SFAR Odisha 2024-25
State Finances Audit Report
Government of Odisha
This Chapter provides a snapshot of Odisha's finances for 2024-25, covering demographics, economic indicators and the State's fiscal structure. It analyses trends in revenue and expenditure, sectoral allocation of expenditure, debt levels, and fiscal deficits. It further examines revenue buoyancy and the capacity of the State to mobilise resources in line with economic growth. The analysis highlights key risks such as rising liabilities and subsidies, and non-receipt of dividends from SPSEs. Overall fiscal sustainability is assessed in terms of debt management, expenditure prioritisation, and adherence to fiscal targets, providing a comprehensive picture of the State's financial health.
Odisha, a state on the eastern coast of India, covers 1,55,707 sq. km. and comprises 30 districts. According to the 2011 census of India, its population stood at 4.20 crore (3.47 per cent of India's total), with a density of 270 persons per sq. km. This section provides an overview of the State's demography, GSDP and per capita GSDP of the State.
The State's demographic details vis-à-vis national average are presented in Table 1.1.
Gross State Domestic Product (GSDP) and per capita GSDP are important indicators of the State's economy as discussed in succeeding paragraphs.
Gross Domestic Product (GDP) refers to the total value of goods and services produced within a country, while GSDP measures the same at the State level, and both reflect economic development and overall progress. Trends of GSDP and GDP are given inTable 1.2.
As can be seen from the table, GSDP of Odisha increased steadily from ₹ 5,40,185 crore in 2020-21 to ₹ 8,90,038 crore in 2024-25, registering a growth of about 64.77 per cent during the last five years, which was broadly comparable with the growth in India's GDP (66.56 per cent) during the same period.
Despite this expansion in aggregate State output, the growth in per capita GSDP did not keep pace with the national trend. The per capita GSDP gap between Odisha and the national average widened from ₹ 27,894 in 2020-21 to ₹ 44,420 in 2024-25. This indicated that GSDP growth in the State did not translate proportionately into individual income gains, indicating weaker transmission of aggregate economic growth to per capita outcomes.
Year on year growth of GSDP and GDP and contribution of GSDP in GDP, is given in Chart 1.1 and per capita GDP of the country and per capita GSDP of the State is depicted in Chart 1.2.
The sectoral contribution by various sectors during 2024-25 and sectoral growth in GSDP during the last five years are depicted in Chart 1.3 and Chart 1.4 respectively.
Chart 1.5 shows the composition of each sector in GSDP during FY 2024-25, in terms of its major contributing segments.
The analysis of sectoral share from Chart 1.3 indicate that the contribution of tertiary sector was nearly 34 per cent of GSDP in 2024-25, while the primary and secondary sectors accounted for 28 and 27 per cent each.
A closer look at sectoral composition, presented in Chart 1.5, shows that the primary sector is dominated by agriculture, forestry and fishing (69 per cent), while the secondary sector is led by manufacturing (59 per cent) and construction (30 per cent). The tertiary sector is more diversified with major contributions from (i) trade, (ii) transport, (iii) real estate and (iv) public administration.
Table 1.3 shows the details of actual financial results of State Government of Odisha for the years 2023-24 and 2024-25 vis-à-vis Budget Estimates (BE) and GSDP for the year 2024-25.
The fiscal management of Odisha in 2024-25 reflects an imbalance between receipts and expenditure. Revenue Receipts fell short of BE by 10 per cent, primarily due to a sharp shortfall in Grants-in-aid and underperformance of Non-Tax and Own Tax revenues, though higher receipts of Share in Union tax and duties partly offset the decline. On the expenditure side, while Revenue Expenditure was largely on target (97 per cent of BE), Capital Expenditure which is critical for infrastructure and future growth was only 73 per cent of BE, despite the availability of both Revenue Surplus and borrowings. The details of State Government's Finances for the FY 2020-21 to 2024-25 are given in Appendix 1.1.
Components of the sources and application of funds of the State during the current year are given in Chart 1.6.
Appendix 1.2 provides details of receipts and disbursements and the overall fiscal position of the State during the current year as well as the previous year.
Government accounts capture the financial liabilities of the Government and the assets created out of the expenditure incurred. Appendix 1.3 gives an abstract of such liabilities and assets, as on 31 March 2025, compared with the corresponding position of the previous year. The liabilities consist mainly of internal borrowings, loans and advances from GoI, receipts from the Public Account and Reserve Funds. Assets comprise mainly of the Capital Expenditure, loans and advances given by the State Government and cash balances. A summarised position of assets and liabilities for the financial years 2023-24 and 2024-25, is given in Table 1.4.
A comprehensive ten-year trend analysis covering the period from 2015-16 to 2024-25 of the major fiscal and economic parameters of the State (Appendix 1.4), has been carried out to provide a long-term perspective on the State's fiscal sustainability. The analysis includes calculation of the Compound Annual Growth Rate (CAGR) for each component over the ten-year period. It enables an assessment of the structural strengths and weaknesses of the State's finances, identifies emerging risks and highlights systemic trends that have influenced the fiscal position over the decade.
Revenue Receipts have shown a consistent upward trend over the past ten years, with a CAGR of 11.52 per cent. A significant jump was observed between 2020-21 and 2021-22, when revenue receipts rose from ₹ 1,04,387 crore to ₹ 1,53,059 crore, with an increase of 46.63 per cent and have remained at relatively high levels since then. This steady growth in Revenue Receipts contributed to Revenue Surplus throughout the ten-year period.
Own Tax Revenue grew at a CAGR of 10.76 per cent, showing steady and consistent growth over the ten-year period. This growth was supported by improvement in SGST collection, higher collections from State Excise and Taxes on vehicles. However, on the other hand, Stamp Duty and Registration fees declined marginally from ₹ 2,157 crore in 2015-16 to ₹ 1,987 crore in 2024-25, recording a negative growth over the period, with collections showing sharp year-to-year fluctuations and a one-time spike in 2020-21, which did not sustain thereafter. Land revenue increased modestly from ₹ 589 crore to ₹ 785 crore, reflecting low and uneven growth. The significantly lower growth of Stamp Duty and Land Revenue compared to overall Revenue Receipts indicates that these taxes did not keep pace with the expansion of the State's revenue base, resulting in a declining relative contribution to total Revenue Receipts.
