78 2 17.52 5 1.035 Gujarat 8.79 12 75.52 6 9.77 17 0.656 Haryana 10.04 7 85.90 1 16.53 6 1.277 Jharkhand 6.65 15 44.35 16 13.97 11 0.828 Karnataka 12.21 1 72.08 7 19.22 2 1.579 Kerala 8.86 11 70.50 8 12.97 13 1.1410 Madhya Pradesh 9.73 8 51.11 12 17.69 4 2.1311 Maharashtra 8.95 10 76.25 4 10.97 16 0.8912 Orissa 8.32 13 47.99 15 19.95 1 1.3513 Punjab 9.26 9 79.18 3 16.13 7 1.9214 Rajasthan 10.16 5 57.62 10 15.35 9 1.6915 Tamil Nadu 11.60 2 76.24 5 15.48 8 1.4016 Uttar Pradesh 7.79 14 48.73 14 15.03 10 1.5217 West Bengal 4.83 17 50.07 13 13.60 12 1.25

Total (1 to 17) 8.98 63.05 14.25 1.24

42

States’ Own Tax Revenue to GSDP (2005-06)


Share of States’ Own Tax Revenue (SOTR) in the States’ Total Revenue Receipts (2006-07)


Sl.No

Special Category States

SOTR/GSDP (2005-06)

SOTR/TRR(2006-07)

TGR of SOTR (2001-06)

% Rank % Rank % Buoyancy Rank1 Andhra Pradesh 8.14 7 54.08 8 13.55 1.24 132 Bihar 4.47 15 17.47 17 11.08 1.39 173 Chhattisgarh 7.80 10 44.05 12 19.08 1.26 24 Goa 8.38 4 61.95 6 18.09 1.06 45 Gujarat 7.25 12 59.56 7 14.60 0.97 126 Haryana 8.53 3 63.29 5 16.15 1.24 67 Jharkhand 4.38 17 31.85 16 15.21 0.89 98 Karnataka 10.91 1 63.85 4 18.37 1.50 39 Kerala 8.22 5 66.37 2 12.83 1.13 1510 Madhya Pradesh 7.84 9 40.76 13 16.95 2.04 511 Maharashtra 7.76 11 65.33 3 12.79 1.03 1612 Orissa 6.37 14 33.63 15 19.58 1.32 113 Punjab 8.19 6 49.33 9 15.51 1.84 814 Rajasthan 7.95 8 46.75 10 15.11 1.66 1115 Tamil Nadu 10.44 2 67.88 1 15.81 1.43 716 Uttar Pradesh 6.74 13 37.95 14 15.14 1.53 1017 West Bengal 4.40 16 45.32 11 13.54 1.25 14

Total (1 to 17) 7.64 51.55 14.92 1.30

43

Revenue Expenditure:

TGR of State’s Total Revenue Expenditure (2001-2007)


Share of Total Revenue Expenditure in the Total Expenditure (including Total Revenue Expenditure, Capital Outlay and Loans & Advances) (2006-07)


Sl. No.

Special Category StatesTRE/TE 2006-07 TGR of TRE 2001-07% Rank % Rank

1 Andhra Pradesh 79.31 8 10.54 10

2 Bihar 78.84 6 13.12 3

3 Chhattisgarh 74.78 1 11.64 6

4 Goa 75.39 2 11.63 7

5 Gujarat 78.05 3 5.51 17

6 Haryana 85.72 14 14.11 2

7 Jharkhand 82.88 10 14.47 1

8 Karnataka 78.42 4 11.93 5

9 Kerala 94.28 17 11.04 9

10 Madhya Pradesh 78.50 5 9.60 13

11 Maharashtra 82.99 11 9.68 12

12 Orissa 90.15 15 10.16 11

13 Punjab 84.18 13 8.52 16

14 Rajasthan 82.74 9 8.68 14

15 Tamil Nadu 83.22 12 12.05 4

16 Uttar Pradesh 78.93 7 11.24 8

17 West Bengal 91.10 16 8.55 15Total (1 to 17) 82.16 10.26

TGR of State’s Non-Plan Revenue Expenditure (2001-2006)

44


Share of Non Plan Revenue Expenditure in the Total Revenue Expenditure (2006-07)


Sl. No.

General Category States

NPRE/TRE 2006-07

TGR of NPRE (2001-06)

% Rank % Rank Buoyancy1 Andhra Pradesh 77.03 6 9.59 10 0.882 Bihar 80.25 7 9.47 8 1.193 Chhattisgarh 70.37 1 9.49 9 0.624 Goa 75.10 3 8.70 6 0.515 Gujarat 81.67 9 0.37 1 0.026 Haryana 84.35 13 9.93 14 0.767 Jharkhand 73.17 2 13.64 17 0.808 Karnataka 75.72 5 9.29 7 0.769 Kerala 88.81 16 11.01 16 0.97

10 Madhya Pradesh 75.62 4 9.86 13 1.1911 Maharashtra 86.40 15 7.86 4 0.6312 Orissa 82.71 11 9.61 11 0.6513 Punjab 94.74 17 9.70 12 1.1514 Rajasthan 84.34 12 7.57 3 0.8315 Tamil Nadu 80.44 8 7.97 5 0.7216 Uttar Pradesh 82.59 10 10.54 15 1.0717 West Bengal 85.93 14 7.40 2 0.68

Total (1 to 17) 82.06 8.42 0.73

45

Deficit Indicators:

Own Revenue Deficit(+)/ Surplus(-) to GSDP Ratio (2005-06)

Orissa 9.00 percent Rank among General Category States 16

Revenue Deficit(+)/ Surplus(-) to GSDP Ratio (2005-06)

Orissa -0.61 percent Rank among General Category States 5

Fiscal Deficit(+)/ Surplus(-) to GSDP Ratio (2005-06)

Orissa 0.35 percent Rank among General Category States 2

Sl. No.


