Odisha’s economic growth, fiscal health, and the crucial need for efficient supply chain management for future progress
Satya Narayan Misra
While releasing a book on his achievements in Odisha, Naveen Patnaik, the former CM of Odisha, told Prabhu Chawla, the journalist, that it’s poverty reduction through high growth. It was Barro & Sala O’ Martin who, in their seminal book ’Economic Growth’ had brought out how high growth has significantly brought down global poverty from 20% in 1970 to 7.5% in 2020.
In the case of Odisha, a consistent high growth rate of 7% per year for nearly two decades has brought people living below the poverty line down from 63.8% in 2005-06 to 11% by 2022-23. In this backdrop, the Fiscal Health Index Report released by the Niti Ayog in January 2025, placing Odisha as the fiscally Healthiest State among 18 states, is an edifying achievement.
Fiscal Health Index (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. In particular, its score of 99 in the Debt Index is remarkable. In contrast, states like Kerala and Tamil Nadu score poorly in terms of overall fiscal health, with scores of 25.4 and 29.2, respectively.
The stunning success of Odisha in turning around major financial indicators is a testimony to the long years of fiscal prudence. 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, 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 achieved the FRBM target of 3%, much before its deadline of 2008-2009. The Naveen Government has also pioneered many development assistance programs like the Kalia Scheme for 6 million small and marginal farmers and for fostering entrepreneurial ability in about 6 million Women SHGs under the aegis of Mission Shakti.
The new government under Mr Majhi has the disadvantage of living up to the legacy of Naveen Babu and the advantage of complete support from PM Modi at the Centre. It is treading a cautious path of continuing with the welfare packages of Naveen, while trying to cash in on the vote bank of poor women by unleashing the Subhadra Scheme. The Scheme provides financial assistance of Rs 50000 over a period of five years for women aged 21-60, with a family income of below Rs 2.5 lakh. Nearly 1 crore women are going to benefit from this marquee scheme.
The Vision Document plans to make a sectoral shift from agriculture to manufacturing, which are value-adding in nature by liberally using modern technology like AI, morphing from Rural Odisha to Urban Odisha, with a substantial step up in the growth of infrastructure. It is indeed a melding of Prof Nicholas Kaldor’s theory of economic growth, which put manufacturing at the centre stage of public policy, with Prof Arthur Lewis’s dual sector model, where he suggested how the high volume of disguisedly employed workers in the agriculture sector with subsistence wage could be moved to the modern, high-paying industrial sector.
These models have been successfully applied in countries like South Korea and China, making them global manufacturing hubs, generating enormous employment, and adding value.
By 2036, when Odisha celebrates a hundred years as an independent state, the transformation of its economic and social landscape is expected to be remarkable. The state’s Gross Domestic Product (GDP), currently around USD 100 billion in 2025, is projected to quintuple to nearly USD 500 billion, reflecting rapid industrialisation, diversification, and sustained investment in infrastructure and services. Per capita income is anticipated to rise from the present ₹1.8 lakh to ₹9.6 lakh, signalling a significant improvement in individual prosperity and living standards.
Urbanisation, which today stands at a modest 17 percent, is likely to expand to 40 percent by 2036, driven by new townships, industrial corridors, and the steady migration of the workforce from agriculture to manufacturing and services. On the human development front, Odisha’s maternal mortality ratio—currently at 119 per lakh live births—is expected to decline to around 60, indicating improved healthcare access and outcomes for women.
Similarly, child malnutrition, which affects nearly 29 percent of children today, is projected to drop to just 12 percent, reflecting the success of targeted nutrition, education, and welfare programs.
Together, these indicators portray an Odisha that is not only more prosperous and urbanized but also healthier, more equitable, and better prepared to embrace its centenary as a truly modern state.
For such a massive turnaround, a humungous investment of $ 1700 B is needed by 2047, which is the end point of the vision. The private sector will be a big contributor to this, at about 70%. Manufacturing, which is the flagship of this vision, will account for $ 650 B, of which 12% will be contributed by the government. Trade and hotels are a big part of this vision, given Odisha’s potential for tourism in general and religious tourism in particular.
Mining, where Odisha has enormous potential, will account for $115 B. The document also envisages the creation of two world-class cities, as Odisha attracts a large number of students from West Bengal, Bihar & Jharkhand to its private universities. The locus of higher education has shifted from Didi’s Kolkata to Majhi’s Bhubaneswar.
The growth targets look to be overambitious. Also, the expectation that the private sector will contribute 70% of investment in PPP mode looks to be unrealistic. Odisha, as the preferred destination for investment, has to be seen in the backdrop of competing states like Maharashtra, Karnataka, Tamil Nadu, and Gujarat, which are private sector savvy, with a much better record for innovation and manufacturing. As per the Niti Ayog Report, while manufacturing as % of GVA is 37.9%, 38%, 42.5% and 36.7% for Tamil Nadu, Maharashtra, Karnataka, and Gujarat, respectively, it is 18.9% for Odisha.
The document does not pay adequate attention to the nutritional challenges confronting women and children who face unacceptably high levels of undernutrition and iron deficiency. Quality of education in government schools needs to be substantially ramped up, as also the primary health care system, both in villages and small towns. Economic infrastructure without supporting social sector programs and infrastructure will not propel growth. Smart villages must take precedence over the rhetoric of smart cities.
As Prof Gunnar Myrdal had rightly pointed out, the peripheries must be given priority instead of the capital city. The leadership needs to come out of the freebies culture to long-term human capability development by investing more in quality education, skilling, IT, and AI. It also must put the AMLAN program for bolstering nutritional needs for women& children as a policy priority.
There is no deficiency of iodine, vitamins & micronutrients. It’s the supply chain management and the lack of accountability of government servants that need to be plugged.
(Prof. Satya Narayan Misra teaches Development Economics. He had the rare privilege of watching Tughlaq at the ramparts of Purana Qila, directed by E. Alkazi. Views expressed are personal.)