Non-Tax Revenue grew from ₹ 8,711 crore in 2015-16 to ₹ 51,221 crore in 2024-25, showing significant increase in 2021-22. Growth of Revenue Receipts since 2021-22 was primarily driven by higher Non-Tax revenue, as the Government auctioned mines (iron ore, manganese, bauxite and dolomite mines) following the Mines and Minerals (Development and Regulation) Amendment Act, 2015, which required the Government to auction all new mines and those with expired leases, resulting in high collection of mining revenue.
Revenue Expenditure grew at CAGR of 11.86 per cent during 2015-25. Its growth accelerated notably after 2018-19, with a temporary moderation in 2020-21. Revenue Expenditure remained consistently higher than Revenue Receipts in growth terms in certain years, exerting pressure on revenue balances. However, the State was able to maintain revenue surplus during the ten-year period.
Subsidies grew at a CAGR of 15.07 per cent, notably spiking to ₹ 9,134 crore in 2024-25. Rising subsidies were a key contributor to the pressure on Revenue Expenditure, during 2015-25.
Interest payments remained relatively stable during the decade, ranging between ₹ 3,343 crore to ₹ 6,644 crore. As a proportion of Revenue Expenditure, interest payments have declined, giving the State some fiscal space.
Capital Receipts grew at a CAGR of 15.03 per cent, mainly because of increased borrowings. Non-debt Capital Receipts, such as recoveries of Loans and Advances, however remained minimal.
Capital Expenditure grew at a CAGR of around 12.47 per cent but showed significant fluctuations, ranging between ₹ 17,090 crore to ₹ 45,481 crore during 2015-2025. The growth in Capital Expenditure post 2020-21 indicated focus on stimulating economic activity and long-term development.
Fiscal Deficit expanded sharply at a CAGR of about 15.10 per cent, however, the Fiscal Deficit as percentage of GSDP was well within the targets prescribed in FRBM Act.
Outstanding liabilities increased from ₹ 59,753 crore in 2015-16 to ₹ 1,37,784 crore in 2024-25, reflecting a rising debt burden. Although this level of debt remained manageable in relation to the State's GSDP, it requires close monitoring to ensure long-term sustainability. However, liabilities saw a decline from ₹ 1,26,084 crore in 2019-20 to ₹ 1,01,700 crore in 2022-23, largely due to the repayment of Market Loans, loans from Special Securities issued to the NSSF of the Central Government and loans from financial institutions. Notably, during FY 2022-23 and 2023-24, the Government of Odisha did not undertake any market borrowing, focusing on repaying outstanding market loans, thereby consolidating the State's overall debt position.
All revenues received by the State Government, all loans raised by the State Government, ways and means advances extended by the Reserve Bank of India and all money received by the State Government in repayment of loans form part of the Consolidated Fund of the State.
Trend and growth of Revenue Receipts with respect to GSDP over the five-year period (2020-25) are shown in Table 1.5.
Revenue Receipts as percentage of GSDP and contribution from various sources in Revenue Receipts is given in Chart 1.7 and Chart 1.8.
As can be seen from Table 1.5, despite continuous growth in the union tax devolution during the last five years and GSDP growth of over 11 per cent in last two FYs 2023-24 and 2024-25, Revenue Receipts grew only by 2.43 per cent, with revenue buoyancy collapsing to 0.21 in 2024-25. This indicates that the State was unable to increase its tax revenue potential in line with the nominal growth rate. The State's Own tax-to-GSDP ratio remained below seven per cent over the past five years, highlighting the need for consistent efforts to improve the State's Own tax revenue, raising capacity and make the tax system more resilient.
C&AG's Report on Performance Audit of Systems and Controls in Assessment and Collection of Revenue from Major Minerals for the year ended March 2022 (Report No. 6 of 2024), of Government of Odisha highlighted major weaknesses in Odisha's revenue mobilisation, particularly undervaluation of iron-ore grades, misreporting of production and extraction beyond approved plans, leading to significant royalty losses. It recommended stronger monitoring, strict compliance with mining plans and technology-based oversight.
Similarly,C&AG's Report on Performance Audit of Systems and Controls in Assessment and Collection of Revenue from Minor Minerals for the year ended March 2022 (Report No. 12 of 2024), highlighted issues like application of pre-revised rates of rents and royalty in the assessment of mineral revenue, even after revision by Government of Odisha; non-adoption of system of taking measurements of sources before commencement of quarrying and after closure of lease periods, etc. resulting in loss of revenue.
Further,C&AG's Compliance Audit Report for the year ended March 2022 (Report No. 3 of 2024) on Government of Odisha included a compliance audit of 'Revision of Market Value Guidelines for urban plots and buildings', which highlighted issues like outdated property valuation practices, absence of expert valuers, non-collection and compilation of relevant data like average value of sale of properties, auction value of Government land, non-revision of values in high-growth areas etc., resulting in revenue leakage from stamp duty and registration.
Addressing these systemic gaps may align revenue mobilisation with economic growth. The State may also broaden its tax base, enforce dividend policies rigorously and strengthen recovery of tax arrears to improve revenue mobilisation.
A. State's Own Resources
The State's Own Revenue comprises of Own Tax revenue and Non-Tax Revenue, details of which are shown in Chart 1.9.
(i) Own Tax Revenue
Own Tax Revenue is the revenue collected by the State Government through taxes, which it is empowered to levy under the Constitution. Details of Budget Estimate (BE), Revised Estimate (RE) and Actuals for Own Tax Revenue of the State for the FY 2023-24 and 2024-25 are given in Table 1.6.
# Difference of 1 crore is due to rounding off.
During FY 202425, the State's Own Tax Revenue grew by 3.84 per cent compared to previous year but fell short of the BE and RE by 4.21 per cent and 5.81 per cent respectively.
Trends of Own Tax Revenue and analysis of its components during the period 2020-21 to 2024-25 are shown in Chart 1.10 and Chart 1.11.
Chart 1.10 highlights that although the State generated higher Own Tax Revenue in absolute terms, the growth rate with respect to GSDP fluctuated during the last five years and declined marginally in 2024-25 compared to the previous year.