ORD/GSDP2005-06

RD/GSDP2005-06

FD/GSDP2005-06

% Rank % Rank % Rank1 Andhra Pradesh 4.67 9 0.03 8 3.52 9

2 Bihar 17.16 17 -0.10 6 4.64 16

3 Chhattisgarh 4.19 7 -2.66 1 0.84 3

4 Goa 2.55 2 0.17 10 4.61 15

5 Gujarat 2.96 4 0.18 11 2.89 7

6 Haryana 1.04 1 -1.14 3 0.27 1

7 Jharkhand 6.84 11 0.04 9 8.90 17

8 Karnataka 3.24 6 -1.35 2 2.16 5

9 Kerala 6.48 10 2.63 16 3.51 8

10 Madhya Pradesh 7.94 13 -0.03 7 3.93 11

11 Maharashtra 2.96 5 0.89 14 4.08 13

12 Orissa 9.00 16 -0.61 5 0.35 2

13 Punjab 4.27 8 1.13 15 2.42 6

14 Rajasthan 7.15 12 0.53 13 4.15 14

15 Tamil Nadu 2.72 3 -0.87 4 1.01 4

16 Uttar Pradesh 8.87 15 0.45 12 3.60 10

17 West Bengal 8.35 14 3.13 17 4.06 12Total 5.48 0.40 3.21

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)


Outstanding Debt to GSDP ratio (2005-06)


Average Rate of Interest (ARI) on the Outstanding Debt (2006-07/2005-06)


Sl. No.


IP/TRR 2006-07 OD/GSDP 2005-06 ARI 2006-07% Rank % Rank % Rank

1 Andhra Pradesh 16.45 8 33.70 7 9.15 15

2 Bihar 14.80 5 58.35 17 7.35 1

3 Chhattisgarh 8.95 1 25.56 2 7.73 2

4 Goa 20.47 12 38.35 9 8.51 11

5 Gujarat 22.36 14 37.56 8 8.52 12

6 Haryana 13.12 3 25.40 1 8.38 10

7 Jharkhand 16.12 7 27.58 3 9.29 16

8 Karnataka 11.61 2 30.59 5 8.11 5

9 Kerala 23.29 16 40.20 10 8.76 13

10 Madhya Pradesh 15.68 6 42.25 11 8.20 7

11 Maharashtra 18.99 11 32.53 6 8.286 8

12 Orissa 17.68 10 48.98 15 8.289 9

13 Punjab 22.71 15 46.81 12 8.08 4

14 Rajasthan 21.72 13 53.46 16 8.12 6

15 Tamil Nadu 13.43 4 27.88 4 8.82 14

16 Uttar Pradesh 17.29 9 46.91 13 7.98 3

17 West Bengal 42.16 17 47.61 14 9.68 17Total 18.47 38.47 8.48

CHAPTER - V

47

STATE’S FORECAST

GSDP

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

GSDP7853

69115

110330

411673

412957

514382

815964

917721

019670

421834

1Growth Rate

10.0 16.1 13.3 13.0 11.0 11.0 11.0 11.0 11.0 11.0

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 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15

Own Revenue Receipts

6534 8653 9510 9407 10342 11026 12027 13127 14336 15665

Growth Rate 18.3 32.4 9.9 -1.1 9.9 6.6 9.1 9.1 9.2 9.3

Buoyancy 1.8 2.0 0.7 -0.1 0.9 0.6 0.8 0.8 0.8 0.8

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

Own Tax Revenue 5002 6065 6856 7272 8200 8760 9628 10584 11638 12799

Growth Rate 19.8 21.2 13.0 6.1 12.8 6.8 9.9 9.9 10.0 10.0

Buoyancy 2.0 1.3 1.0 0.5 1.2 0.6 0.9 0.9 0.9 0.9

TGR for the period 1999-2008 is 18.97 with Buoyancy of 1.51

Own Non-Tax Revenue 1532 2588 2654 2135 2142 2266 2399 2543 2698 2865

Growth Rate 13.9 68.9 2.5 -19.5 0.3 5.8 5.9 6.0 6.1 6.2

Buoyancy 1.4 4.3 0.2 -1.5 0.0 0.5 0.5 0.5 0.6 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 2009-10, 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 11-12 12-13 13-14 14-15Total Revenue Expenditure

13604 15772 17723 22707 35346 36885 41824 49255 55690 63191

Growth Rate 9.9 15.9 12.4 28.1 55.7 4.4 13.4 17.8 13.1 13.5TGR for the period 1999-2008 is 9.69Non-Plan Revenue Expenditure

11491 13045 13634 17339 28933 29681 33540 39733 44749 50619

Growth Rate 10.3 13.5 4.5 27.2 66.9 2.6 13.0 18.5 12.6 13.1TGR for the period 1999-2008 is 9.90Plan Revenue Expenditure 2113 2727 4089 5368 6413 7204 8284 9522 10941 12572Growth Rate 8.0 29.1 50.0 31.3 19.5 12.3 15.0 14.9 14.9 14.9TGR for the period 1999-2008 is 8.60

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 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15Interest Payments 3697 3188 3169 4312 4593 4937 5307 5705 6133 6593Growth Rate 11.0 -13.8 -0.6 36.1 6.5 7.5 7.5 7.5 7.5 7.5TGR for the period 1999-2008 is 9.48Pension 1339 1485 1801 2796 4612 3938 4447 5001 5601 6287Growth Rate 6.3 10.9 21.3 55.2 65.0 -14.6 12.9 12.5 12.0 12.2TGR for the period 1999-2008 is 11.19 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 1105 1723 3248 3348 3929 4385 4892 5460 6096 6809Growth Rate -12.3 55.9 88.5 3.1 17.4 11.6 11.6 11.6 11.7 11.7TGR for the period 1999-2008 is 6.59

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 Deficit7069 7119 8214 13299 25003 25858

29797 36128 41354 47526

Pre-Dev. Non-Plan Revenue Deficit 4957 4392 4125 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 1862 1862 1862 1878 1878 1878 2028Thermal-Coal Fired 420 420 420 420 420 420 420Total 2282 2282 2282 2298 2298 2298 2448

NET OWN GENERATION(MKWH):

Hydro 3114 5925 6839 4995 7149 7748 7044Thermal-Coal Fired 2327 2676 2833 2772 2973 2725 2924Total 5441 8601 9671 7767 10122 10473 9968

POWER PURCHASE(MKWH) 16082 19797 21593 20991 23490 26138 25383

Energy Available(MKWH) 21523 28399 31264 28758 33613 36612 35351

Energy Sold(MKWH) 19076 26059 28858 26127 30840 33449 32207 Source: Statement: 36

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

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-090%

10%20%30%40%50%60%70%80%90%

100%

Power Source Composition (MKWH)

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 2002-03 2003-04 2004-05 2005-06 2006-072007-08

RE2008-09

BE

Thermal 1.0542 0.9165 0.8648 0.9283 0.9068 0.9481 0.9775

Hydro 0.7061 0.3884 0.3461 0.4914 0.3622 0.3663 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.

