Situational analysis: Economic position of state

Thursday, 1st June 2006

Poverty in Orissa has been further aggravated by the serious financial crisis facing the state. The fiscal deficit of the state has increased from 7.8% of the Gross State Domestic Product (GSDP) in 1995/96 to 27.3% in 2001/02.

The Orissa Government's capability to increase social sector spending is severely constrained by this weak fiscal position.

The situation is so critical that whilst the GOI has stepped up allocations for centrally sponsored schemes for the social sector, the Orissa Finance Department has cut down
state plan allocations for this sector, and diverted funds to more pressing needs of salaries, pensions, and interest payments.

The state's decision to promote FDI and its policy of widespread industrialisation is seen as a direct effort on the part of the state to resolve its fiscal crisis.

The predominant consideration in policy making is the need to generate large revenues as opposed to those that can reduce poverty and bring economic benefit to the wider population.

Concern India country strategy 2006 - 2011: Contents