Chart 1.11 shows SGST as the largest contributor (44.34 per cent), followed by Taxes on Sales, Trade etc., and State Excise. During 2020-2025, an upward trend was seen in case of SGST, State Excise, Taxes on vehicles and Taxes on Sales, Trade etc., while it decreased in case of Stamps and Registration fees, Land Revenue, Taxes and Duties on Electricity and Others. Higher tax revenue on State Excise was mainly due to collection of higher excise duties on malt liquor, foreign liquor and spirts during the last five year
(ii) Non-Tax Revenue
Non-Tax Revenue of a State refers to the rent, fees, royalties and other receipts of the State Government from sources other than taxes.
Details of BE, RE and Actuals for major components of Non-Tax Revenue of the State for the FYs 2023-24 and 2024-25 are given in Table 1.7.
# Difference of 1 crore is due to rounding off.
In FY 2024-25, the State's Non-Tax Revenue declined by 3.38 per cent compared to the previous year, falling short of the BE (₹ 56,000 crore) and RE (₹ 58,000 crore) approximately by 9 and 12 per cent, respectively.
Trends of components of State's Non-Tax Revenue and its percentage to GSDP during 2020-25 are shown in Chart 1.12 and Chart 1.13.
Chart 1.12 highlights that the Non-Tax Revenue decreased by ₹ 1,790 crore in 2024-25 over the previous year and consequently its share in GSDP also declined. This decrease was primarily due to less realisation of Interest Receipts on account of investment of cash balances and decrease in collection of fees, rent and royalties from non-ferrous mining and metallurgical industries. This was however, partially offset by higher-than-estimated dividends and profits from Odisha Mining Corporation.
Major reasons for substantial increase or decrease in the components of Non-Tax Revenue are as follows:
Trends in components of State’s share in Union taxes and duties are shown inTable 1.8.
Percentage of State’s share in Union taxes and duties to GSDP is given in Chart 1.14.
Trend of Grants-in-aid from GoI and its components are shown in Table 1.9.
Percentage of Grants-in-aid from Government of India to GSDP is given in Chart 1.15.
Out of the Grants of ₹ 11,384.60 crore for Centrally Sponsored Schemes during 2024-25, the schemes receiving the major grant amounts are shown in Table 1.10.
The Fifteenth Finance Commission (15th FC) grants were provided to the States for Local Bodies, State Disaster Response Fund (SDRF), State Disaster Mitigation Fund (SDMF) and Health sector. Details of grants provided to the State by GoI are given in Table 1.11.
As can be seen from Table 1.11, there was no shortfall in release of 15th FC grants by the State Government.
Capital Receipts comprise miscellaneous Capital Receipts such as proceeds from disinvestments, recoveries of loans and advances, debt receipts from internal sources (market loans, borrowings from financial institutions/commercial banks) and loans and advances from GoI.
Trends of various components of Capital Receipts during 2020-21 to 2024-25 are shown in Table 1.12.
Capital Receipts as percentage of GSDP is depicted in Chart 1.16.
While GSDP growth has remained relatively stable (between 11-12 per cent in last two years), Public Debt Receipts have grown disproportionately (239 per cent in 2023-24 and 136 per cent in 2024-25). This abrupt surge in Public Debt Receipts resulted in a steep rise in Capital Receipts as percentage of GSDP from 0.86 per cent in 2022-23 to 4.88 per cent in 2024-25. Thus, the increase in borrowings is not directly aligned with economic expansion, pointing to fiscal stress and potential challenges in debt servicing capacity.
This paragraph analyses the deviations between the projections of the 15th FC and the State's actual fiscal and economic performance during the period 2020-21 to 2024-25.
The revenue and GSDP projected by the 15th FC and actuals are given in Table 1.13.
Government expenditure is classified into Revenue Expenditure, Capital Expenditure and Loans and Advances. Revenue Expenditure includes costs for maintenance, repairs and day-to-day functioning of departments, including administrative and establishment expenses. Capital Expenditure relates to the initial construction of projects and sanctioned improvements or additions to assets. Loans and Advances comprise funds provided by the government to Public Sector Undertakings and other entities, which are recoverable over time. Details of expenditure, total expenditure as percentage of GSDP and share components of Total Expenditure are given in Table 1.14, Chart 1.17 and Chart 1.18 respectively.
Out of the total expenditure of ₹ 2,09,670 crore incurred by the State during the financial year 2024-25, a portion of ₹ 5,450.06 crore pertained to pass-through transactions such as Finance Commission grants etc.
The State's expenditure profile revealed that Revenue Expenditure continued to dominate the total expenditure during 2020-21 to 2024-25, while the share of Capital Expenditure has gradually increased since 2020-21. Thus, there is a marginal but positive shift towards asset creation and developmental spending, though overall expenditure remains largely consumption oriented.
Sector-wise composition of Total Expenditure is given in Table 1.15 and its share in total expenditure is depicted in Chart 1.19.
Analysis of sectoral composition of total expenditure shows that the share of Social Services has steadily increased during last five years, except in 2022-23, indicating a rising emphasis on welfare-related and human development sectors (Education, health, nutrition etc.). Expenditure on Economic Services, however, exhibited fluctuations, which is indicative of inconsistent prioritisation of developmental and infrastructure related activities. Overall, the trend highlights a shift in focus towards social sector spending, with relatively low and uneven allocations to economic development and local bodies.
Revenue Expenditure is incurred to maintain the current level of services and payment for the past obligation. As such, it does not result in any addition to the State's infrastructure and service network. Growth of Revenue Expenditure, its ratio to total expenditure, GSDP and Revenue Receipts are shown in Table 1.16.
Analysis of Revenue Expenditure reveals that it continues to dominate the expenditure profile of the State, accounting for more than three-fourths of the Total Expenditure during the last five years. Further, Revenue Expenditure as percentage of Revenue Receipts consistently remained high, ranging between 71.60 per cent and 91.31 per cent during the FYs 2020-25. This high dependency on Revenue Receipts for current consumption limits the fiscal space for capital investments and poses risks to revenue balance.
A. Sector-wise Revenue Expenditure
Sector-wise composition of Revenue Expenditure is given in Table 1.17 and Relative share of various sectors in Revenue Expenditure is shown in Chart 1.20.