Particulars 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

1 Revenue 4,291 5,510 5,902 6,237 6,936 7,591 7,4902 Expenditure 5,048 5,225 5,722 6,145 6,707 7,268 7,8772.1 Generation Cost 127 154 163 167 174 166 1892.2 Purchase of Power 3,080 3,155 3,370 4,104 4,162 5,063 5,3402.3 Repairs&Maintenance 81 98 100 95 146 201 2962.4 Employees Cost 458 513 645 574 719 703 7912.5 Adm. & General Expr. 173 210 192 201 238 161 1692.6 Depreciation 323 330 554 382 394 427 5652.7 Interest & Other Expr. 807 764 698 621 875 548 5273 Profit Before Tax -757 285 180 92 229 322 -3874 Profit After Tax -779 268 161 72 197 286 -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 Orissafrom 2000-01 to 2006-07

( In MU)

Consumption SectorYear

Tota

l co

nsum

ption

Dom

estic

Com

mer

cial

Indu

stria

l

Publ

ic

lighti

ng

Irrig

ation

&

Agric

ultu

re

Railw

ays

Publ

ic w

ater

w

orks

Bulk

sup

ply

& o

ther

s

2000-01 6090(100.00)

2173(35.68)

548(9.00)

2622(43.06)

41(0.67)

186(3.05)

201(3.30)

117(1.92

202(3.32)

2001-02 5769(100.00)

2258(39.14)

607(10.52)

2184(37.86)

38(0.66)

162(2.81)

213(3.69)

120(2.08)

187(3.24)

2002-03 6745(100.00)

2441(36.19)

468(6.94)

2971(44.05)

37(0.55)

139(2.06)

263(3.90)

117(1.73)

309(4.58)

2003-04 7208(100.00)

2491(34.56)

488(6.77)

3270(45.37)

39(0.54)

133(1.84)

302(4.19)

120(1.66)

366(5.07)

2004-05 7598(100.00)

2352(30.96)

482(6.34)

3742(49.25)

41(0.54)

147(1.93)

355(4.67)

126(1.66)

353(4.65)

2005-06 8144(100.00)

2483(30.49)

558(6.85)

3941(48.39)

55(0.68)

137(1.68)

384(4.72)

129(1.58)

457(5.61)

2006-079288

(100.00)2525

(27.19)640

(6.89)4967

(53.48)45

(0.48)131

(1.41)525

(5.65)134

(1.44)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

Villages Electrified

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

Sl. No. State

No. of Villages as per 2001

census

Villages Electrified as on

31-10-08

Percentage of Villages Electrified

1 Andhra Pradesh 26613 26613 100.02 Arunachal Pradesh 3863 2195 56.83 Assam 25124 19741 78.64 Bihar 39015 20620 52.95 Jharkhand 29354 9119 31.16 Goa 347 347 100.07 Gujarat 18066 18014 99.78 Haryana 6764 6764 100.09 Himachal Pradesh 17495 17183 98.2

10 Jammu & Kashmir 6417 6304 98.211 Karnataka 27481 27126 98.712 Kerala 1364 1364 100.013 Madhya Pradesh 52117 50218 96.414 Chhattisgarh 19744 18877 95.615 Maharashtra 41095 36296 88.316 Manipur 2315 1981 85.617 Meghalaya 5782 3428 59.318 Mizoram 707 570 80.619 Nagaland 1278 823 64.420 Orissa 47529 26535 55.821 Punjab 12278 12278 100.022 Rajasthan 39753 27163 68.323 Sikkim 450 425 94.424 Tamil Nadu 15400 15400 100.025 Tripura 858 491 57.226 Utter Pradesh 97942 86450 88.327 Uttaranchal 15761 15213 96.528 West Bengal 37945 36462 96.1

Total (States) 592857 488000 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:

(Rupees in crore)Particulars 2004-05 2005-06

(provisional)2006-07

(Provisional)Operating

Revenue 30.70 34.13 36.86

Expenditur

e

31.96 35.59 38.39

Surplus / deficit (-) (-) 1.26 1.46 (-)1.53

Non-Operating

Revenue 3.43 3.68 3.69

Expenditur

e

1.83 1.29 1.29

Surplus / deficit (-) 1.60 2.39 2.40

Total

Revenue 34.13 37.81 40.55

Expenditur

e

33.79 36.88 39.68

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

Government companies

Statutory corporations

Investment(Rs. Crore)

Working 23 4 9056

Non-working 31 0 141

Total 54 4 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).

Financial Results of each Undertaking in terms of Profit And Loss.(Rs. in crore)

Sl No

Statutory Corporation 2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

1 Orissa State Financial Corporation. 1.30 -4.68 -8.04 2.22 1.12 1.85

2Orissa State Warehousing Corporation. 1.16 0.33 5.36 5.70 5.94

3 IDCO 3.28 4.45 25.09 35.30 61.94 70.00 54.00

4Orissa State Road Transport Corpn.

