Bhubaneswar: Odisha’s real GSDP will cross the psychological barrier of 6 lakh cr in the current financial year. The real GSDP growth will be 8% vis-a-vis 6.4% GDP growth nationally.
The budget’s fiscal policy statement shows Odisha economy will be growing higher than the national economy.
ODISHA’S ZIGZAG SHOW
However, a look at the State’s growth run shows that the State’s real GSDP growth has been treading through a zigzag path loaded with crests and troughs all along.
The economic growth in real term has not been a show of consistency.
A look at the last 5 years shows that while the State economy contracted by 2% due to the COVID-19 pandemic, and the pump-priming of the economy by govt thereafter had the salutary impact with GSDP growth in 2021-22 clocking a massive 16.4% , though the higher growth has been attributed to low base effect in 2020-21. (see the table below)
However, the real GSDP growth then tumbled to 6% in 2022-23, only to grow higher at 9.6% in 2023-24. But the growth again slipped to 7.2% in 2024-25.
As per the Fiscal policy statement, “During FY 2024-25, GSDP growth is 7.2% and it is projected to grow at 8% during FY 2025-26.”
The perils of zigzag growth has been that slower economic growth every alternate years indicate contraction of economic activities in the State, which in turn then lead to slower prosperity.
WHY ODISHA ECONOMY GROWTH FALTERS?
Explaining the slower GSDP growth in 2024-25, the fiscal policy statement attributed the slackening growth to the following.
- Higher Commodity Prices
- Higher interest rates
- Political instability around globe
The budget attributing the aforesaid reasons to a dip in private investemnt in the State, and lesser public expenditure.
HOW BUDGET EXPECTS A TURNAROUND?
The budget statement maintained despite the volatile factors, the State Government’s focus on capital investment and private sector investment in industries, MSME sector, social sector and economic sector is likely to help the domestic economy to grow at more than 8 percent in real terms and about 12 percent in nominal terms in the medium term.
ODISHA NOMINAL GSDP TO DOUBLE IN 2025-26
The Fiscal Policy Statement predicts the economy at current prices (means with inflation) will double in the year 2025-26
As per the budget statement, the nominal GSDP grew from Rs 5,37,502 crore in 2019-20. It reached to Rs 9,49,140 crore in 2024-25.
In 2025-26, with a 12% growth in GSDP at current prices, the nominal GSDP will touch Rs 10.63 lakh cr.
The Budget has estimated the nominal and real GDSP of the State adopting the Fifteenth Finance Commission formula for estimation of GSDP for the budget year based on 3 years average growth preceding the current year.
It says, based on this formula, GSDP at current prices for the year 2025-26 is estimated at Rs10.63 lakh crore. It is estimated that the nominal growth rate for the year 2025-26 will be 12.10 percent. The real growth rate is estimated at 8.00 percent for the FY 2025-26.