The sectoral analysis of Revenue Expenditure reveals reduced prioritisation on General Services during 2023-24 and 2024-25. In contrast, Social Services consistently registered a growth, highlighting the State's growing emphasis on welfare and human development, during 2023-25.
However, at the same time, allocations towards Economic Services have remained inconsistent, indicative of uneven prioritisation of infrastructure-related activities.
B. Committed Expenditure
The committed expenditure of the State Government on revenue account consists of interest payments; expenditure on salaries and wages; and pensions. It has the first charge on Government resources. The components of committed expenditure are given in Table 1.18 and committed expenditure as percentage of receipts and remaining fiscal space for other expenditure is given in Chart 1.21.
Table 1.18 shows that Committed expenditure as a proportion of Revenue Expenditure has shown positive changes during 2020-25, showing an overall improvement in fiscal space. However, the rising obligations of salaries (from ₹ 21,003 crore in 2020-21 to ₹ 31,659 crore in 2024-25) and pensions (₹ 13,629 crore in 2020-21 to ₹ 21,849 crore in 2024-25) continues to exert structural pressure on the State’s finances, limiting flexibility in allocation towards developmental and Capital Expenditure.
The Subsidies during the current year (2024-25) increased by ₹ 5,011 crore (121.54 per cent) compared to the previous year. This increase was mainly due to grant of ₹ 5,848.70 crore as input assistance to the farmers under a new scheme "Samrudh Krushak Yojana" with the intended outcome of enhancement of farmers income, improvement of production and productivity of paddy in the State.
Department-wise major Subsidies for FYs 2020-21 to 2024-25 are shown inTable 1.19.
The total original budget for Subsidies was ₹ 8,067.84 crore, while the actual expenditure was ₹ 9,133.55 crore, showing an overall increase of ₹ 1,065.71 crore over the original provision as shown in Table 1.20.
Sector-wise analysis of subsidies during 2020-21 to 2024-25 shows a continued dominance of subsidy under economic sector with a steep rise in 2024-25. This was primarily due to substantial input assistance provided to farmers under the Samrudh Krushak Yojana, resulting in nearly 91 per cent of the total subsidy outlay in the Economic Sector. Social Sector subsidies, though fluctuated over the years, increasing from ₹ 340 crore in 2023-24 to ₹ 675 crore during 2024-25. This was mainly due to increase in Subsidy for agricultural inputs under Disaster Management. Though relatively small, the allocation for General Services doubled from ₹ 75 crore in 2023-24 to ₹ 150 crore in 2024-25, primarily on account of the subsidy provided by the Transport Department for the implementation of the Electric Vehicle Policy. The sectoral pattern indicates that the exceptional increase in total subsidies from ₹ 4,123 crore in 2023-24 to ₹ 9,134 crore in 2024-25 was driven overwhelmingly by agriculture and allied activities.
While subsidies declined in 2022-23 compared to 2021-22, the trend reversed sharply thereafter. In 2024-25, subsidy expenditure almost doubled to ₹ 9,134 crore compared to the previous year and its share in Revenue Receipts, Revenue Expenditure and Total Expenditure peaked over the five-year period. This sudden escalation not only offset the earlier gains in rationalising subsidies but also reduced the fiscal space available for developmental and capital spending.
As can be seen from Chart 1.23, there is an inverse trade-off. The sharp increase in Subsidies (more than double from 2.12 per cent to 4.36 per cent of Total Expenditure) was accompanied by a decrease in Capital Expenditure (from 22.20 per cent to 21.69 per cent of Total Expenditure) from 2023-24 to 2024-25. This indicates that the substantial increase in welfare spending may have crowded out some portion of the capital spending, affecting long term growth.
D. Fiscal stress from committed expenditure and subsidies
Chart 1.24 and Chart 1.25 depict the Committed expenditure and subsidies as percentage of Revenue Receipts and Revenue Expenditure during the FYs 2020-25.
In 2024-25, the State's committed expenditure of ₹ 58,789 crore comprising salaries (₹ 31,659 crore), pensions (₹ 21,849 crore) and interest payments (₹ 5,281 crore) accounted for approximately 32 per cent of the Revenue Receipts. In addition, subsidies amounted to ₹ 9,134 crore, bringing the total committed expenditure (including subsidies) to ₹ 67,923 crore, which was nearly 37 per cent of the State's Revenue Receipts.
Thus, the high and inflexible nature of such expenditure significantly compresses fiscal space, limiting the State's ability to allocate resources towards capital investment and developmental priorities. This structural imbalance increases the risk of persistent primary deficits, constrains long-term fiscal sustainability and reduces the government's capacity to respond to emergent socio-economic challenges.
Thus, to avoid future fiscal risks, there is an urgent need for expenditure reform through rationalisation of subsidies, improved targeting and prudent management of salary and pension commitments, to enhance fiscal flexibility and ensure a sustainable fiscal path.
E. Financial assistance by the State Government to Local Bodies and Other Institutions
Assistance provided by way of grants to the local bodies and other institutions during the period from 2020-21 to 2024-25 is presented in Table 1.22.
As can be seen from Table 1.22, Grants-in-aid to Zila Parishads and other Panchayati Raj institutions and Municipal Corporations and Municipalities decreased by 44 per cent over the previous year. This was mainly due to decrease in Grants-in-aid to PRIs and ULBs for creation of Capital assets.
Capital Expenditure is primarily expenditure on creation of fixed infrastructure assets such as roads, buildings, etc. Capital Expenditure, in both the Centre and the State, is being met from budgetary support and extra budgetary resources/ off-budget. It also includes investments made by the State Government in Companies/Corporations. Trend of Capital Expenditure in the State over the last five years i.e., 2020-25 is given in Chart 1.26.
Apart from Capital Expenditure of ₹ 45,481 crore, State Government also transferred ₹ 5,345 crore as Grant-in-aid for creation of capital assets to the Local Bodies and other institutions. However, it was found during test-check of sanction orders that an amount of ₹ 586.62 crore of capital nature was transferred to the Personal Ledger accounts of ITDAs, which inflated the actual Capital Expenditure as discussed in Paragraph 3.6 of Chapter III.