0.55 0.65 0.34 0.76 0.87 2.67 1.27

Government Companies

5 GRIDCO -607.69 411.12 348.56 25.82 236.88 393.92 -239.13

6 Orissa Mining Corporation 17.60 121.23 328.40 211.74 442.47

7Orissa Agro Industries Corporation -2.41 -2.31 -0.42 -1.14 -0.95

8Orissa Construction Corporation

0.13 0.15 0.23 1.03 0.78 0.72

9 Orissa Forest Development Corporation

-22.60 -11.96 -23.22 -18.35 0.94 1.51

10 Industrial Dev. Corporation of Orissa

-1.87 -46.43 -2.77 0.72 5.00

11Orissa Small Industries Corporation. -3.10 -1.98 -2.84 -4.77 -2.16 2.25

12 IPICOL. -3.78 0.76 0.48 10.07 2.50

58

Sl No

Statutory Corporation 2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

13 Orissa Film Development Corporation

0.03 0.03 0.08 0.03 0.06 0.06 0.07

14 Orissa State Seeds Corporation 0.30 0.0029 0.003 0.05 0.69 3.38 2.41

15Orissa Pisciculture Dev. Corporation -0.24 -0.11 -0.09 -0.24 -0.16

16 Orissa Tourism Dev. Corporation

-0.09 0.16 0.40 0.52 1.18 1.98

17 Orissa State Cashew Dev. Corporation 1.04 1.54 1.70 0.94 1.32 1.71

18Orissa State Civil Supplies Corporation

19 Orissa State Police Housing & Welf. Corpn.

0.32 2.30 0.18 0.20 0.63

20Orissa Bridge & Construction Corpn. -0.96 -0.15 -0.74 -13.60 -14.12

21 Orissa Power Generation Corporation

198.64 135.11 143.39 147.85 156.78 147.85 104.04

22 Orissa Lift Irrigation Corporation -0.05 0.38 0.21 0.65 0.83

23 Orissa Rural Housing & Dev. Corporation -0.90 -0.55 -1.59 -1.94 -3.25

24 Orissa Hydro Power Corporation -41.80 8.37 59.05 -24.17 53.93 95.05 30.26

25 APICOL

26 Orissa State Beverages Corporation 0.38 0.63 1.80 1.25 12.87 2.59

27 Orissa Power Transmission Corporation Ltd. -24.95 -7.88 -31.03 -74.40

Aggregate Profit/Loss 0.38 0.63 1.8 -23.7 4.99 -28.44 -74.4

59

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

Sl. No

. Name Of The Corporation

AUDIT OF ACCOUNTS

COMPLETEDPERIOD OF ARREARS

NO. OF ACCOUNTS IN

ARREARStatutory Corporation

1 Orissa State Financial Corporation. 2006-07 No arrear 02 Orissa State Warehousing Corporation. 2005-06 2006-07 13 IDCO 2006-07 No arrear 04 Orissa State Road Transport Corpn. 2005-06 2006-07 1

Government Companies5 GRIDCO 2006-07 No arrear 06 Orissa Mining Corporation 2006-07 No arrear 0

7 Orissa Agro Industries Corporation 2002-032003-04 to 2006-

07 48 Orissa Construction Corporation 2005-06 2006-07 19 Orissa Forest Development Corporation 2005-06 2006-07 1

10 Industrial Dev. Corporation of Orissa 2006-07 No arrear 011 Orissa Small Industries Corporation. 2005-06 2006-07 112 IPICOL. 2006-07 No arrear 013 Orissa Film Development Corporation 2005-06 2006-07 1

14 Orissa State Seeds Corporation 2004-052005-06 to 2006-

07 2

15 Orissa Pisciculture Dev. Corporation 2000-012001-02 to 2006-

07 616 Orissa Tourism Dev. Corporation 2006-07 No arrear 017 Orissa State Cashew Dev. Corporation 2005-06 2006-07 1

18 Orissa State Civil Supplies Corporation 2004-052005-06 to 2006-

07 2

19 Orissa State Police Housing & Welf. Corpn. 2003-042004-05 to 2006-

07 3

20 Orissa Bridge & Construction Corpn. 2004-052005-06 to 2006-

07 221 Orissa Power Generation Corporation 2006-07 No arrear 022 Orissa Lift Irrigation Corporation 2005-06 2006-07 1

23 Orissa Rural Housing & Dev. Corporation 2002-032003-04 to 2006-

07 424 Orissa Hydro Power Corporation 2006-07 No arrear 025 APICOL 2006-07 No arrear 0

26 Orissa State Beverages Corporation 2004-052005-06 to 2006-

07 227 Orissa Power Transmission Corporation Ltd. 2005-06 2006-07 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 Co-operative Enterprises were privatized with Rs.241 crore earnings to the State exchequer as per detail given below:

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PRIVATIZATION / DISINVESTMENT ACHIEVED DURING 1999-TILL DATE.

No. Name of Enterprise Year of TransactionProceeds(Rs. crore)

1 IDCOL Cement Limited2003-04(Share transfer)

182.00

2IDCOL Piping &Engineering Works Ltd

2005-06(Asset sale)

4.70

3 Co-operative Sugar Mill, Nayagarh2004-05(Asset sale)

5.22

4 S N Corporation Ltd2004-05 & 2005-06(Asset sale)

8.50

5 IDCOL Rolling Mill Ltd2005-06(Share transfer)

5.33

6 Co-operative Sugar Mill, Baramba2005-06(Asset sale)

8.28

7 Hirakud Industrial Works Limited2006-07(Share transfer)

5.25

8 Orissa State Commercial Transport CorporationSale of 47 lots of movable assets

0.84

9 Aska, Baripada and Sonepur Spinning Mill2006-07(Asset sale)

15.65

10 Orichem Ltd2007-08(Share transfer)

5.34

11 Orissa Timber & Engineering Works Employee Buy OutTotal 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 & Co-operative 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 extensively available in the state which is nearly 17% of the total mineral reserve of India.

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Coal Reserves of India

(in Million Tonnes)State Proven

Andhra Pradesh 8791Arunachal Pradesh 31Assam 314Bihar 0Chhattisgarh 10182Jharkhand 36960Madhya Pradesh 7872Maharashtra 4856Meghalaya 118Nagaland 4Orissa 17712Sikkim 0Uttar Pradesh 766West Bengal 11454Total 99060

17.9% of India’s 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 2006-07. 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 Production(in lakh tone)

% increase over previous year

Value(Rs. In crore)

% increase over previous

year

2000-01 689.24 6.88 2776.15 6.572001-02 749.81 8.79 2910.47 4.842002-03 873.62 16.51 3694.17 26.932003-04 1080.00 23.62 3877.75 4.972004-05 1270.48 17.64 6130.93 58.562005-06 1396.78 9.94 6604.41 7.732006-07(P) 1614.45 15.58 7629.63 15.52

Source State Economic survey 2007-08

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.

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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

YearOrissa All India

Civil Criminal Total Civil Criminal Total2004 155281 702122 857403 6714408 16740768 23455176

2.31% 4.19% 3.66%2005 176063 783513 959576 7254145 18400106 25654251

2.43% 4.26% 3.74%2006 179417 829867 1009284 7368025 19196973 26564998

2.44% 4.32% 3.80%2007 181721 834805 1016526 6683742 18251916 24935658

2.72% 4.57% 4.08%

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 Orissa’s population in total population (3.58%). However the percentage of criminal case is higher than the percentage of Orissa’s 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

6-12 months 1-2 year 2-3 year 3-5 year Above 5

years Total

2004Orissa 2949 1763 1124 2977 403 193 35 9444

% to total 31.23 18.67 11.90 31.52 4.27 2.04 0.37 100

All states 84111 40682 37509 26431 10461 5292 1719 206205

% to total 40.79 19.73 18.19 12.82 5.07 2.57 0.83 100

All india 88007 42403 39649 28023 11272 5707 2069 217130

As % to total 40.53 19.53 18.26 12.91 5.19 2.63 0.95 100

2005Orissa 4550 1879 1587 1104 355 201 44 9720

% to total 46.81 19.33 16.33 11.36 3.65 2.07 0.45 100

All states 91236 48967 42287 25517 11023 5693 1805 226528

% to total 40.28 21.62 18.67 11.26 4.87 2.51 0.80 100All india 97903 50344 43580 26025 11369 5971 1884 237076As % to total 41.30 21.24 18.38 10.98 4.80 2.52 0.79 100

2006Orissa 4562 2253 1563 1253 380 203 33 10247

% to total 46.93 23.18 16.08 12.89 3.91 2.09 0.34 105All states 97900 50975 40622 25961 11034 5454 1490 233436

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% to total 41.94 21.84 17.40 11.12 4.73 2.34 0.64 100All india 103869 53068 42671 26982 11343 5742 1569 245244

As % to total 42.35 21.64 17.40 11.00 4.63 2.34 0.64 100

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 DisparitiesThere 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.

