Odisha emerges as India’s top-performing state in fiscal management, driven by effective public spending, robust capital investment, and disciplined deficit control
OdishaPlus Bureau
An in-depth review of the state budgets for 2024-25 highlights notable trends in financial management among India’s 17 general category states. By utilizing the newly created ‘Index of Budgetary Evaluation (IBE)’, states are ranked based on their budget performance through various fiscal metrics. Odisha stands out as the leading state with an IBE score of 80.88, demonstrating excellent fiscal management.
The IBE is based on two key elements: the improvement index and the deprivation index. The improvement index focuses on positive factors such as revenue efficiency, quality of expenditure, capital investment, and overall budget size. In contrast, the deprivation index addresses more difficult aspects like revenue deficits, fiscal deficits, total debt, and obligations for interest payments.
Odisha’s achievements are linked to effective public spending, strong capital investment, low deficit levels, minimal debt, and reduced interest payments. Jharkhand came in second with a score of 75.71, mainly due to its low fiscal deficit and large budget. Uttar Pradesh followed in third place with 66.88 points, noted for its significant capital investment and extensive budget.
Conversely, some historically strong economic states are showing worrying signs. Tamil Nadu, Kerala, Punjab, and West Bengal had the lowest IBE scores among the states analyzed, highlighting areas that need fiscal improvement. This analysis is based on information from state budget documents and the Reserve Bank of India.
Generating revenue efficiently, ensuring quality public spending, and creating assets through capital investments are crucial for any government. Effective debt management and the ability to meet interest payments sustainably are essential. For Odisha, as this is the new government’s inaugural budget, the high IBE score indicates a positive beginning. Upholding this fiscal discipline could lead to greater growth and job opportunities in the state.
The analysis points out the differences in fiscal capabilities among states and emphasizes the ongoing necessity for equitable resource allocation from the central government to promote federal unity and minimize economic disparities.
This assessment is a useful resource for both policymakers and the public to grasp their state’s financial condition and make comparisons with other states, which could result in more informed policy choices and improved financial management strategies.