Audit observed that the Government had enhanced prioritisation of developmental spending during the last five years, but there is a need for sustained efforts to maintain capital outlay at a high level to support long-term growth.
Sector-wise composition of Capital Expenditure is given in Table 1.23. Detailed Sector-wise expenditure is given in Appendix 1.2.
As can be seen from Chart 1.27, during 2020-25, Capital expenditure was consistently dominated by Economic Services (64 per cent to 68 per cent), reflecting a focus on development and growth, while Social Services accounted for 21 per cent to 25 per cent of total capital expenditure, indicating steady prioritisation in Social Sector.
There were a total of 152 entities, out of which 72 entities were defunct and investment of ₹ 68.52 crore therein remained un-recovered. Of the remaining 80 active entities, only nine entities had paid dividends. These included seven Government companies (which included two power sector companies), one statutory corporation and one co-operative society .
As of 31 March 2025, the State Government's investment in companies, corporations and other bodies stood at ₹ 13,925 crore, comprising Government Companies (₹ 10,992 crore), Co-operative Societies (₹ 1,570 crore), Statutory Corporations (₹ 805 crore), Other Joint Stock Companies and Partnerships (₹ 539 crore) and Rural Banks (₹ 19 crore).
Trends of investment at the end of the year in companies, corporations, co-operative banks and societies, and return on this investment during the last five years are depicted in Chart 1.28. Rate of return on investment made vis-à-vis average rate of interest on Government borrowings is depicted in Chart 1.29.
The investment consistently increased during 2020-25. However, returns initially declined but saw a sharp rise in the last two years. This increase in return was primarily due to increase of receipt of dividend from the Odisha Mining Corporation (OMC) (₹ 4,223 crore in 2024-25 and ₹ 1,420 crore in 2023-24). Throughout the period, the average interest rate on government borrowings remained almost stable. The sharp rise in RoR on investment compared to average interest rate on Government borrowings showed improved investment efficiency.
Dividend Policy and its impact
A well-defined dividend policy mandating a minimum return from profit-making enterprises, enables the State Government to optimise its returns from investments in SPSEs and enhances monitoring of the SPSEs financial performance. It was observed that the State has enforced a dividend policy for its State Public Sector Undertakings (SPSUs) to pay an annual dividend to the State Government calculated as 30 per cent of either the Profit After Tax (PAT) or the State Government's equity, whichever is higher. This directive aligns with the guidelines issued by the GoI for Central Public Sector Enterprises.
Audit analysed the PAT data from the annual accounts submitted by the SPSUs to the Accountant General for the last 4-5 years, on test-check basis and compared it with the dividends actually paid and recorded in the Finance Accounts of the State over the years. It was found that 27 SPSUs, despite reporting PAT, did not remit the required dividends to the State Government as mandated by the Finance Department. As a result, a significant amount of ₹ 5,146.76 crore remained unpaid by these SPSE in the form of outstanding dividends. The Finance Department also failed to raise the necessary demand for these dividends. Further, it was also noticed that the annual accounts of 35 entities were not submitted (as on 30 September 2025) to the Accountant General, with delays ranging from one to 15 years, due to which the actual dividends required to be paid to the Government could not be assessed.
The Government replied (November 2025) that not all SPSEs were required to pay dividends and that it had been decided not to collect dividends from Odisha Power Generation Corporation and Odisha Hydro Power Corporation, as these entities utilise their surpluses for expansion activities. However, the reply is not acceptable, since the existing dividend guidelines which prescribe payment of annual dividend to the State Government, calculated as 30 per cent of either the Profit After Tax (PAT) or the State Government's equity, whichever is higher, do not provide any such exemption.
Also, the Finance Department issued (November 2025) guidelines directing the Public Enterprises Department and other concerned administrative departments to review the financial performance of State PSUs under their control and ensure the payment of outstanding dividends. As per the information furnished by the Odisha State Warehousing Corporation to the Office of the Principal Accountant General (Audit-I), the Corporation had remitted ₹4.23 crore towards dividend for FYs 2021-22 and 2022-23 in November/ December 2025. Dividends due from the remaining SPSEs were still pending.
The fact however, remains that the Finance Department, being the nodal Department had not maintained any centralised system to track collection of outstanding dividends or recovery of the same.
C. Loans and Advances by State Government
In addition to the investments in co-operative societies, corporations and companies, the State Government has also been providing loans and advances to many institutions/organisations. Table 1.24 presents the position of outstanding loans and advances as on 31 March 2025 and interest receipts vis-à-vis interest payments by the State Government on its borrowings during the last five years.
Out of the total loans and advances disbursed during 2024-25, ₹ 846 crore was disbursed to the Government employees. Further, GRIDCO was granted loans of ₹1,001 crore by the Government as a soft loan to meet its financial requirement. Out of this amount, ₹ 480 crore was offered at an annual interest rate of 5.25 per cent while the remaining ₹ 521 crore was provided at an annual interest rate of 5 per cent.
Other loans extended during the year were: interest free loans to (i) Indian Oil Corporation Limited (₹ 700 crore) as a part of an agreement with it, for providing a fiscal incentive of ₹ 10,500 crore interest free Viability Gap Funding (VGF) loan, over a period of 15 years, for the Paradeep Refinery Project, (ii) Odisha State Seeds Corporation Limited (₹ 100 crore), (iii) Odisha State Co-operative Marketing Federation Limited (₹ 150 crore), (iv) Odisha State Handloom Weavers Co-operative Society (₹ 20 crore), (v) Sambalpuri Bastralaya Handloom Co-operative Society (₹20 crore) and (vi) Odisha State Co-operative Marketing Federation Limited (₹ 40 crore).
Further, Finance Accounts for the year 2024-25 revealed that terms and conditions of the loans granted to three institutions during 1982-2014, were yet to be settled.
Audit analysed the status of outstanding loans from 2020-21 to 2024-25 and it was observed that principal amount of ₹ 73.85 crore outstanding for repayment at the end of March 2021 remained unrecovered till the end of March 2025, though these loans were sanctioned between 1954-55 and 2005-06, indicating poor loan recovery. Since the loan amounts remained outstanding for long period, the interest due also rose from ₹ 72.13 crore in March 2021 to ₹ 81.25 crore in March 2025. Thus, the department concerned failed to recover the loan amounts or write them off in case of non-feasibility of recovery.