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High Literacy Rate & Low Sex RatioS.No. District Literacy Sex Ratio1 Khurda 79.59 9022 Jagatsinghpur 79.08 9633 Puri 77.96 9684 Cuttack 76.66 9385 Jajpur 71.44 9726 Balasore 70.56 9537 Nayagarh 70.52 938

Low Literacy Rate & High Sex RatioS.No. District Literacy Sex Ratio1 Malkangiri 30.53 9972 Koraput 35.72 9993 Rayagada 36.15 10284 Nawapara 42 10075 Kalahandi 45.94 10016 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 2003-04 2004-05 2005-06 2006-072007-08(as on

1.01.08)Outstanding 66.15 64.52 64.43 64.43 61.93Borrowing Added -- - -- - -Repayment made (Principal) 1.63 0.09 -- 2.50 34.31Balance Principal 64.52 64.43 64.43 61.93 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.

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H. Private initiatives in the State:

STATUS OF THE POSCO’S PROPOSED 12 MTPA

POSCO INDIA (P) LIMITED

1. Date of signing of MoU : 22.06.2005

2. Location : Paradeep, Jagatsinghpur

3. Capacity : 12.00 MTPA

4. Land (In Acres) : Required: 5525 Allotted: 516.74

5. Achievement (In MTPA) : NIL6. Investment (Rs. In Crore) : Proposed: 51,000 Made so far: 175.50

7. Employment (Potential) : 12000

8. Employment Generated : Direct: 61 Indirect: NIL

9. Tax Paid (Rs. In Crore) : State: NIL Central: NIL

10. Amount Spent for

Periphery Development : NIL

11. Land : Land acquisition under process. De-reservation proposal in respect of Forest land has been cleared by Hon’ble Supreme Court. State-I clearance obtained from MoEF.

12. Captive Mines : 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.

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

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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 Hon’ble court in WP(C) No 1775/2007 has set aside the State Government’s 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 Hon’ble Supreme Court has heard the matter on 08.08.2008 and passed order favorably allowing the forest diversion for the project. The order of Hon’ble 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.PattanaikMember, Central Empowered CommitteeGovt. of India Chairman

2. PCCF (Wild Life)Forest & Environment Department,Govt. of India Member Convenor

3. Shri B.K.SinghSenior Assistant Inspector General Of ForestMoEF, Government of India Member

4. Director (ST & SC)ST & SC Development DepartmentGovernment 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. Date of signing of MoU : 21.12.2006

2. Location : Patna Tahasil, Keonjhar

3. Capacity : 12.00 MTPA

4. Land (In Acres) : Required: 8000 Allotted: NIL5. Achievement (In MTPA) : NIL

6. Investment (Rs. In Crore) : Proposed: 40,000 Made so far: 60.00

7. Employment (Potential) : 5000

8. Employment Generated : Direct: 27 Indirect: 124

9. Tax Paid (Rs. In Crore) : State: NIL Central: NIL

10. Amount Spent forPeriphery Development : NIL

11. Land : Land acquisition is under process12. Captive Mines : The mineral concessions for captive purposes

will be considered after achievement of the criteria by the company as mentioned in the MoU.

I. Status of Public Private Partnership Projects in the State:

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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 one-time capital grant. The private party would invest on college 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.

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(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 non-KBK 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.

(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

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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;

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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-à-vis the one recommended by the Twelfth Finance Commission:

Criteria Weight (percent) Assigned by 12th FC

Suggestions for 13th FC

Income Distance 50 -Population 25 -Area 10 -Tax Effort 7.5Fiscal Discipline 7.5 20Population below poverty line - 50Proportion of SC & ST population - 10Inverse of infrastructure index - 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 6th

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 State’s 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 Commission’s 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).

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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 FC’s 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 State’s 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 Orissa’s 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 Amount sought

1 Upgradation 12449.352 State specific needs 3136.423 Ecology and environment 2907.094 Maintenance Grants 40572.695 Equalisation grants for Health and Education 1681.565 Local Bodies 13820.546 Disaster mitigation 7431.64

Total 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:

Sr. No.

Name of DistrictNo. of Gram

Panchayats

No. of Panchayats

Samitis

No. of Villages (2001)

Rural Population (2001/Nos.)

District-wise % Distribution of

Rural Population

1 ANUGUL 209 8 1635 981587 3.142 BALANGIR 285 14 1761 1182871 3.783 BALESHWAR 289 12 2586 1804140 5.774 BARGARH 248 12 1177 1242795 3.975 BHADRAK 193 7 1224 1192678 3.816 BOUDH 63 3 1101 355347 1.147 CUTTACK 341 14 1763 1699964 5.438 DEOGARH 60 3 697 254012 0.819 DHENKANAL 199 8 1060 973964 3.1110 GAJAPATI 129 7 1460 465949 1.4911 GANJAM 475 22 2762 2604276 8.3212 JAGATSINGHAPUR 195 8 1318 953180 3.0513 JAJAPUR 280 10 1560 1551361 4.9614 JHARSUGUDA 78 5 353 323831 1.0415 KALAHANDI 273 13 2068 1235275 3.9516 KANDHAMAL 153 12 2336 604107 1.9317 KENDRAPARA 230 9 1389 1227868 3.9218 KENDUJHAR 286 13 2067 1348967 4.3119 KHORDHA 168 10 1355 1071689 3.4320 KORAPUT 226 14 1915 982188 3.1421 MALKANGIRI 108 7 878 469582 1.50

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Sr. No.

Name of DistrictNo. of Gram

Panchayats

No. of Panchayats

Samitis

No. of Villages (2001)

Rural Population (2001/Nos.)

