Odisha has achieved a remarkable feat by securing the top position in the Fiscal Health Index (FHI) for FY 2022-23, becoming the first state in India to do so. With an overall score of 67.8, the state has excelled in several key fiscal parameters, particularly in Debt Index and Debt Sustainability. This outstanding performance has set Odisha apart, placing it in a league of its own in terms of fiscal health and economic management.

Debt Management and Sustainability

Odisha's Debt Index score of 99.0 is a clear indicator of the state's effective debt management, ensuring its fiscal discipline remains intact. The state's Debt Sustainability score of 64.0 highlights its capacity to maintain manageable debt levels while fostering long-term fiscal sustainability. This has been crucial in maintaining low fiscal deficits, a healthy debt profile, and a solid Capital Outlay/GSDP ratio, all of which reflect Odisha's responsible economic stewardship.

Revenue Mobilization and Non-Tax Revenue

Odisha has also outperformed expectations in Revenue Mobilization, particularly with its non-tax revenue generation, which accounts for 21% of its total revenue. This places Odisha in the same category as other states like Jharkhand, Goa, and Chhattisgarh, known for leveraging non-tax revenue sources, such as mining-linked premiums. This strategic move has significantly contributed to the state's fiscal health.

Social and Economic Services Investment

Another area where Odisha has excelled is in its investment in social and economic services, particularly health and education. Over the period from 2020-2022, Odisha’s revenue expenditure in these areas grew at an impressive Compound Annual Growth Rate (CAGR) of 33.8%, surpassing the growth rates of major states, which averaged around 22.6%. This reflects the state's commitment to improving the lives of its citizens through better access to essential services.

Adherence to Fiscal Responsibility

Odisha’s performance is further bolstered by its adherence to the Fiscal Responsibility and Budget Management (FRBM) Act since 2005, making it one of the few states in India to maintain such consistent fiscal discipline. The state’s commitment to prudent fiscal management and long-term sustainability is evident in the steps it has taken to ensure that its fiscal indicators remain robust.

Conclusion: A Role Model for Fiscal Prudence

Overall, Odisha's performance in the Fiscal Health Index is a testament to its robust economic management. By effectively managing its debt, mobilizing non-tax revenue, and prioritizing social services, Odisha has set a high bar for other Indian states in terms of fiscal prudence and development. It is now a role model for states aiming to achieve sustainable fiscal health and economic growth.

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