In reply, the Finance Department stated (April 2025) that the matter was communicated to the Departments concerned and they were instructed to reconcile with Accountant General (A&E). The reply was not acceptable as the Finance Department, being the controlling department did not maintain any centralised system for tracking receivables (principal and interest) and also failed to recover the old outstanding loans.
During the Exit Conference (November 2025) the Finance Department stated that some loans had been converted into equity. The reply is not acceptable, as no evidence of such loan-to-equity conversion was found in the State's Finance Accounts.
The Contingency Fund of the Government of Odisha is intended to provide advances for meeting unforeseen expenditure, pending its authorisation by the State Legislature. The fund is recouped once the Legislature approves the additional expenditure. The corpus of the Fund is ₹ 400 crore.
During 2023-24, ₹ 274.34 crore had been withdrawn from the fund under various budgetary heads. However, it was noticed that out of the total amount withdrawn, ₹ 117.73 crore had not been recouped by the end of the FY 2024-25. As on 31st March 2025, Contingency Fund had a balance of ₹ 282.27 crore only.
Details of expenditure incurred from the Contingency Fund are discussed in Paragraph 2.7 of Chapter-II.
Receipts and Disbursements in respect of certain transactions such as Small Savings, Provident Funds, Reserve Funds, Deposits, Suspense, Remittances etc., which do not form part of the Consolidated Fund are kept in the Public Account set up under Article 266(2) of the Constitution and are not subject to vote by the State Legislature. The balance after disbursements during the year is the fund available with the Government for use for various purposes.
The component-wise net balances in Public Account of the State are given in Table 1.25.
The net balances in the Public Account during FY 2024-25 declined compared to FY 2023-24. This was mainly attributable to the non-transfer of funds to the Revenue Reserve Fund (Budget Stabilisation Fund) by the State Government during 2024-25, whereas an amount of ₹5,000 crore had been transferred in the previous year. In addition, the decline was influenced by a negative net balance under Major Head 8443-106 (Personal Deposits) under Deposits not bearing interest.
Reserve Funds are created for specific and defined purposes under the Public Account of the State Government. These funds are met out of contributions or grants from the Consolidated Fund or from outside agencies. It comprises interest bearing Reserve Funds and Reserve Funds not bearing interest.
There were three interest bearing Reserve Funds and nine Reserve Funds not bearing interest, as on 31 March 2025. The available balances in these major Reserve Funds as on 31 March 2025 are given in Table 1.26.
Out of the gross accumulated balance of ₹ 52,946.34 crore lying in these Funds, as on 31 March 2025, ₹ 51,755.81 crore had been invested in Government Stocks by the Reserve Bank of India, leaving a total net accumulated balance of ₹ 1,190.53 crore remaining un-invested, as on 31 March 2025.
As per the agreement with RBI, State Governments must maintain a minimum daily cash balance (₹ 1.28 crore) with the Bank. If the balance falls below this minimum, the shortfall is met through instruments like Ways and Means Advances (WMA)/Special Ways and Means Advances (SWMA)/ Special Drawing Facility (SDF)/ Overdrafts (OD), with the WMA limit revised periodically by RBI.
The State Government invests surplus cash balances, including those from earmarked reserve funds in GoI securities and Treasury Bills. Earnings from these investments are credited under '0049-Interest Receipts'.
It is undesirable for the State Government to raise market loans while holding large unutilised cash balances, as it leads to idle funds rather than productive use. Cash balance and investment details for 2024-25 are given in Table 1.27.
The closing cash balance increased by ₹2,479.17 crore. The cash balance included investment of ₹ 51,778.23 crore from earmarked funds. The State Government maintained the minimum cash balance of ₹ 1.28 crore throughout the year.
Balances in Reserve funds are either held in cash or are required to be invested in various securities stipulated in the respective fund guidelines. Investments of State Disaster Response Fund (SDRF) of ₹ 6,091.23 crore, State Disaster Mitigation Fund (SDMF) of ₹ 1,522.81 crore, State Compensatory Afforestation Fund (SCAF) of ₹ 5,386.92 crore, Consolidated Sinking Fund (CSF) of ₹ 17,253.16 crore, Odisha Budget Stabilisation Fund (BSF) of ₹ 19,574.87 crore and Guarantee Redemption Fund (GRF) of ₹ 1,926.82 crore were made as on 31 March 2025. On investment of Earmarked Funds, interest amounts of ₹ 3,225.76 crore (SDRF: ₹132.66 crore, SDMF: ₹ 32.80 crore, SCAF: ₹ 308.56 crore, CSF: ₹ 1,290.25 crore, BSF: ₹ 1,315.36 crore, GRF: ₹ 146.13 crore), were realised during the FY and were invested by the RBI. Further, ₹ 189.33 crore was received by the Government from RBI on interest realised on investment of cash balance.
Other than the Earmarked Funds, the Government invested surplus general cash balances throughout the year, in GoI Stock and GoI Treasury Bills. As of 31 March 2025, an amount of ₹ 5,503.78 crore remained invested in GoI Treasury Bills. On such investments, the Government earned an interest of ₹ 189.33 crore during the year.
Details of Cash Balance Investment Account during the last five years are given in Table 1.28.
Fiscal Sustainability is the ability of a government to manage its revenue and expenditure in a manner that ensures it can meet its current and future obligations such as public services, infrastructure, and debt repayments without excessive borrowing or accumulating unsustainable debt.
It implies maintaining a stable balance between revenue generation and expenditure over the long term. Chart 1.30 and Chart 1.31 show percentages of various receipts and expenditure of the State to GSDP during FYs 2020-25.
Outstanding liabilities of the State along with percentage to GSDP for the last ten years i.e., 2015-16 to 2024-25 are depicted in Chart 1.32.
Outstanding total liabilities increased from ₹ 59,753 crore in 2015-16 to ₹ 1,37,784 crore in 2024-25. Although liabilities as a percentage of GSDP peaked to 23 per cent in 2019-20, it declined thereafter and stabilised at about 14 to 15 per cent during 2022-23 to 2024-25, indicating relatively improved debt sustainability due to higher GSDP growth. However, the continued rise in absolute liabilities indicated increasing reliance on borrowings, which may pose risks to future fiscal space and debt servicing capacity, if not managed prudently.