District-wise % Distribution of

Rural Population

22 MAYURBHANJ 382 26 3718 2067756 6.6123 NABARANGPUR 169 10 880 966496 3.0924 NAYAGARH 179 8 1511 827450 2.6425 NUAPADA 109 5 643 500652 1.6026 PURI 230 11 1584 1298654 4.1527 RAYAGADA 171 11 2445 715702 2.2928 SAMBALPUR 148 9 1247 681835 2.1829 SONEPUR 96 6 808 501767 1.6030 SUNDARGARH 262 17 1688 1201479 3.84

Total 6234 314 46989 31287422 100.00[Source: RGI, Ministry of Panchayati Raj]

2. Devolution of Powers

The State Government devolved 21 subjects out of 29 enlisted in the 11th 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)

Amount(Rs. in thousands)

1 2 3 4 5 61 Agriculture ZP/ PS/ GP 25.10.2005 - Funds have not been

transferred2 Land improvement, ZP/ PS/ GP 25.10.2005 -3 Minor Irrigation,

water management and watershed development

ZP/ PS/ GP 25.10.2005 -

4 Animal Husbandry, diarying and poultry

ZP/ PS/ GP 25.10.2005 -

5 Fisheries ZP/ PS/ GP 25.10.2005 -

6 Minor Forest Produce

ZP/ PS/ GP 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-1734-compensation & assignment under award of 2nd SFC-29006-compensation to GPs-719-Minor Forest Produce(NP)

7 Rural Housing ZP/ PS/ GP 25.10.2005 17-2505-Rural Employment-State Plan-District Sector-60-Other Programmes-102-IAY

2000-01- 1186538 2001-02- 666890 2002-03- 1011081 2003-04- 1334555 2004-05- 2262240

8 Drinking Water/ Sanitation

ZP/ PS/ GP 25.10.2005 Funds are transferred from 12th Finance Commission grants

9 Roads, Culverts, Bridges, Ferries, Water Ways

ZP/ PS/ GP 25.10.2005

10 Non-conventional energy sources

ZP/ PS/ GP 25.10.2005

11 Poverty alleviation programmes

ZP/ PS/ GP 25.10.2005 2000-01- 1186538 2001-02- 666890 2002-03- 1011081 2003-04- 1334555 2004-05- 2262240

12 Education including primary & secondary education

ZP/ PS/ GP 25.10.2005 Funds are being placed with PRIs directly

13 Adult & Non-formal education


14 Markets & Fairs ZP/ PS/ GP 25.10.200515 Health & Sanitation,

Hospital, Primary Health Centre and dispensaries

ZP/ PS/ GP 25.10.2005 Funds have not been transferred

16 Family welfare ZP/ PS/ GP 25.10.2005 Funds have not been transferred

17 Women & Child Development


18 Social Welfare ZP/ PS/ GP 25.10.2005 Funds are being placed with PRIs directly

19 Social Welfare of weaker sections and in particular of SC & ST

ZP/ PS/ GP 25.10.2005

20 Public Distribution System

ZP/ PS/ GP 25.10.2005

21 Maintenance of community assets

ZP/ PS/ GP 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 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Devolution 96.21 102.23 97.4 98.27 121.14 149.44 152.53

Grant-in-Aid 57.4 49.52 35.55 12.44 37.91 52.57 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 2007-08ReceiptsOwn Tax 0 0 0 0 0 0Own Non-Tax (incl. user charges) 0 0 0 0 0 0Total own Revenue 0 0 0 0 0 0Assignment + Devolution 3.96 4.44 3.67 6.83 7.2 9.1Grants-in-Aid 2.9 3.26 2.96 1.50 24.72 25.97Transfers from Central Govt. 54.81 49.49 52.23 64.65 20.12 107.98Transfer from TFC/EFC 0.66 0.45 0.24 0.18 0.16 0.18Others 10.73 26.63 23.31 23.82 19.07 5Total Revenue Receipts 73.06 84.27 82.41 96.98 71.27 148.23 ExpenditureRevenue Expenditure 7.79 8.14 12.88 8.71 13.26 14.99Capital Expenditure 65.27 76.13 69.53 88.27 58.01 133.24Total Expenditure 73.06 84.27 82.41 96.98 71.27 148.23Per Capita Receipts (In.Rs.)Own Tax 0.00 0.00 0.00 0.00 0.00 0.00Own Non-Tax (incl. user charges) 0.00 0.00 0.00 0.00 0.00 0.00Total own Revenue 0.00 0.00 0.00 0.00 0.00 0.00Assignment + Devolution 1.25 1.38 1.13 2.09 2.19 2.75Grants-in-Aid 0.91 1.02 0.92 0.46 7.52 7.84Transfers from Central Govt. 17.25 15.43 16.15 19.82 6.12 32.59Transfer from TFC/EFC 0.21 0.14 0.07 0.06 0.05 0.05Others 3.38 8.30 7.21 7.30 5.80 1.51Total Revenue Receipts 22.99 26.28 25.48 29.73 21.68 44.74Per Capita Expenditure (In Rs.)Revenue Expenditure 2.45 2.54 3.98 2.67 4.03 4.52Capital Expenditure 20.54 23.74 21.50 27.06 17.64 40.22Total Expenditure 22.99 26.28 25.48 29.73 21.68 44.74Projected Population 3.178 3.2068 3.2347 3.2615 3.2877 3.3129

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

Own Tax 0 0 0 0 0 0Own Non-Tax (incl. user charges) 0 0 0 0 0 0Total own Revenue 0.00 0.00 0.00 0.00 0.00 0.00

Assignment + Devolution 73.83 78.03 75.72 69.68 86.41 109.27Grants-in-Aid 3.33 5.46 6.65 2.78 36.98 63.15Transfers from Central Govt. 155.13 168.73 204.44 229.62 993.12 992.85Transfer from TFC/EFC 1.32 1.53 1.75 1.85 1.83 1.89Others 120.42 139.50 110.42 96.52 111.00 107.49Total Revenue Receipts 354.03 393.25 398.98 400.45 1229.34 1274.65 ExpenditureRevenue Expenditure 70.15 76.00 74.43 68.93 85.21 128.11Capital Expenditure 283.88 317.24 323.56 331.52 1144.13 1146.54Total Expenditure 354.03 393.24 397.99 400.45 1229.34 1274.65Per Capita Receipts (In.Rs.)Own Tax 0.00 0.00 0.00 0.00 0.00 0.00Own Non-Tax (incl. user charges) 0.00 0.00 0.00 0.00 0.00 0.00Total own Revenue 0.00 0.00 0.00 0.00 0.00 0.00Assignment + Devolution 23.23 24.33 23.41 21.36 26.28 32.98Grants-in-Aid 1.05 1.70 2.06 0.85 11.25 19.06Transfers from Central Govt. 48.81 52.62 63.20 70.40 302.07 299.69Transfer from TFC/EFC 0.42 0.48 0.54 0.57 0.56 0.57Others 37.89 43.50 34.14 29.59 33.76 32.45Total Revenue Receipts 111.40 122.63 123.34 122.78 373.92 384.75Per Capita Expenditure (In Rs.)Revenue Expenditure 22.07 23.70 23.01 21.13 25.92 38.67Capital Expenditure 89.33 98.93 100.03 101.65 348.00 346.08Total Expenditure 111.40 122.63 123.04 122.78 373.92 384.75Projected Population 3.178 3.2068 3.2347 3.2615 3.2877 3.3129


