Odisha has been ranked the fiscally healthiest state in India by Niti Aayog, reflecting significant improvements in financial management
Prof Satya Narayan Misra
Niti Aayog, the central government think tank, has pulled the rabbit out of the hat by ranking Odisha as fiscally healthiest among 18 states based on a Fiscal Health Index (FHI) developed by the think tank. FHI is based on five sub indices: the quality of expenditure, revenue mobilization, fiscal prudence, debt index, and debt sustainability for the year 2022-23, using data from the CAG. It not only tops in the overall score of 67.8 but in almost all the sub indices. In particular, its score of 99 in the Debt Index (which looks at outstanding liabilities as % of GSDP) is particularly edifying.
In contrast, states like Kerala and Tamil Nadu which have a far better record than Odisha in terms of % the multi dimensionally poor people, have a poor record in terms of debt index (23.1 & 36 respectively). They score poorly in terms of overall fiscal health, with a score of 25.4 and 29.2 respectively. Debt sustainability is another important variable that looks at the growth rate of interest payments against the growth rate achieved in GSDP. Here also, Odisha scored 64 against 11.3, 11.1, and 6.7 scored by states like Kerala, Tamil Nadu, and Karnataka.
Odisha’s Success
The stunning success of Odisha in turning around major financial indicators is a testimony to the long years of fiscal prudence combined with development programs unleashed by Mr Naveen Patnaik, the longest-serving CM of Odisha. In the years 1999-2000, it had the unenviable record of -8% as fiscal deficit, and -5.3% as Revenue deficit. Its Capital allocation to GSDP was only 1.67% and Tax/GSDP a measly 3.56%. By 2005-06, not only the growth of GSPD was 6%, but the fiscal deficit had come down to -1.76%, and its Tax/GSDP had gone up to 5.9%. Odisha was one of the rarest states that achieve the FRBM target of 3%, much before its deadline of 2008-2009.
In fact, by 2017-18, Odisha had achieved a revenue surplus of 3%. Its capital outlay/ GSPD had increased to 4.7%. While the indicators took a dip during the pandemic, they have bounced back to healthy numbers in 2023-2024, with a fiscal deficit of -3%, positive RD of 2.7%, capital outlay/, GSDP of 5.5%, and 6.4% Tax/GSDP. The Government of Odisha has also pioneered many development assistance programs like the Kalia Scheme for 6 million small and marginal farmers, spending around 2000 cr and about 2000 cr for fostering entrepreneurial ability in about 6 million Women SHGs under the aegis of Mission Shakti. The deadly cocktail of fiscal prudence (FHI) and inclusive programs for the poor, farmers, and women have been a remarkable template of Odisha.
However, these robust data on the fiscal health of Odisha do camouflage its unedifying record in many development parameters like maternal mortality, sanitation, and availability of clean cooking fuel. The Niti Aayog also releases periodic data on the performance of different states on the Multidimensional Poverty Index (MPI) which looks at three variables, education, health, and living standard, instead of looking at poverty from the prism of calorie intake only. As per the latest report, nearly 24.8 cr Indians seem to have come out of the quagmire of MDPI, with a reduction in poverty headcount ratio from 29.1% in 2013-14 to around 11.2% by 2022-23. While Kerala scores poorly in terms of FHI, it ranks the highest in terms of MDPI. Its record in terms of Child Mortality is 2 per 1000 and 33 in Maternal Mortality per lakh. Odisha, on the other hand, has a high level of child mortality (15.7 per 1000) and MMR of 119 per lakh.
Besides, in terms of living standards, 65.9% of women are deprived of clean cooking fuel, 40% of sanitation, and 40.7% of housing as against 28%, 1.2%, and 10.7% respectively in Kerala. The NFHS V survey also brings out how approximately 31% of children under 5 years old in Odisha suffer from stunting, which happens due to chronic malnutrition and poor sanitation. In terms of percentage of the population who are multi-dimensionally poor, Odisha has a higher figure of 15.7% (around 7 million wallowing in real poverty) compared to All India’s average of 11% and only 0.55% in the state of Kerala.
False Hype
Aron Levenstein, Professor of Statistics had wittily observed: Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital. In the context of Odisha the hype of its being the fiscally healthiest state as per FHI sadly does not sit easily with its distressing record in various development parameters like anemia amongst women (15-49 years) which has gone up from 51% in 2015-2016 to 64.3% during 2019-2021 (NFHS V), stunting among children, lack of access to clean cooking fuel and lack of proper housing.
The Niti Aayog which releases progress reports made by states against various SDG targets, and the present FHI report must evolve a composite index that takes into account growth indicators, development parameters, and fiscal discipline together, instead of looking at these three verticals in silos, giving a misleading picture.
When Prof Mahbub ul Haq and Prof Amartya Sen collaborated to create the Human Development Index in 1990, they tried to come out of the trap of evaluating a country in terms of its per capita GDP and look at human development parameters like Life Expectancy and Mean Years of Schooling as a composite troika. The 17 SDG goals to be achieved by 2030 look at the interconnected objectives of eliminating poverty and hunger with good health, quality education, and reduced inequality, while ensuring life on land, and below water is sustainable by strengthening global partnerships.
The Odisha government instead of gloating over its fiscal health must look at innards of underdevelopment that go beyond its false hype of Odisha Asmita of promoting language, culture, and identity. It also needs to come out of the freebies culture of wooing 10 million women voters through the Subhadra Scheme by spending nearly 11000 cr per year. This will neither promote entrepreneurship among women nor reduce their proneness to anemia.
(The writer is a Professor, Emeritus, KiiT University, Bhubaneswar. Views expressed are personal.)
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