Total liabilities of the State Government typically constitute internal Debt of the State (market loans, special securities issued to National Small Savings Fund and loans from financial institutions etc.), loans and advances from the Central Government and Public Account Liabilities. The component-wise liability trends of the State for the period of five years beginning from 2020-21 are presented in Table 1.29.
# Difference of 1 crore is due to rounding off
State's outstanding total liability declined consistently between 2020-21 and 2022-23, but rose sharply to ₹1,37,784 crore in 2024-25, reversing the earlier trend. This increase was mainly due to significant increase in public debt, particularly internal debt (from ₹45,532 crore in 2022-23 to ₹69,472 crore in 2024-25) and significant surge in loans from Government of India, which increased more than two-fold in two years. Despite this, the liability-to-GSDP ratio remained stable at around 15 per cent, due to a strong rise in GSDP. Notably, net funds available from borrowings turned positive from 2023-24 after being negative for three years, indicating that prior borrowings were mostly used for repayments rather than fresh spending.
Break-up of outstanding total liabilities at the end of 2024-25 is shown in Chart 1.33.
Break-up of outstanding total liabilities
Chart 1.34 depicts the quantum of internal debt taken vis-à-vis repaid during the period of five years i.e. 2020-25.
Internal debt taken by the government during 2024-25, increased by ₹21,175 crore compared to the previous year, out of debt taken 47 per cent was utilised for repayment of the previous debt. An amount of ₹ 3,291 crore was paid towards interest on internal debt.
Borrowed funds should ideally be used to fund capital creation and developmental activities. Using borrowed funds for meeting current consumption and repayment of interest on outstanding loans is not a healthy trend. Table 1.30 depicts utilisation and trends of borrowed funds during 2020-21 to 2024-25.
The State did not utilise borrowings for any Revenue Expenditure, as it was Revenue Surplus since enactment of FRBM Act in 2005. Table 1.30 shows that State's major part of total borrowings (41 per cent in 2024-25 to 261 per cent in 2022-23) had been spent for repayment of earlier borrowings. After utilising the Revenue Surplus of ₹22,651 crore and amount left after the repayment of earlier borrowings, i.e., ₹ 25,381 crore for Capital Expenditure and giving loans and advances, an amount of ₹ 339 crore (0.79 per cent of total borrowings during the year) remained unspent, which enhanced the Cash Balance of the State to that extent.
Debt maturity and repayment profile indicates commitment on the part of the Government for debt repayment or debt servicing. Debt maturity profile of the State is depicted in Chart 1.35.
A concentrated short to medium term maturity profile indicates potential rollover risks and liquidity pressure. A high concentration of liabilities maturing within the short to medium term (0-7 years) indicates potential debt bunching, increasing refinancing and liquidity pressure on the State. Analysis of maturity profile revealed that ₹ 76,642 crore is to be paid by the State in upcoming seven years, which is almost 56 per cent of the total borrowings.
Analysis of Table 1.31 revealed that during 2024-25, the State Government resorted to market borrowings after three years (i.e., after 2020-21) to finance its deficit.
As per Finance Accounts of the State for the FY 2024-25, the Revenue Surplus of the state was ₹ 22,651 crore (2.54 per cent of GSDP), fiscal deficit was ₹ 25,042 crore (2.81 per cent of GSDP) whereas primary deficit was ₹ 19,761 crore (2.22 per cent of GSDP). However, Audit found that, during 2024-25, the State Government had misclassified, ₹ 721 crore of Revenue nature as Capital Expenditure (Details discussed in Paragraph 2.5.6 of Chapter-II). This resulted in overstatement of Revenue Surplus and understatement of Primary Deficit to that extent and thus, the Revenue Surplus and Primary Deficit worked out to be ₹ 21,930 crore (2.46 per cent of the GSDP) and ₹ 20,482 crore (2.30 per cent of the GSDP) respectively after audit.
As per the FRBM Act of Odisha and its amendments aligned with the 15th Finance Commission, State aims to:
Achievements vis-à-vis the fiscal targets, prescribed in the State FRBM Act for the FYs 2020-21 to 2024-25, post Audit are detailed in Table 1.32.
Trend analysis of deficits/ surplus during the last ten years is depicted in Chart 1.36.
The State largely met the FRBM targets, maintaining revenue surplus, while fiscal deficit stayed within the limits and even showed a surplus in 2021-22. Although primary balance turned negative from 2022-23, debt and interest payments remained well below the prescribed ceilings.
Revenue surplus fell short of both the budget and FC targets, though the State managed to keep fiscal deficit within the limit prescribed in FRBM Act. Outstanding liabilities remained within the FC ceiling but exceeded the State's own budget projection.
Debt sustainability refers to the ability of the State to service its debt obligation in present and in future. Analysis of variations in debt sustainability indicators is given in Table 1.33.
Guarantees are contingent liabilities on the Consolidated Fund in case of borrower defaults. The State extends guarantees for loans raised by entities like statutory corporations, boards, local bodies and co-operative institutions. The Finance Department, Government of Odisha instructed (November 2022) that the total outstanding guarantees, as on 1st April of every year, should not exceed hundred per cent of the State's Revenue Receipts (excluding Grants-in-Aid) of the 2nd preceding year. The trends in Outstanding Guarantees for FYs 2020-21 to 2024-25 are shown in Table 1.34.
Out of the total outstanding loans guaranteed by the Government at the end of the year (₹ 3,435 crore), 98.86 per cent (₹ 3,396 crore) pertained to the Grid Corporation of Odisha Limited (GRIDCO). The Government gave guarantees within the prescribed limits.
In consideration of the guarantees given by the Government, the institutions, in some cases, are required to pay Guarantee Commission at rates varying from 0.01 per cent to one per cent. During the year 2024-25, as against the receivable Guarantee Commission of ₹ 37.57 crore, only ₹ 12.71 crore was received from GRIDCO. The balance guarantee commission of ₹ 24.86 crore was yet to be received majorly from GRIDCO (₹ 7.70 crore), Odisha Rural Housing Development Corporation Limited (₹ 8.56 crore), Odisha State Housing Board (₹ 3.77 crore), Odisha Textile Mills (₹ 1.24 crore), etc.