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Table 6.3 Revenue & Expenditure of Village Panchayats

Rs in Crore)

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

Own Tax 1.28 1.30 1.30 1.30 1.37 1.41Own Non-Tax (incl. user charges) 7.84 8.23 8.39 8.55 8.75 9.02Total own Revenue 9.12 9.53 9.69 9.85 10.12 10.43



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Table 6.4: Revenue & Expenditure of Panchayat Raj Institutions (All Tiers)

Rs in Crore)

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

Own Tax 1.28 1.30 1.30 1.30 1.37 1.41Own Non-Tax (incl. user charges) 7.84 8.23 8.39 8.55 8.75 9.02Total own Revenue 9.12 9.53 9.69 9.85 10.12 10.43



85

Table 6.5: Consolidated position of Receipt and Expenditure of the PRIs

(Rs. In Crores)Item 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Total Revenue 838.35 923.97 911.79 1021.02 1778.43 1802.50

Revenue Expenditure 126.46 129.45 118.92 112.53 140.80 190.75Capital Expenditure 711.88 794.52 791.87 908.49 1637.63 1611.75Cash

Surplus(+)/Deficit(-) 0.01 0.00 1.00 0.00 0.00 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

86

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 GP’s 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 State’s 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)

Year Collection of from assigned taxes

Amount actually

transfer

Devolution actual transfer

Grants-in-Aid actual transfer

2002-03 939.21 105.00 0 23.842003-04 1131.57 114.82 4.23 25.612004-05 1154.79 119.51 0.29 16.362005-06 1390.02 129.26 16.10 18.122006-07 1722.00 154.40 4.90 40.832007-08 1808.10 186.98 38.15 39.842008-09 1742.70 224.38 3.15 39.85

Source: As provided by the State Government

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5. Financial Performance

Table 51: Receipts and Expenditure of Municipal Corporation

(Rs in Crore)

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

Own Tax 2.59 3.87 4.74 7.47 8.50 9.29

Own Non-Tax (incl. user charges) 1.01 1.01 1.32 1.91 2.14 2.65Total own Revenue 3.60 4.88 6.06 9.38 10.64 11.94

Assignment + Devolution 48.00 55.05 53.58 67.36 61.55 91.76

Grants-in-Aid 9.82 7.74 2.91 3.94 4.66 4.56Transfers from Central Govt. 2.39 2.87 3.06 0.47 1.34 121.34Transfer from TFC/EFC 1.20 1.27 1.10 5.46 10.08 10.08Others 0.11 1.31 0.05 0.18 35.68 41.82Total Revenue Receipts 65.12 73.12 66.76 86.79 123.95 281.50 ExpenditureRevenue Expenditure 31.54 30.04 46.98 49.00 69.07 77.29Capital Expenditure 33.58 43.08 19.78 37.79 54.88 204.21Total Expenditure 65.12 73.12 66.76 86.79 123.95 281.50Per Capita Receipts (In.Rs.)Own Tax 4.53 6.61 7.92 12.22 13.61 14.57Own Non-Tax (incl. user charges) 1.76 1.73 2.21 3.12 3.43 4.16Total own Revenue 6.29 8.34 10.13 15.34 17.04 18.73Assignment + Devolution 83.87 94.05 89.57 110.19 98.57 143.91Grants-in-Aid 17.16 13.22 4.86 6.45 7.46 7.15Transfers from Central Govt. 4.18 4.90 5.12 0.77 2.15 190.31Transfer from TFC/EFC 2.10 2.17 1.84 8.93 16.14 15.81Others 0.19 2.24 0.08 0.29 57.14 65.59Total Revenue Receipts 113.59 122.69 111.52 141.68 141.37 375.91Per Capita Expenditure (In Rs.)Revenue Expenditure 55.11 51.32 78.54 80.16 110.62 121.22Capital Expenditure 58.67 73.61 33.07 61.82 87.89 320.28Total Expenditure 113.79 124.93 111.60 141.98 198.51 441.50Projected Population 0.5723 0.5853 0.5982 0.6113 0.6244 0.6376


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Table 5.2: Receipts and Expenditure of Municipalities

(Rs in Crore)Item 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Receipts

Own Tax 3.85 3.21 3.95 4.59 6.36 6.51Own Non-Tax (incl. user charges) 1.39 1.79 3.44 3.16 2.02 2.98Total own Revenue 5.24 5 7.39 7.75 8.38 9.49Assignment + Devolution 41.97 46.90 47.20 33.97 60.07 81.28Grants-in-Aid 15.88 13.46 4.87 10.68 19.20 18.01Transfers from Central Govt. 2.45 2.97 2.72 8.02 14.23 37.70Transfer from TFC/EFC 2.69 2.88 3.30 10.08 18.78 19.02Others 0.46 1.14 0.45 2.69 2.25 3.42Total Revenue Receipts 68.69 72.35 65.93 73.19 122.91 168.92 ExpenditureRevenue Expenditure 54.47 55.19 44.96 52.40 87.64 108.78Capital Expenditure 14.22 17.16 20.97 20.79 35.27 60.14Total Expenditure 68.69 72.35 65.93 73.19 122.91 168.92Per Capita Receipts (In.Rs.)Own Tax 6.73 5.48 6.60 7.51 10.19 10.21Own Non-Tax (incl. user charges) 2.43 3.06 5.75 5.17 3.24 4.67Total own Revenue 9.16 8.54 12.35 12.68 13.42 14.88Assignment + Devolution 73.34 80.13 78.90 55.57 96.20 127.48Grants-in-Aid 27.75 23.00 8.14 17.47 30.75 28.25Transfers from Central Govt. 4.28 5.07 4.55 13.12 22.79 59.13Transfer from TFC/EFC 4.70 4.92 5.52 16.49 30.08 29.83Others 0.80 1.95 0.75 4.40 3.60 5.36Total Revenue Receipts 119.22 121.66 109.46 115.33 193.24 259.57Per Capita Expenditure (In Rs.)Revenue Expenditure 95.18 94.29 75.16 85.72 140.36 170.61Capital Expenditure 24.84 29.32 35.06 34.01 56.49 94.32Total Expenditure 120.02 123.61 110.21 119.73 196.84 264.93Projected Population 0.5723 0.5853 0.5982 0.6113 0.6244 0.6376