Deficits can be improved by enhancing revenues and rationalising expenditures. This includes strengthening tax compliance, widening the tax base, revising user charges and monetising idle government assets. On the spending side, better targeting of subsidies, controlling salary and pension growth and ensuring proper classification of expenditure are key factors. Prioritising productive capital investment and improving debt management through transparent and efficient borrowing can further ease fiscal pressure. These measures collectively create fiscal space and help reduce revenue, fiscal, and primary deficits in a sustainable manner. These have been discussed in succeeding paragraphs.
Untapped revenue potential that, if harnessed effectively, could significantly enhance fiscal space and reduce dependence on debt. Inefficiencies in assessment, undervaluation and limited enforcement mechanisms of key tax streams such as State GST, Stamp Duty and Excise will lead to subdued revenue growth. Under-realized non-tax revenues, with low user charges, poor cost recovery and suboptimal returns on public assets and investments also impede the fiscal space. Timely realisation of pending arrears (tax and non-tax) is another step towards enhancing the fiscal space.
Audit requisitioned for comprehensive data on revenue arrears, tax assessments, detected tax evasion, refund cases and other relevant details across all revenue heads. However, despite multiple reminders, the Department provided data only for Taxes/VAT on Sales, Trade etc., and Goods and Services Tax. On analysis of data, Audit observed that:
A. Arrears of revenue
As on 31 March 2025, the arrears of revenue in respect of two principal heads of revenue were ₹ 14,752.61 crore, of which ₹ 5,979.66 crore was outstanding for more than five years, as depicted in Table 1.35.
The long-standing arrears pertaining to Taxes/VAT on Sales, Trade etc. (₹ 5,731.75 crore), indicated persistent delays in collection, whereas GST arrears were predominantly recent, indicating the need for strengthened mechanisms to ensure timely revenue realisation.
B. Arrears in assessment
The information on number of cases pending at the beginning of the year, cases becoming due for assessment, cases disposed of during the year and number of cases pending for finalisation at the end of the year, as furnished by Commissionerate of CT & GST is depicted in Table 1.36.
As can be seen from the table, disposal was relatively better for Taxes/VAT on Sales, Trade etc. (60.49 per cent), whereas GST cases showed a much lower disposal rate of 36.46 per cent, resulting in 53,797 cases pending at the end of the year, indicating significant backlog in assessment.
As such, there is need for implementation of timely follow-up mechanisms and enhanced monitoring including deployment of additional staff and periodic review of pending cases, to accelerate disposal and reduce arrears.
C. Details of evasion of tax detected by the Department, refund cases, etc.
The cases of evasion of tax detected, cases finalised and the demands for additional tax raised are important indicators of revenue collection efforts of the State Government.
The details of cases of evasion of tax detected by the Commissionerate of CT&GST, Odisha, cases finalised and the demand for additional tax raised during the year 2024-25, as reported by the departments concerned, are depicted in Table 1.37.
Undischarged/deferred liabilities, if not addressed timely, will reduce the available fiscal space for future developmental and infrastructure spending. Besides creating lack of transparency and credibility, these liabilities impair the State's ability to raise resources in a sustainable manner, thereby impacting overall fiscal health and long-term sustainability.
Audit observed that the State Government had accumulated several undischarged liabilities during the year 2024-25, which have significant implications for fiscal sustainability. These include:
The cumulative value of these un-discharged liabilities amounted to ₹ 911.97 crore, which is equivalent to 0.10 per cent of the GSDP and 3.64 per cent of the Fiscal Deficit for the year 2024-25.
Fiscal health of Odisha compared to General Category States17 is given in Table 1.38.
The fiscal assessment of Odisha for 2024-25 highlights persistent weaknesses despite compliance with FRBM targets and robust GSDP growth of 11.40 per cent. Revenue Receipts fell short of the Budget Estimates by 10 per cent, increasing only by 2.43 per cent against double-digit GSDP growth, with revenue buoyancy collapsing to 0.21 and Own Revenue growing by a meagre 0.28 per cent. Non-Tax Revenue declined by 3.38 per cent (₹ 1,790 crore), mainly due to lower mining royalties and interest receipts, reflecting weak revenue mobilisation.
On the expenditure side, Revenue Expenditure consumed 87.69 per cent of Revenue Receipts, while Capital Expenditure (₹ 45,481 crore) was 73 per cent of BE (₹ 62,677 crore). The expenditure profile further revealed rising Committed Expenditure on salaries (₹ 31,659 crore), pensions (₹ 21,849 crore) and interest (₹ 5,281 crore), reaching ₹ 58,789 crore, i.e., 32 per cent of Revenue Receipts and 36 per cent of Revenue Expenditure.
Subsidy outgo doubled to ₹ 9,134 crore in 2024-25, reversing earlier rationalisation efforts and pushing the total rigid expenditure to ₹67,923 crore (37 per cent of Revenue Receipts and 42 per cent of Revenue Expenditure). During FY 2024–25, Revenue Receipts grew by 2.43 per cent over the previous year.
Debt sustainability appears comfortable at a Debt-GSDP ratio of 15.48 per cent, but the absolute debt stock surged from ₹ 1,01,700 crore in 2022-23 to ₹ 1,37,784 crore in 2024-25, with 87.70 per cent of new borrowings used for repayments and ₹ 76,642 crore (56 per cent) of public debt maturing within the next seven years, raising refinancing risks. Moreover, un-discharged liabilities of ₹ 911.97 crore including short transfers to NPS (₹ 271.71 crore), unpaid interest (₹ 397.84 crore), non-transfer of cess (₹ 122.81 crore), non-recoupment of Contingency Fund to the tune of ₹ 117.73 crore and non-transfer of labour cess of ₹ 1.88 crore, indicates weaknesses in fiscal discipline and transparency.
To safeguard fiscal sustainability, the State needs to broaden its tax base, strengthen mining and non-tax revenues, enforce dividend compliance from SPSEs, rationalise subsidies and adopt a prudent debt management strategy aligned with GSDP growth.