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Table 5.3: Receipts and Expenditure of Notified Area Councils

(Rs in Crore)Item 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Receipts

Own Tax 1.16 1.25 1.38 1.33 1.15 1.89

Own Non-Tax (incl. user charges) 0.81 0.89 0.29 1.08 1.70 1.26Total own Revenue 1.97 2.14 1.67 2.41 2.85 3.15Assignment + Devolution 15.03 17.10 19.01 44.04 37.67 52.09Grants-in-Aid 10.41 9.39 12.81 9.20 18.37 18.79Transfers from Central Govt. 1.71 1.79 2.36 5.05 4.09 8.69Transfer from TFC/EFC 4.12 3.94 2.54 5.31 12.70 12.95Others 0.43 1.31 1.52 2.83 1.50 3.38Total Revenue Receipts 33.67 35.67 39.91 68.84 77.18 99.05 ExpenditureRevenue Expenditure 29.70 34.28 30.49 49.49 58.88 74.03Capital Expenditure 3.97 1.39 9.42 19.35 18.30 25.02Total Expenditure 33.67 35.67 39.91 68.84 77.18 99.05Per Capita Receipts (In.Rs.)Own Tax 2.03 2.14 2.31 2.18 1.84 2.96Own Non-Tax (incl. user charges) 1.42 1.52 0.48 1.77 2.72 1.98Total own Revenue 3.44 3.66 2.79 3.94 4.56 4.94Assignment + Devolution 26.26 29.22 31.78 72.04 60.33 81.70Grants-in-Aid 18.19 16.04 21.41 15.05 29.42 29.47Transfers from Central Govt. 2.99 3.06 3.95 8.26 6.55 13.63Transfer from TFC/EFC 7.20 6.73 4.25 8.69 20.34 20.31Others 0.75 2.24 2.54 4.63 2.40 5.30Total Revenue Receipts 58.83 60.94 66.72 112.61 123.61 155.35Per Capita Expenditure (In Rs.)Revenue Expenditure 51.90 58.57 50.97 80.96 94.30 116.11Capital Expenditure 6.93 2.37 15.75 31.66 29.31 39.24Total Expenditure 58.83 60.94 66.72 112.61 123.61 155.35Projected Population 0.5723 0.5853 0.5982 0.6113 0.6244 0.6376


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Table 5.4: Receipts and Expenditure of ULBs (All tiers)

(Rs in Crore)Item 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

A. RevenuesOwn Tax 7.60 8.33 10.07 13.39 16.01 17.69Own Non-Tax (incl. user charges) 3.21 3.69 5.05 6.15 5.86 6.89Total own Revenue 10.81 12.02 15.12 19.54 21.87 24.58Assignment + Devolution 105.00 119.05 119.79 145.37 159.29 225.13Grants-in-Aid 36.11 30.59 20.59 23.82 42.23 41.36Transfers from Central Govt. 6.55 7.63 8.14 13.54 19.66 167.73Transfer from TFC/EFC 8.01 8.09 6.94 20.85 41.56 42.05Others 1.00 3.76 2.02 5.70 39.43 48.62Total Revenue 167.48 181.14 172.60 228.82 324.04 549.47B. ExpenditureRevenue Expenditure 115.72 119.51 122.43 150.89 215.59 260.10Capital Expenditure 51.76 61.63 50.17 77.93 108.45 289.37Total Expenditure 167.48 181.14 172.60 228.82 324.04 549.47Per Capita Receipts (In.Rs.)Own Tax 13.28 14.23 16.83 21.90 25.64 27.74Own Non-Tax (incl. user charges) 5.61 6.30 8.44 10.06 9.39 10.81Total own Revenue 18.89 20.54 25.28 31.96 35.03 38.55Assignment + Devolution 183.47 203.40 200.25 237.80 255.11 353.09Grants-in-Aid 63.10 52.26 34.42 38.97 67.63 64.87Transfers from Central Govt. 11.45 13.04 13.61 22.15 31.49 263.06Transfer from TFC/EFC 14.00 13.82 11.60 34.11 66.56 65.95Others 1.75 6.42 3.38 9.32 63.15 76.25Total Revenue 291.65 305.30 287.70 369.62 458.22 790.82Per Capita Expenditure (In Rs.)Revenue Expenditure 202.20 204.18 204.66 246.83 345.27 407.93Capital Expenditure 90.44 105.30 83.87 127.49 173.69 453.84Total Expenditure 292.64 309.48 288.53 374.32 518.96 861.78Projection Population 0.5723 0.5853 0.5982 0.6113 0.6244 0.6376


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Table 5.5: Consolidated position of Receipt and Expenditure of the ULBs

(Rs. In Crores)Item 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Total Revenue 167.48 181.14 172.60 228.82 324.04 549.47

Revenue Expenditure 115.72 119.51 122.43 150.89 215.59 260.10

Capital Expenditure 51.76 61.63 50.17 77.93 108.45 289.37

Cash Surplus(+)/Deficit(-)

0.00 0.00 0.00 0.00 0.00 0.00

6. Election

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 software’s 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 12th 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.)

ii) 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)

iii) Grants-in-aid–10% 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.)

iv) 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.

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11th FC grants to Local Bodies

(Rs. in Crore)

Year 2000-01 2001-02 2002-03 2003-04 2004-05 Total

Recommended 77.11 77.11 77.11 77.11 77.11 385.55

Actually drawn 38.55 115.66 38.55 46.55 146.23 385.54

12th FC grants to Local Bodies

(Rs. in Crore)

Year 2005-06 2006-07 2007-08 Total

Recommended 181.4 181.4 181.4 544.2

Actually drawn 181.4 171.0 160.6 513.0

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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 AG’s 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 AG’s 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)Investment as on

31.03.2006 31.03.2007 31.03.2008Investment in Treasury Bills

2728.17 4582.79 5824.62

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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